Auto Collect is a payment feature that allows merchants and businesses to automatically collect payments from their customers regularly. Subscription-based businesses such as online streaming services (OTT), software-as-a-service (SaaS), and e-commerce platforms widely use this feature. It helps businesses in streamlining the payment process and reduces the need for manual intervention. Also, it improves the overall efficiency of the payment flow.
By automating the payment process, merchants can focus on providing high-quality products and services to their customers, rather than worrying about the collection of payments. This leads to improved customer satisfaction and loyalty.
Let’s understand some key terms and concepts related to Auto Collect:
Recurring Payments: A payment that occurs regularly, usually monthly or annually, for a fixed amount. Auto Collect enables merchants to set up recurring payments automatically, reducing the need for manual intervention.
Payment Gateway: A service that facilitates the transfer of funds between a customer’s bank account and a merchant’s bank account. Payment Gateways/PGs enable that offer Auto Collect feature to merchants enable it.
Merchant Account: It is a bank account that allows merchants to accept online payments. To enable auto collect this is a mandatory requirement.
Payment Schedule: For auto-collect, customers have to share a plan for when and how the merchants can collect payments from them. Through the payment gateway service provider, merchants can customise the payment schedule for each customer based on their subscription plan.
Payment Method: The mode of payment that a customer uses to make payment for goods or services is called a payment method. For example, credit cards, debit cards, or bank transfers. Auto Collect supports multiple modes, giving customers more flexibility and convenience to make payments.
Payment Authorization: The process of obtaining permission from a customer to collect payments from their account. Merchants must obtain payment authorization from customers before enabling Auto Collect.
Chargeback: A chargeback occurs when a customer disputes a charge and asks their bank to reverse the transaction. Merchants have a system in place to handle chargebacks and resolve them quickly and efficiently.
API (Application Programming Interface): A set of protocols and tools used to build software applications. Payment gateways provide APIs that allow merchants to integrate Auto Collect into their software applications.
In the payments ecosystem, payment gateways (PGs) enable the Auto Collect feature. PGs provide merchants with the tools they need to set up and manage recurring payments. Payment gateways offer APIs that allow merchants to integrate this feature into their software applications. This gives them greater control over the payment process. Merchants must set up a merchant account with a payment gateway to enable Auto Collect. Then, they must obtain payment authorization from their customers before collecting payments.
One of the benefits of Auto Collect is that it reduces the risk of payment errors and fraud. With manual payment collection, there is always the risk of human error, such as mistyping a payment amount or missing a payment deadline. Auto Collect eliminates these errors by automating the payment process. It ensures that the payments are collected on time and for the correct amount. Auto Collect also reduces the risk of fraud by providing merchants with the tools they need to authenticate customers and prevent chargebacks.
Another benefit is that it improves the overall efficiency of the payments ecosystem. By automating the payment process, merchants can reduce the amount of time and resources they need to devote to payment collection. This leads to greater productivity, as merchants can focus on other aspects of their business, such as product development and marketing.
