The digital payment landscape in Malaysia is evolving rapidly, but many businesses, such as insurance companies, property management firms, and micro-lending companies, still grapple with recurring billing and subscription collection challenges.

These issues often stem from customer behaviours and lead to disruptions in cash flow, increased administrative burdens, and hindered business growth.

This article explores the advanced payment methods used for recurring billing, the challenges in each, and how businesses can overcome them to optimize cash flow.

Providing a Customer-facing App for Bill Payments

One of the most common solutions that enterprises implement to improve their bill collection efficiency and customer experience is to provide a mobile app or a web app through which customers can receive invoices and make payments.

While this is an effective solution for most enterprises as they can use push messages to remind users to make payments on pending invoices, the primary challenge lies in convincing customers to download and regularly use the app.

Even if customers download the app, keeping them engaged over time can be difficult, especially if the app doesn’t offer unique value or is not user-friendly.

Building and maintaining such an app, and creating customer awareness to download and use it, comes at a significant cost, making this solution unaffordable for most small and medium-sized businesses.

While payment initiation apps offer convenience, their limitations and affordability call for a more effective alternative.

Auto Debit From Cards

Another common option is to obtain card information using POS terminals or sign-up pages to auto-debit subscription payments, instalment payments, or monthly bill payments from the card.

It is also an effective approach that works for a specific category of merchants, especially when the recurring debit amount is fixed.

The primary challenge in this approach is handling debit failures. In many situations, customers replace their existing cards, or the cards expire, leading to the hassle of getting the customer to register the new card.

Recently, due to the rise in fraudulent transactions, especially in card-not-present cases, banks and payment service providers have implemented additional fraud control measures, often leading to the failure of genuine debit requests.

The root cause of this problem is that the issuing/payer bank is not informed of the customer’s consent provided to the merchant to debit from their cards. In cases where the debits are failing, customers may have to contact their bank and inform them to allow debits from the respective merchant.

Apart from all these, the cost of auto-debit from cards starts at 2% and can go up to 5%, which is not feasible for many service businesses, and transferring the merchant discount rate (MDR) to customers might also become challenging.

Direct Debit from Bank Accounts

The most efficient approach is to obtain consent from customers to debit their bank accounts with defined terms like maximum allowed debit limit and debit frequency.

Conventionally this was done using Signed Paper-based Standing Instructions, but it can now be done online using e-Mandate or e-consent.

Merchants can request consent from their customers through an online form, and if the customers agree to the mentioned terms, they can authorise the auto-debit by making a payment of RM1.00 using their online banking.

The primary advantage of this approach is that payment decline is exceptionally low, as both the merchant bank and the payer bank are aware of the electronic consent provided to the merchant by the customer.

Secondly, the coverage is extremely high, as all categories of customers have a bank account and no sensitive information like card details is collected from the customer. The cost of direct debit is also considerably low, ranging from 0.5% to 1%.

Even though this approach is better, merchants still need to handle debit failures due to low balances. Merchants can reattempt failed debits, but this should be done in a controlled manner, as there is a minimum charge of RM1.00 even for failed debit attempts.

How Can Merchants Overcome These Challenges? Where to Get Started?

To curtail the unique payment problems that comes with recurring billing, such as loan repyament, insurance payment, maintenance fee, utility bills etc., businesses should sign up with a payment platform that can help handle all the payment challenges at once.

RinggitPay – A merchant-friendly payment platform in Malaysia comes with many features that are meant to dissolve the payment burdens not just in recurring billing but also in other billing.

As far as recurring billing is concerned, e-consent/e-mandate is the smart option to collect payments. The challenges with regards to it as mentioned above can be easily overcome using RinggitPay. With RinggitPay, merchants can send e-consent to customers via E-mail and other messaging channels.

Once the e-consent is successful, merchants can automate debit, initiate ad-hoc debits, and configure debit retires. RinggitPay notifies customers before and after debiting. Businesses have complete visibility of the notifications sent to their customers along with debit attempts and status.

When the debit retry is exhausted due to insufficient balance or other reasons, RinggitPay sends a secure payment link to customers through which they can make the payment using any payment method of their choice.

The below image represents how far RinggitPay has improved the success rate of Direct Debit/Auto Debit.

Conclusion

For Malaysian businesses seeking optimized, industry-specific payment collection solution, RinggitPay is the go-to option. The platform has trusted users from across industries such as Education, PropTech, lending, Travel & Tours etc., and has recorded transaction volume over 100M as of 2023. This stands as evidence to the fact that RinggitPay is a diversified payment platform that provides a customized, problem-specific payment solution for all businesses across multiple industries in Malaysia.

Payment operations can be made seamless by just integrating RinggitPay’s API and the portal can be used without any external IT resources.

Enterprises can make their business operations seamless by integrating our API, and SMEs can use RinggitPay portal without any need for extensive IT resources.

To streamline recurring billing and collection, explore RinggitPay’s e-mandate solution here and to explore other products of RinggitPay, visit here.