Bahaa Abdul Hussein is a Fintech expert and shares his experiences with his audience through his blogs.
It’s no secret that the way we pay for things is changing. More and more people are opting for variable recurring payments over traditional methods like direct debits. But could this new payment method spell doom for direct debits? Let’s take a closer look at both payment options and find out.
What are variable recurring payments?
Different businesses have different payment schedules. While some only require payments once a month, others might request payments every week or even every day. For businesses that deal with variable recurring payments, this means that their payment schedule can change from month to month. This can be a challenge for both businesses and their customers. For businesses, it can be difficult to keep track of when payments are due and how much is owed.
For customers, it can be hard to budget for expenses when the amount owed can fluctuate from month to month. However, there are some advantages to variable recurring payments as well. They can give businesses more flexibility in terms of payment collection, and they can help customers avoid incurring late fees or being cut off for non-payment. Ultimately, whether or not variable recurring payments are right for a business depends on the needs of both the business and its customers.
What are the benefits of variable recurring payments?
Variable recurring payments offer a number of advantages for both businesses and consumers. For businesses, they provide a way to receive predictable income while still allowing customers the flexibility to change their payment amount based on their usage. This can help to smooth out fluctuations in customer demand and reduce bad debt.
For consumers, variable recurring payments offer the ability to budget more effectively by aligning their payments with their actual usage. This can help to avoid overspending and late fees. In addition, variable recurring payments can provide a sense of control and empowerment by giving consumers the ability to choose how much they spend each month. As a result, variable recurring payments offer a number of benefits for both businesses and consumers.
What are the risks of variable recurring payments?
Recurring payments can be a convenient way to pay for regular expenses, but they can also pose some risks. If you have a variable recurring payment, you may find yourself unexpectedly unable to afford your payments if the price goes up. This can lead to late fees or even cancellation of your service.
Additionally, if you miss a payment, you may be charged a late fee or interest. To avoid these risks, it’s important to carefully consider whether you can afford a variable recurring payment before signing up for one.
You should also make sure to keep track of changes in the price of the service and adjust your budget accordingly. By taking these precautions, you can minimize the risks associated with variable recurring payments.
What are direct debits?
A direct debit is a payment method that allows you to authorise a company to take money from your bank account on a regular basis. This could be for things like utility bills or gym memberships. Direct debits are usually set up so that the company can take the money on a specific date each month.
The amount of money that is taken can also be fixed, or it could vary depending on how much you owe. To set up a direct debit, you will need to provide your bank account details to the company. You will also need to give them permission to take the money from your account.
Thank you for your interest in Bahaa Abdul Hussein blogs. For more stories, please stay tuned to www.bahaaabdulhussein.com
