• Recurring charges resulting from discounts
• Recurring charges resulting from coupons
• Recurring add-ons

However, it does not include one-time fees.

With MRR, the current financial health of a business can be assessed appropriately. Moreover, projections of future earnings can be created based on active subscriptions.

MRR Calculation

Calculating MRR is a straightforward process that you will not find complex. All you have to do is to multiply the following:

MRR = Number of subscribers under a monthly plan * ARPU                 

(ARPU stands for average revenue per user.)

For example, let’s assume you have 5 subscribers on a monthly INR 300 plan. The calculation of MRR will be as:

(5* INR 300) = INR 1500

For annual plan subscriptions, the calculation will take place by dividing the annual plan price by 12. Afterwards, you will have to multiply the result by the number of annual plan customers.

For example, let’s assume that a customer subscribes to your product. The annual renewal agreement stands at INR 1200. Now, the calculation of MRR will be as follows:

INR 1200 / 12 = INR 100

Types of Monthly Recurring Revenue

New MRR: 

This is the additional revenue whose generation takes place from the new customers. These new customers are secured during a specific month.

For example, the new MRR for 5 new subscriptions under the INR 500/month plan is as follows:

5 * INR 500 = INR 2500

Upgrade MRR:

This is the additional revenue generated from subscriptions that go from current to higher pricing plans over a particular month. Here, the add-ons are taken into consideration. 

For example, suppose an existing customer has a subscription to a basic plan of INR 50/month. This customer is now upgraded to a standard INR 200/month plan and buys an INR 25/month add-on. In such a case, the upgrade MRR is as follows:

INR 200 – INR 50 + INR 25= INR 175

Downgrade MRR:

This refers to the reduced revenue from subscriptions whose movement has taken place to a lower plan from their existing plan over a particular month.

For example, if a higher subscription plan for INR 500 is downgraded by an individual to a basic subscription plan for INR 100, the Downgrade MRR shall be as follows:

INR 500 – INR 100 = INR 400

Expansion MRR

This refers to the additional revenue that is obtained from current existing customers. This is for a particular month in comparison to the previous month. The additional revenue generation takes place via cross-selling, upselling, and add-ons.

The calculation of the rate of growth in expansion MRR for a particular month is as follows:

(Expansion MRR in a particular month / Total MRR at the particular month’s beginning) * 100

For example, suppose that a business has MRR of INR 800K when the month begins. The business gains additional revenue of INR 17k of Expansion MRR during the month. This expansion MRR comes from current customers through cross-selling, upselling, and add-ons.

Churn MRR

This is the total amount lost by a business because of monthly subscription cancellations.

For example, suppose 3 of your customers are paying INR 1000/month. All 3 of them cancel in the same month. Here, the churn MRR is INR 3000.

Net New MRR

This type shows the amount of growth or shrunk of revenue in a particular month in contrast to the previous month. The Net New MRR is calculated as follows:

MRR(New) + Expansion MRR – Churned MRR.

For example, 5 new customers, during the course of a month, subscribed to an organization’s service. Each of them paid INR100/month. Meanwhile, due to upgrading, 10 current customers moved to a higher-tier plan for INR 200/month from INR 100/month. However, 3 of the organization’s customers churned out. These 3 were each paying INR 200/month. In such a case, the Net New MRR for that month is as follows:

INR 500 + INR 1000 – INR 600 = INR 900.

Conclusion

MRR tells us how well a business is operating. Moreover, it also provides significant actionable insights into the growth of a particular business. For any subscription business, it is one of the most critical metrics in existence. To make the most of MRR, act now with PayU. Try the PayU recurring suite

FAQs

The post Everything You Need to Know About Monthly Recurring Revenue appeared first on PayU Blog.

The revenue model for such businesses entails a recurring payment from the consumer. A recurring payment revenue model means that the business offers certain services or products that require repeated payments from the consumers. Usually, such payments are billed monthly, and in some cases, they could also be year-on-year. Let’s get into the depth of the concept of recurring payments so that you get the maximum out of this article.

Recurring Payments: Explained

The meaning of recurring payments can be best defined as a subscription type of business model that allows the consumer to keep using the service or product seamlessly and without any interruptions. 

The cycle continues until the subscription is cancelled or expires. A recurring payment facility enables the user to access the service or product continuously.

How Can Recurring Payments Help Businesses?

Recurring payments are beneficial for business owners as they are assured of a steady income source. Once a customer is onboarded, the business does not have to incur extra costs for customer retention due to the longevity of the customer’s lifetime cycle. Better customer retention benefits the business financially and helps grab market share. 

Business owners can also project their business viability, as it becomes relatively straightforward to predict future income. An accurate prediction helps the business to plan for its future operations properly. 

