Recurring payments are automatic payments that a user authorizes to be made from a bank account or credit card on a regular billing cycle. Generally, the billing cycle is on a set day of every month. Recurring payments can be beneficial for both the party being billed and the party receiving the funds.

Users benefit from setting up recurring payments because they’re less likely to miss future payments. Additionally, the potential for human error in authorizing payments is reduced when you automate the process with your online payment solution. This also means that for the receiver of the funds, recurring payments offers a more reliable source of payment.

Situations where you could use recurring payments:

  • Bills
  • Memberships
  • Subscriptions
  • SaaS products

Recurring Payments and Payment Churn

Churn is one of the main considerations for businesses that have implemented recurring payments. Customer churn is a measurement of the number of customers that discontinue their use of your service.

This discontinuation can be due to the customer actually canceling the service, or it can be due to the customer failing to consistently continue payment. The latter, in which the customer fails to have consistent payment, can often be referred to more specifically as payment churn.

A portion of payment churn can be involuntary due to an expired or canceled credit card.

For example, last month the payment for my monthly parking bill didn’t go through. This happened because my bank sent me a replacement debit card and I forgot to update my payment information. And this month, a credit card of mine also changed. I will likely find out next month that a recurring payment I forgot about was declined due to old credit card information.

In order for your company to grow, you need to ensure that your acquisition exceeds your churn.

Often companies focus their energy solely on acquisitions, giving little time or attention to the value of reducing payment churn even though growth can also be achieved with less exhaustion by reducing payment churn.

How Involuntary Payment Churn Affects Your Customers

Beyond impacting your company’s success, involuntary payment churn also affects your customers. You should strive to make the customer experience simple, from onboarding your customer to setting up recurring payments. Involuntary payment churn is one way to ruin your customer’s experience.

When involuntary payment churn occurs, the customer may not realize it and may forget to input their new payment information. Ideally, they’ll realize that their payment method has expired and re-enter it, but why leave it up to chance?

The Benefit of ACH When Using Recurring Payments

ACH has much lower payment churn because it’s linked to a bank account. You might go through four or five credit and debit cards before you change banks. Further, some people never change their bank, so why haven’t you considered ACH for those recurring payments?

Read our guide: “8 Considerations when Searching for a Payment Integration”

Another potential benefit is an improved user experience with an ACH integration. For example, Dwolla’s white-labeled solution allows you to customize the payment experience. In some cases, users don’t feel safe entering their credit card information to make payments on a merchant’s website.

Now they can log into to their bank account to authorize payments.

As you can see below, Dwolla supports instant bank verification. It’s simple by design, and you can embed it right into your website for an intuitive and clean experience.

Setting up Recurring Payments with Dwolla

With our bank transfer API, Dwolla can empower you to set up and improve recurring payments. Using Dwolla, you can put a powerful payments integration behind your user experience design.

In some instances, a business might need to have recurring payments that are not the same amount each time, but varying amounts from week-to-week or month-to-month. This is where on-demand bank transfers come into play.

On-demand bank transfers allow your users to authorize recurring payments for variable amounts. This is especially useful for services that charge based on usage or other factors.


While recurring payments have not been perfected, there are some pretty straightforward ways to consider improving the experience.

Since ACH is linked to bank accounts, which are not changed as frequently as credit card account numbers, a good way to jumpstart your company’s growth is to reduce involuntary payment churn by utilizing ACH payments. You can leverage the ACH network with Dwolla.

Your users will be able to log into their bank accounts on your application to authorize the payments with instant bank verification. They can also authorize variable payments for each payment cycle with our on-demand bank transfer product.

If ACH can improve your recurring payments for your application or website, please reach out to us.

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