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Wednesday March 31, 06:41
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Recurring Payments Market Seen As New Niche
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Card issuers and payment processors alike are targeting the recurring payments market, with MasterCard being the latest to promote the benefits of recurring payments to its merchants. US payment processor, National Cash Flow Systems (NCFS), is also specializing in automated recurring payments to meet growing demand from health clubs, gyms, utilities, telcos, ISPs, stored-value and debit consolidation firms. From MasterCard’s perspective, merchants using recurring payments can cut bill-processing costs from more than a dollar per transaction for paper-based payments, to about 40 cents for an electronic payment.
Eliminating paper checks from the billing cycle also helps merchants minimizes payment fraud, while improving their cashflow in that payments are received more quickly. Consumers benefit from not having to write checks every month, and the ability to gain air miles or loyalty points when using their MasterCard to pay recurring bills. If a consumer’s MasterCard is lost or stolen, or their personal information changes, MasterCard will automatically notify merchants of any new card numbers or address changes to ensure the seamless processing of recurring payments.
Automated recurring payments have helped payment processor, NCFS, to achieve a 40 per cent annual growth rate in each of the past five years, according to industry newsletter, the Green Sheet. NCFS acts as a payments broker for companies wanting to electronically collect their receivables, and will seek out the best processing deal for its clients, based on the degree of risk affecting the business. For instance, health clubs are typically classified as low-risk merchants, whereas NCFS will negotiate a sympathetic processing deal for prepaid phone card merchants, which, as high-risk clients, tend to incur higher rates.
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