Understanding UPI Payment Gateway for Recurring Payments
10 min read
Recurring revenue models have become a popular choice for many businesses because they provide a steady, predictable income stream. But there’s more to managing these payments than just collecting money every month or quarter. Ensuring smooth, secure transactions and a great user experience is key to keeping things running seamlessly.
For businesses, handling recurring payments effectively – especially with solutions like UPI Autopay can make a huge difference in their overall performance. It allows for better cash flow forecasting, helps build long-term customer relationships, and reduces the time and effort spent on administrative tasks like billing and collections. For customers, having a simple, reliable system means they can enjoy services without interruptions, which leads to greater satisfaction and loyalty.
Setting up a reliable recurring payment system is definitely not a one-size-fits-all solution. Businesses need to leverage UPI Autopay to securely manage recurring transactions while ensuring compliance with financial and data protection regulations. And of course, the chosen system needs to match the company’s unique business model while meeting customer expectations. But first, let’s understand…
What are Recurring Payments?
Simply put, recurring payments allow businesses to automatically collect payments from customers at fixed intervals, like monthly, quarterly, or annually, after receiving their consent. UPI Autopay enables seamless automation of these payments, ensuring hassle-free transactions for both businesses and customers. This eliminates the need for businesses to chase customers and remind them of due payments. Recurring payments also help improve cash flow for businesses.
Common examples of businesses using recurring payments are:
Utility and Mobile Bills – Electricity, water, internet, and mobile service providers use auto-payments to ensure bills are paid on time.
Gym Memberships – Fitness centers and yoga studios use automatic renewals to keep memberships active without interruptions.
TV Streaming Services – Several OTT platforms like Disney+ Hotstar and Netflix charge users regularly so they don’t lose access to content.
How is UPI Payment Gateway a part of Recurring Payments?
A UPI payment gateway lets businesses accept payments from a customer’s bank account via UPI. What makes it stand out is that it removes the need for customers to manually enter their card details when checking out. Instead, they’re redirected to their preferred UPI app, where they can quickly approve the payment by entering their MPIN. The payment is processed almost instantly.
Take, for example, an online store. If a customer chooses UPI as a payment method, the gateway connects directly to the customer’s UPI app, and within moments, the transaction is completed. This system works smoothly because a UPI payment gateway acts as a middleman between the business and the banking network. It encrypts customer data, verifies the transaction, and ensures that the funds are securely transferred.
With features like UPI Autopay, businesses can also enable automated payments for subscriptions and recurring expenses, ensuring a seamless payment experience for customers.
Unlike older payment methods that need card details or net banking logins, UPI payments are faster and simpler. The customer can use apps like PhonePe to make payments without the hassle of filling out long forms. By integrating a UPI payment gateway, businesses can streamline the entire process, reduce payment failures, and offer a quicker, smoother checkout experience.
Now that we understand what recurring payments are and how they are a part of UPI payment gateways, let’s discuss the different types of recurring payments.
Types of Recurring Payments
There are primarily three types of recurring payments.
1. Fixed Recurring Payments
These payments stay the same every billing cycle, monthly, quarterly, or annually. Businesses use this model for subscriptions, memberships, and software services. For example, an e-learning platform charges students a fixed monthly fee for unlimited access to courses, study materials, and certification programs. Whether a user enrolls in one course or multiple courses, the charge remains the same every month. This predictable pricing helps businesses maintain a steady revenue stream and simplifies financial planning.
2. Variable Recurring Payments
These payments happen at regular intervals, but the amount changes each time. Unlike fixed recurring payments, these depend on usage or consumption. Take a cloud hosting provider, for instance. It bills businesses based on server usage, bandwidth consumption, or storage requirements. If a company’s website experiences high traffic in a given month, hosting costs increase accordingly and vice versa. This makes this model scalable and cost-effective for businesses managing fluctuating demands.
3. Recurring Payments Based on Payment Modes
This refers to how businesses collect payments – through credit/debit cards, bank transfers, or digital wallets. The choice depends on what works best for customers and businesses. A streaming platform, for example, may allow users to set up automatic payments through credit cards, UPI, or digital wallets. Once a customer selects a preferred method, the system deducts payments automatically on the due date, ensuring uninterrupted service without manual intervention. This convenience improves customer retention while reducing missed payments.
How Can Recurring Payments Benefit Businesses?
Here’s how your business can benefit from recurring payments-
1. Higher Customer Retention
When payments aren’t automatic, missed payments can cause service interruptions or cancellations. With UPI AutoPay, customers don’t have to worry about manually renewing or forgetting to pay. It keeps their subscription going without any hassle, which means they stay engaged for longer. This helps you reduce churn and maintain a steady customer base.
By making things easy for customers to stay subscribed, you’re not just saving them time you’re also locking in more consistent, long-term revenue.
2. Predictable Revenue
Relying on one-time purchases makes it hard to predict revenue, which can create uncertainty in budgeting and planning. With recurring payments, businesses get a steady income stream, making it easier to manage cash flow and allocate resources efficiently. A predictable revenue model allows you to invest in growth opportunities without worrying about inconsistent earnings.
It also helps in forecasting trends and making data-driven decisions. Knowing exactly how much revenue to expect each month brings financial stability and reduces risks.
