Recurring card payments or Direct Debit? Methods to suit all operators

Jemima Walker
26-Oct-2020 09:26:14

It’s no secret that automatic payments are fundamental to the leisure industry – with monthly membership fees being the norm. But with the steady rise in popularity of the trusty Direct Debit (DD), are we ignoring another very credible payment method: recurring card payments (RCP)?

Subscriptions are all the rage at the moment. Think of sites like Netflix and Amazon Prime - simply sign up to a monthly subscription, input your card details, agree to a fixed amount to be taken from your card every month and you’re good to go. This is a classic example of an RCP. In this new age of customer convenience, consumers want things to happen at the click of a button and offering RCP as a payment option could help leisure operators align themselves to their customers’ spending habits.

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The difference between recurring card payments and Direct Debit

RCP: Also known as continuous payment authority (CPA), a recurring card payment gives an organisation the authority to take money directly from a debit or credit card. Put simply, when a customer signs up to an RCP, they provide you with their long card number.

Direct Debit: On the other hand, Direct Debit is an agreement which lets an organisation take money directly from a bank account. eg. a customer hands over their sort code and account number to set this one up.

Both give customers the right to cancel at any time. And the good news? Gladstone offers both payment options – we want to give you the choice and flexibility to align your payment methods with what works best for your business and your customers.

RCP seems to be the lesser-known payment method, so let’s start there.

How does RCP benefit you as an operator?

You’re in control: RCP puts the operator in control - customers must contact you directly to cancel, which gives you the opportunity to connect with them before they walk away. You can find out their reasons for wanting to cancel and possibly offer them discounts/add-ons to their current membership package, depending on their reasons for leaving. This leads to a higher customer retention than other payment methods. And even if they can’t be persuaded to stay (eg. If they’re moving away from the area), you’ll have captured this information and can build a comprehensive picture of membership attrition.

On the flip side - how will RCP benefit your customers?

Earn rewards: RCP can be set up with either a debit or a credit card. This means that customers wishing to use a credit card will still be able to collect reward points on their membership payments.

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Reach a wider audience: And let’s not forget that not everyone has a UK bank account! Take international students for example. How are they going to pay for a monthly gym membership when setting up a Direct Debit isn’t an option? Making a manual payment each month would be a hassle for both parties. Recurring card payments are an option for anyone with a debit or credit card – all you need is their card details (and obviously agreement for the payment amount and frequency). And voila!

Cancel at anytime Pre-2009, cancelling an RCP wasn’t so straightforward for the customer. But things are very different now and customers can cancel with the company at any time. Naturally, as a reputable company, you will honour this cancellation, but customers have the peace of mind and additional safety net of knowing they can cancel through their bank should they need to.

Find out more about our recurring card payment service. 

Benefits of Direct Debit

It’s no secret that the UK loves Direct Debit. As the most trusted payment method, it continues to rise in popularity. Like RCP, customers can cancel their Direct Debit at any time. And because Direct Debit is taking money from a bank rather than a card which typically must be renewed every 3-4 years, there is reduced payment churn (failed payments). And not to mention the Direct Debit Guarantee which protects customers from fraudulent payments or payments taken in error – it’s not surprising that this payment method is so popular.

In a nutshell, both Direct Debit and recurring card payments have their advantages – it’s not a ‘one size fits all’ situation. Instead, we suggest operators offer both RCP and DD in order give your customers the flexibility they need. Here at Gladstone we offer both Recurring Card Payments and Direct Debit options to operators, so that you can offer both payment types to your members. Simple.

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Time for Transformation

Digital transformation has begun.  Gladstone customers are already using the tools and products available now to help them streamline their digital customer engagement strategy.

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