How Is A Recurring Payment Facility Beneficial?

Recurring billing allows the merchant to automatically charge the consumer for particular services or products repeatedly over a set period. Until this option is not terminated or expires, the charges will be deducted from the consumer’s chosen mode of payment. It is important to note that the merchant does not need permission for further payment charges once the consumer has agreed to make the recurring payment.

What Are The Features Of Recurring Payments?

 The following features characterise recurring payments in India:

1) Payment modes

The customer has various options to select the mode through which the payment would be deducted regularly. Customers can make payments from bank accounts or through debit, credit cards or UPI. For certain high-value transactions, flex-pay options like EMIs are also available.

2) Fixed or variable amounts

Many subscription models involve a fixed amount to be paid over each payment cycle. Some examples of this could be gym membership payments, subscriptions for newspapers or magazines, payments for video streaming services, etc.

Whereas there are certain recurring payments in which the amounts vary for every payment cycle. Examples could be utility bills like electricity, gas or telephone services.

3) Billing cycle

The billing cycle could differ depending upon the service or product used. Most of the subscription models are billed monthly. However, it is not uncommon to see quarterly, half-yearly or even yearly billings.

4) Add-ons or part-deletions

Recurring payments allow the user to add on any part or even delete some part of the subscription, as necessary.

5) Cancellation

An essential feature of recurring payments is to allow cancellation of the subscription when the customer decides.

6) Restart

After the cancellation of service or the expiry of the term, the user may wish to restart the service. This feature is readily provided in the plans for recurring payments.

How Do Users Stand To Benefit From Recurring Payments?

Let’s discuss the benefits for the users:

• Many businesses that offer recurring payment services provide discounts for their regular users. Users can stand to gain financially from the discounts provided.
• With this facility, consumers can continue using the services or goods without interruption and with no worries about missed payments.
• Making recurring payments on debit cards is a handy way of handling financial commitments. It saves time and energy for the consumer. You need to enter the payment information only once, and then the future payments are deducted automatically.
• According to the recurring payments RBI guidelines, a business must notify or remind about the future payments to be deducted. Hence, the consumer is always aware of the charges to be paid.

How Do Merchants Stand To Benefit From Recurring Payments?

Here are some of the benefits for the merchants: 

• The merchant is assured of prompt payment. Immediate and prompt payment is a massive advantage for any business.
• The option of recurring payment greatly helps in customer retention for the vendor.
• A huge plus point for the business is streamlining the cash flow through recurring payments.
• Recurring payments help lower the billing and collection costs for the business owner.
• As the future revenue stream is predicted to a large extent, it helps in better planning for operations and growth of a company.

Although recurring payments seem like a win-win situation for both the user and the company, they still have inherent problems. Let us look at some typical issues faced in such a payment system.

1) Payments get declined

There are instances when the payment is declined for myriad reasons. The recurring credit card transaction sometimes declines if the credit limit has already been exhausted.

2) Change in payment mode

Changing the payment mode becomes a tedious task for the user. Resubmitting all the requisite information could consume a lot of time and effort.

3) Errors in billing

It does become a bit challenging to get the errors rectified. Since the payment may have already got released, it takes some follow up to identify and rectify the errors.

4) Continuing with subscription even after the need is exhausted

A user may miss out on cancelling the service once the need has been met. Non-cancellation could lead to unnecessary extra payments, taking a toll on the user’s financial management. PayU India tries to minimise and eliminate the shortcomings of recurring payments. There is no denying that recurring payments can be advantageous to both the customer and the company. 

In India, PayU India offers the best service for a business owner who may need to set up or integrate a recurring payment facility for business.

Some of the salient features that PayU India offers are –

• It allows the vendor to create a customised plan.
• It gives the facility for the merchant to combine multiple plans.
• Business owners can accept all modes of payment.
• It offers 24×7 support.
• The best part about PayU India is that it is a completely secure service.

Conclusion

Recurring and regular business can transform your business’ functioning. It could help you meet consistent operating expenses and maintain enough cash flow for contingencies. Your business could soar to new heights with reduced costs and increased cash flows.

But it is vital to have a trusted Payment Gateway for payment acceptance. PayU India, a brand in the Payment Gateway space, has the confidence of its customers. To associate with PayU India would be a good choice. Research and choose the one that suits your needs.

FAQs

The post How Can Recurring Payments Help Grow Your Business? appeared first on PayU Blog.

UPI AutoPay by NPCI was launched at the Global Fintech Fest recently. At PayU, our endeavour is always to support growing businesses and further boost the fintech ecosystem. Continuing this tradition, we partnered with NPCI for the launch of UPI AutoPay. Our team will be adding support for this under the same integration, requiring no change from our merchant’s end.  

