The subscription business model is one of the optimal monetization options for various digital services. For example, music streaming, on-demand video, education technology, and even services such as e-commerce and ride-hailing also have membership features that require 'premium customers' to make regular monthly payments.
For customers, this subscription model is also sometimes a convenient option, especially for applications that are needed for productivity. One example is an accounting application for online merchants. With a subscription model, they don't need to input monthly payments manually.
Behind the convenience of the subscription system, there is a platform that bridges the transaction process called Recurring Payments. This article will discuss the definition, how it works, and its use cases.
How the recurring payments platform works
Recurring Payments is a financial service infrastructure that allows digital services to provide payment processing automation. In this automation process, there are several stages that the platform must carry out, including:
1. Authentication and authorization
This process asks the user to provide approval for payment transactions that will be carried out in the future. This includes providing access to the platform to make transactions with financial accounts, such as credit cards, debit cards, e-money, etc.
Recurring payment providers such as Finantier have direct connectivity with banks as partners, so the authentication process can be carried out quickly by integrating logins into their banking accounts.
After the previous process is complete, the platform will automatically debit and forward payments to the relevant merchant for the services subscribed by the user. This activity can be done simultaneously and cumulatively.
Every transaction will be reported via email or short message. Ideally, consumers can also see a resume of payments that have been made in the previous and future periods.
Its application on the digital side is done through integration between systems. It is usually done with the Open API mechanism. In this case, the recurring payments service provider will provide an API connection to the application backend. Thus, developers only need to focus on presenting a user interface tailored to their application design without thinking about the payment system's architecture.
Use cases for recurring payments
The recurring payments service can be applied to several scenarios. The following are famous use cases that adopt the recurring payments platform:
- Subscription payments: Some applications can use the recurring payments platform to provide subscription options. This applies to various types of applications.
- Billing: For some businesses, such as lending or paylater businesses, the recurring payments platform will provide a more efficient user experience to ensure customers make timely returns.
However, several things must be considered when presenting the recurring payments service. Most importantly, platform provider partners must be able to provide reliability and security guarantees to ensure that possible risks will be avoided, such as debit errors, double payments, and so on.
In addition, payment options also need to be considered. Make sure partners have a complete payment system network on the banking side and fintech payments that consumers widely use.
Recurring payments in the Open Finance ecosystem
One of the Finantier products in the Open Finance ecosystem is Recurring Payments. This payment infrastructure is delivered with frictionless integration and a user-friendly interface. In addition, Finantier guarantees a stringent encryption and security system, in the same class as financial services in banking.
Through certain mechanisms, the recurring payments service from Finantier guarantees lower costs. Service owners and consumers can save service fees up to 99%; of course, this will make a unique proposition for the product itself.
With broader use cases and easy integration support, Finantier enables various innovations outside the financial platform to provide a simpler subscription payment system. For example, for a gym manager, finantier products can be applied in the application or POS (Point of Sales), which is used to complement their membership services.
In the Open Finance ecosystem, recurring payments are supported by other financial features. There is an Account Aggregation service to perform authentication and authorization, making it easier for developers to obtain financial data for particular needs. The simplest example is that looking at the lack of balance a few days before the payment can provide information to the user, thereby reducing the possibility of default.
Another Open Finance product that has the potential to be linked is Verification, which assists in the user identity verification process. The intelligent capabilities of this feature can prevent the threat of fraud or other cyber crimes.