How Does PayPal Recurring Payments Work?

PayPal Recurring Payments

Using subscriptions or recurring payments through PayPal

PayPal payments exist in different formats. You have a regular payment style in which the payment is sent whenever the customer is on your site to purchase something. This involves a onetime fee. Subscriptions or PayPal recurring payments allow you to charge a customer for the same service on a monthly, biweekly or yearly basis. This is often used for services instead of products.  People typically don’t want recurring payments on products.  Recurring payments work best for online magazines, clubs, newsletters, donations or other service that you offer. Software as a digital good is also often paid with recurring payments. You would typically renew subscriptions by making a payment annually to use the license.

What are the Benefits of PayPal Recurring Payments?

PayPal Payments is one method to set up recurring payments. It offers features you might not get with other methods. PayPal is one of the largest online companies for electronic funds transfers. Most people trust PayPal in a way they wouldn’t if payment required giving bank account information to a business website. Additionally, PayPal recurring payments are easy to implement. You have flexible billing, which is also automatic, so you don’t need to worry about sending invoices. PayPal Payments don’t require upfront costs. You’ll always have the same fee schedule PayPal offers. Because your transactions are monitored online, you have detailed transaction records to access via the Internet whenever you need them. Another benefit regarding recurring payments is the improvements you make to your buyer’s experience. You can customize the payment system for repeat customers.

Setting up PayPal Recurring Payments

When you log into your PayPal merchant account, go to the recurring payments area. You’ll be asked to input the information regarding the type of payment you will receive. A3 is the billed amount at each recurrence. This value is the amount you charge for the service. P3 is the number of times between each recurrence. For a yearly service, you put in 1. T3 is the time period. This would be days, weeks, months or years. If P3 is 1 and T3 is Y, the recurring payment would be once a year. If you put P3 as 1 and T3 as months, you charge the same amount monthly. Besides setting up PayPal recurring payments, you can also set up the system to provide information about your PayPal account customer you have collected. If a customer decides to sign up for recurring payments later, the information is already there for you to use. This makes the process quicker. Your setup can also include notifications and invoices. You can use this service with an option like PayLoadz that hosts your digital files.

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