3. Easily Scalable
Manually handling payments may seem manageable in the early stages, but as your customer base grows, it quickly becomes overwhelming. Processing invoices, tracking due dates, and chasing overdue payments can take up valuable time and effort. With recurring payments, transactions happen automatically, no matter how many customers you have.
Whether you’re handling hundreds or thousands of subscriptions, the system scales with your business without increasing administrative workload. This efficiency allows you to focus on growth instead of getting stuck in payment management.
4. Actionable Business Insights
Recurring payments don’t just bring in revenue. They also provide valuable data on customer behavior and payment trends. For example, by analysing payment data, you can easily pinpoint which customer segments are more likely to continue their subscriptions and which ones tend to cancel early. You can also track how many customers upgrade to higher plans or downgrade to lower ones.
These insights help you refine pricing strategies, improve retention efforts, and target the right audience more effectively. With data-driven decisions, you can optimise long-term growth and stay ahead of market trends.
5. Easier Upselling and Cross-Selling
When customers are already subscribed to a service, introducing premium features or additional products becomes much easier. Instead of relying on aggressive sales tactics, you can naturally offer upgrades or complementary services at the right time.
Customers who already trust your service are more likely to opt for higher-tier plans or add-ons, increasing their lifetime value. This way, you not only boost revenue but also improve the customer experience by providing more value.
How Does UPI Payment Gateway Work in Recurring Payments?
Up until now, you have a clear understanding of what a payment gateway is, what recurring payments are, and how they can benefit your business. But you might be wondering what role does a UPI Payment Gateway play in recurring payments? Well, it typically works in the following way:
1. Customer Opt-in & Mandate Creation
The merchant integrates UPI Autopay through their payment gateway.
When a customer chooses a recurring payment option, they select UPI as the payment method.
The customer sets the payment frequency (e.g., monthly, quarterly, half-yearly, or annually) based on their subscription or billing cycle.
The mandate is authenticated using their UPI PIN via a UPI-enabled app like PhonePe.
Once approved, the mandate is successfully registered, and the merchant gets notified in real time.
2. Automated Payment Collection
On the scheduled due date, the UPI Payment Gateway automatically deducts the agreed amount from the customer’s bank account.
The payment is settled instantly, eliminating the need for manual follow-ups or reminders.
The merchant receives a confirmation, ensuring transparency in transactions.
3. Flexibility & Customer Control
Customers can modify, pause, or cancel their mandate at any time through their UPI app.
Merchants get real-time updates on mandate changes, helping them manage billing cycles efficiently.
4. Settlement & Reconciliation
Payments are settled quickly, reducing cash flow disruptions.
The merchant’s dashboard provides detailed reports for tracking payments, refunds, and failed transactions, helping with reconciliation.
What to Consider When Choosing a UPI Payment Gateway?
A UPI Payment Gateway is your key to offering customers different payment options, like UPI AutoPay. If they choose this, you save a lot of time and effort that would normally go into sending payment reminders or chasing down missed payments. But, not all payment gateways are created equal. Some come with extra features that can make the whole process a lot smoother and more reliable for your business. Here’s what you should look for when choosing a UPI Payment Gateway for recurring payments:
1. Easy Integration with your platform
The payment gateway you choose should be compatible with your existing setup. It should easily integrate with your website (such as Shopify or WooCommerce) or app and be able to process payments from the most common UPI apps your customers use. This way, payments will go through without any hitches.
2. Customisable Subscription Plans
A good payment gateway should support flexible billing cycles – monthly, quarterly, or annually – so you can offer tailored plans to your customers. It should also allow easy plan modifications, upgrades, or downgrades based on customer preferences.
3. Automated Customer Management
Managing recurring payments manually is inefficient. The gateway should provide tools to track subscriptions, handle renewals, and process cancellations efficiently. This helps reduce churn and improve customer satisfaction.
4. Automated Dunning Management
Sometimes, payments don’t go through on the first try, whether due to expired cards or insufficient funds. Look for an automated dunning system that can retry the payment at intervals. This reduces the chance of losing a customer due to payment issues.
5. Pre-Debit Notifications
Trust is everything in business. You want your customers to know exactly when to expect their payments to go through. Choose a payment gateway that lets you send reminders before each debit. This keeps things transparent and makes customers feel in control of their subscriptions.
6. Easy Mandate Setup
Setting up payment mandates should be quick and easy. Your payment gateway should allow this with minimal effort while giving customers the flexibility to manage their subscriptions. Whether they want to pause or cancel, they should be able to do so without any hassle.
A payment gateway like PhonePe Payment Gateway takes care of all these aspects, making recurring payments effortless. It integrates smoothly with Shopify and WooCommerce, supports all UPI apps, and allows you to automate retries and pre-debit notifications. Plus, with PhonePe Payment Gateway, you can set up mandates in under 20 seconds, making subscription management simple and efficient.
As digital payments grow, recurring transactions have become a key part of everyday life. From news subscriptions to utility bills, automating payments saves time, reduces errors, and improves customer experience. For businesses, this model ensures a steady cash flow and builds long-term customer relationships.
To make recurring payments even simpler, you can rely on the PhonePe Payment Gateway, which ensures smooth, secure, and automated transactions with no manual involvement. With high success rates and the ability to handle large volumes of transactions, PhonePe PG provides businesses with a secure and hassle-free way to process online payments. So what are you waiting for? Register your business with PhonePe Payment Gateway now!
