How Do Recurring Payments Work

With recurring payments, you can set up an account to automatically renew or have repeated transactions occur at a specific time or number of times. This is very helpful in bringing down your financial debt!

Most online shopping sites offer this option for their users. You will usually be asked if you would like to start a subscription service when you check out. By adding these subscriptions to your account, it helps keep track of how much money you spend each month.

This article will go into more detail about what types of subscriptions exist and how they work! Stay tuned and read on to learn more.

Sample invoice for a recurring payment

how do recurring payments work

This invoce has two items, both of which are payable via PayPal as a recurring payment. The first item is a few months’ worth of services that you offer to do business consulting. You can read more about this service here.

This invoce has two items, both of which are payable via Paypal as a recurring payment. The first item is a few months’ worth of services that you offer to do business consulting. You can read more about this service here.

The second item is an online survey or questionnaire tool. They ask you questions and then pay you money depending on your answers. I will go into more detail about this in the next section!

Importantly, these payments don’t have any kind of set schedule. What I mean by this is there is no way to say ‘I’ll give you this much every month until you tell me something different’. It’s all or nothing – either they come at regular intervals or they don’t come at all.

That said, it is possible to reduce the payout if you aren’t able to make a scheduled payment, but only if you tell them this ahead of time.

How do I set up a recurring payment?

how do recurring payments work

The next step is to decide how you want to fulfill the purchase by choosing between Website Gifts or Membership Sites, for example. You can also choose Between Automatic Renewal Or One-Time Payment.

You will then need to pick an eCommerce platform that allows you to create and manage your recurring payments easily.

Most of the major platforms offer this feature but some may be more user friendly than others. Make sure to check out each one’s settings as well as customer reviews before making your choice.

How will I know if the payment was processed?

how do recurring payments work

The next step in creating a recurring payer is determining how to track your payments. You can choose between automatic re-ordering of products, automated email notifications, or both!

Most vendors offer you their own tools to help with this process. Some may even include a prepaid card that you can use for refunds or extra purchases. That way you do not have to worry about keeping tabs on where the money went.

Some companies also allow you to add an additional login through their website so you can check the status more easily. This is very helpful as you do not want to be spending time checking online every few days to see whether your order has been processed.

Will I get charged again?

how do recurring payments work

After you create your recurring payment, there is an easy way to test the product or service out! You can use the free trial option that most companies offer these days.

A lot of times, company representatives will include a trial mode where you can view all of their products or services without being billed for two weeks. They usually let you choose how many months you want to pay for it, so make sure to check out everything before buying a monthly subscription.

What should I charge?

how do recurring payments work

The second recurring payment you create will depend on your situation and what products you sell. You can choose to offer any type of product or service as an item for this subscription.

For example, if you run a site-specific t-shirt business, you could use our fun “I’m Too Sexy For My Shirt!” t-shirts as inspiration and create a recurring monthly membership for our t-shirt collection.

You get access to all our t-shirts in the member area, which includes size limited editions and we also include low cost shipping.

This way, people do not need to buy additional t-shirts to add to their collection because they can easily reaccess the members section and check out new designs.

If you are looking to make some extra money online, this is a great way to do so. We have helped many bloggers launch successful collections and it is always within budget. We recommend staying within $100 per month unless you feel more affordable.

How can I stop a recurring payment?

how do recurring payments work

Stopping or canceling a recurring payer is easy to do! You can easily remove someone as a paying member by heading into your account settings and searching for the specific product or service that paid member position is under. Then, you simply click “Remove” next to Paying Member Name.

You will then be taken back to the members area of your site where you can add or delete members. The process removes them completely without any refunds- just make sure to keep your credit card on file in case there are refund issues.

There is also an option to pause their membership which comes with the same perks as having a monthly subscription except they get notified one week before their current plan expires. This way you have time to reevaluate whether this person is worth the money!

By using WooCommerce’s built-in functions to create subscriptions, you will never run out of ways to manage your business.

What is a refund?

how do recurring payments work

A recurring payment is one that keeps re-updating your account every x days or weeks. For example, you can set up an automatic monthly donation to a charity of yours. Or a recurring credit card payment for your shopping sprees!

A Refund is when You Cancel Your Subscription

As mentioned before, you can cancel any subscription at any time! Just go into your Account Settings and find the “Unsubscribe” option.

But what if you accidentally made a purchase using this service and wanted to stop it? That isn’t as easy!

Luckily, most companies offer a cancellation policy. Most likely, there is a certain amount of time that you have to cancel your plan within before they charge you for canceling. This is called grace period.

After the grace period, you will be charged the price of the product per their Terms & Conditions.

What are interest rates?

how do recurring payments work

When you borrow money, you usually have to give up some of your future income for the loan. You will have to pay back the money with time, but you can typically keep your house or car longer if you know how to do this using recurring payments.

Most lenders use what’s called an interest rate to determine how much they want to charge you to take out a mortgage or lien card. It is similar to the price of milk at the grocery store that goes up each day!

Interest rates depend on several things, like credit score, monthly income, length of debt, amount needed, etc. Most banks offer the most lenient loans at one of three different interest rates: zero percent, low interest (sometimes as high as 9%!), or medium-range interest (usually around 10%-15%). A lot of people choose a fixed-rate lien card because these don’t vary.

But staying within budget won’t always protect you from higher cost of living situations, such as when food costs rise or bills stop being paid due to lack of income. If this happens, it’s very difficult to avoid paying more in finance fees, which may include late payment penalties and overdraft charges. These are expensive!

It’s important to be aware of how many extra expenses you can afford before you accept any new debts.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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