What is a recurring billing?

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on Mar5

What is the difference between committed and uncommitted recurring billing?

Recurring billing is a process when a merchant charges a customer’s account at regular time intervals for purchases of goods and services. Uncommitted recurring billing does not involve any minimum number of required payments, while under committed billing a customer is required to do a specific number of payments. Under committed billing, if a payment is missed, and account becomes delinquent, the creditor (a subscription-based business using recurring billing system) generally attempts to collect any past dues.

What payment schedule types are available for subscription-based businesses?

The three recurring billing schedule (or payment plan) types are:
• fixed plan (when a limited number of payments are charged at regular time intervals),
• unlimited plan (when the number of payments is unlimited, and they recur until being cancelled by the customer),
• hybrid plan (when after a certain period of time a fixed plan becomes an unlimited one). More information on the subject can be found here.

What is the difference between repeat billing and recurring billing?

Under repeat billing no outstanding balances and past dues are accumulated, while under recurring billing the amounts owed by the customer are accumulated and stored in order to facilitate further collections attempts. An online dating web-site subscription is a typical example of repeat billing, while a typical example of recurring billing is a two-year-commitment on a cell phone plan. Consequently, the second approach is more complex in terms of recurring payment processing. More information on the subject can be found here.

How is credit card data handled during recurring payment processing?

If a business, using some recurring billing solutions, stores the actual credit card data, it falls within PCI scope and has to undergo the costly PCI audit procedure. The two techniques, allowing merchants to reduce their PCI scope or even get out of it, are credit card tokenization and profiling. More information on the subject can be found here.

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