A recurring payment is a payment model where funds are automatically deducted from a customers account at scheduled intervals to cover the customers subscription fees for products or services. The payments are pre-scheduled, and the customers are always aware of when they are being taken out. Recurring payments are also known as subscription payments and are most common in subscription businesses such as SaaS companies, DTC ecommerce brands, online learning providers, health and fitness clubs, and streaming services.

Recurring payments are beneficial since the model enables businesses to reduce the time and effort involved in collecting payments from customers for products or services consumed. The recurring payment model also provides businesses with a predictable revenue stream and offers convenience for customers. Customers only need to enter their payment details once, and the payments are automated, saving them time and effort.

Examples of recurring payments include Netflix subscriptions, cell phone bills, gym memberships, and magazine subscriptions. Recurring payments can be charged to a customers credit card or bank account at periodic intervals. The frequency of recurring payments can vary depending on the seller and product or service chosen.

Recurring payments are advantageous for business providers because they reduce account receivable risks and ensure a prompt and reliable inflow of capital, helping to produce a healthier cash flow and lowering collection costs. Recurring payments also strengthen the relationship between businesses and customers by making it much easier for them to do business with the company.