Disadvantages of recurring payment
Like all other payment models, this model is not without its disadvantages. Here are the most prominent cons of recurring payment models you need to know about:
1. Loss of profits due to churn
One of the top issues you have to deal with when using the recurring payment model is a high churn rate. With this payment model, customers can simply cancel their subscription anytime they wish. When customers make that decision, it's a loss for your business and a dent in your revenue.
That said, you can solve this problem through personalization, constant communication with customers, and continuous dedication to product or service improvement.
2. Issues with billing processing
For the most part, recurring payments work without a hitch. But every once in a while, there will be a wayward process that doesn't work as expected. For instance, recurring payments will often be exposed to issues such as failed credit cards. Luckily, you can resolve this issue by communicating with the customer, offering multiple and flexible payment options, and choosing a suitable payment processor.
3. Security loopholes
A recurring payment model is great, but, like any digital solution, it's also susceptible to security loopholes. There's always the threat of cyberattacks, fraud, and identity theft crimes. However, if you choose a payment processor that takes security seriously, these risks will reduce significantly.