What options exist
When you see a need for recurring payments, you face a tough choice of different solutions. Looking beyond the hundreds of vendors, there are only a few types of methods. Those methods have some major technical differences.
Autogiro, Avtalegiro and similar
For a long time (60 years in Sweden) bank services like Autogiro and Avtalegiro have been the common and preferred recurring payment method. Still today it’s used by businesses and governments across the Nordics. But, even if the tunes of Elvis’ classics are eternal, 60-year-old tech is not and in Sweden, autogiro is officially coming to an end, as it’s being superseded by P27.
And honestly, any payment method that requires you to print a piece of paper and sign it by hand, or manually inputting account and KID-numbers, are outdated and bound to lose traction.
Let’s just briefly touch on this solution, as we still know very little about its application. It will supersede companies like Bankgirot, but how it will work for businesses and consumers is uncertain. There’s a great risk that it’s going to be a hassle, as consent for autogiro can’t automatically transfer to another payment provider. (Updated September 7, 2022)
Card payments were never intended for recurring payments, and for businesses this is important to keep in mind. Each card transaction is pricey, and you run a risk on churn (losing customers) due to expiring, lost or stolen cards.
For global businesses cards can offer a great coverage. The hassle of manually entering card credentials is at least only done once or twice. If you’re a SaaS business, for instance, you can keep your users within your platform. That’s better than using external bank services in order to set up the payment.
There are two meals on the menu. One we recognize with a new seasoning, and one exciting chef composed super dish.
Apple, Google, Samsung and others are doing a great job modernizing the payments within their own platforms. Apple for one lets your customers setup a recurring payment with the push of a thumb.
It looks, and feels new, but it’s all based on card payments and inherit their flaws.
Recurring payments with open banking
Open banking is simple, yet highly effective. As the banks open up their data with APIs, funds are moved from one bank to another without middlemen. As simple as that!
It becomes even more effective when we combine payments with dates or periods. Thus reinventing recurring payments! The setup for your clients is easy, integrated on your platform or in a standalone interface. No entering of manual numbers, no plastic card to break or lose. All safely encrypted and protected with Strong Customer Authentication (SCA).
As of this date there’s only one major downside with recurring payment using open banking technology. It is the lack of support for variable recurring payment. The fintech industry is eagerly awaiting these possibilities from the major Nordic banks.