To be the first one to get access to this feature, 

Growth of UPI and Recurring Payments

The growth story of UPI is quite impressive. Since its inception in India in 2016, it has achieved various milestones and has become the most preferred mode of payments among Indians. For FY20, UPI processed 12,519 million transactions worth Rs 2 1,31,730 crore, a 132% jump in volume, and a 143% surge in value as compared to FY19.  

On the other hand, with advancements in fintech, consumers are more open to businesses auto-debiting charges for their services or products. According to a report, the subscription growth rate has accelerated for 22.5% of companies.

Making payments via subscriptions is easier for customers, especially during this global pandemic COVID-19. Also, offering subscriptions to your customers will keep your business running in these times.Offering recurring payments to your customers saves them time and effort required to buy the same things, again; they become more loyal to your brand.    

UPI AutoPay on PayU Subscriptions

The convenience of UPIAutoPay combined with the power of PayU Subscriptions will be a game changer for businesses such as OTTs, insurance, rentals and much more to collect recurring payments. You can read more about how different businesses can use PayU Subscriptions here.  

Businesses can now take advantage of all modes of recurring payments credit card/debit card, NACH and UPI via a single integration of PayU Subscriptions.  

Here’s how UPI Recurring Payments will offer a seamless and virtually frictionless experience to your customers. Take a look! 

Benefits of Using UPIAutoPay on PayU Subscriptions for Businesses 

• Automate billing via our Subscription APIs 
• Improve cash-flow for your business  
• Seamless customer experience  
• Offer better pricing to your customers  

Benefits of Using UPIAutoPay for Consumers 

• Control of authorizing requested payment and cancel it any time they want
• Also, the 24-hour pre-notification feature of UPI AutoPay ensures that customer is well aware of the charges to be levied in advance making it completely safe and secure.

Conclusion 

Now all businesses can simply offer subscriptions to anybody that has UPI and start collecting recurring payments easily. Offering Subscriptions means better reach and locking customers to your platform. So, get started with UPI AutoPay on PayU Subscriptions today,  

The post Make Recurring Payments Easier for Your Customers via UPI AutoPay on PayU Subscriptions appeared first on PayU Blog.

Now, PayU’s recurring platform allows a merchant to offer their customers standing instruction feature for Credit Card, selected Debit cards and Net Banking (e-NACH and e-mandate), through various integration methods.

What is e-NACH and e-mandate?

The Electronic National Automated Clearing House or e-NACH is the latest electronic payment system in India, developed by the NPCI (National Payments Corporation of India). With e-NACH, anyone with a bank account can automate transactions that are repetitive and periodic in nature.

Net Banking recurring, like cards, is processed seamlessly without customer’s intervention and without any 2nd-factor authentication.

There are 2 types of transaction: ​

1. Registration transaction (also called e-Mandate transaction): This is usually 0 Rs transaction and hence it is called as registration transaction.
2. Payment transaction (also called e-NACH transaction or SI transaction): ​When PayU/Merchant starts charging customer recurring payments, as per billing plan submitted during registration.

This is an extension to PayU’s comprehensive Subscription product suite bringing together all the payment methods such as Credit Cards, Debit Cards and Bank Accounts to handle recurring payments.

The customer will provide authorization with the choice of its preferred bank at the start of the billing cycle/subscription plan, and all subsequent payments will be fully automated thereon. PayU has already integrated with 21 leading bank accounts and counting, for collecting payments via e-NACH.

Collect Recurring Payments via e-NACH in Three Simple Steps:

1. Easily set up subscription plans that best meet your customer’s needs through our easy to use Subscription APIs, on your existing PayUmoney dashboard and invite your customers to use it.
2. If interested, your customer receives a link to authorise payment through their preferred bank.
3. PayU registers the customer’s mandates and brings you your money, in an automated way!

PayU Subscriptions helps you with all your subscription needs such as creating plans, tracking them and much more. Click on the link to know more about PayU Subscription-based payments and how to integrate it.

Step By Step Flow of Collecting Payments via e-NACH

1. On clicking on a subscription plan, the customer will be asked to select his preferred bank from PayU’s checkout page.

2. The customer enters account details such as account number, beneficiary name, and account type (SAVINGS or CURRENT).

3. Then, the customer is redirected to bank page where he/she needs to log in through Net Banking username and password. ​

4. On successful login, the customer is shown registration details which cover Subscription plan he/she is opting for the given merchant, inside the bank’s portal. ​

5. Once the subscription plan is approved by customer then registration response is returned to PayU through browser redirection​.

6. PayU captures registration details and takes the customer back to the merchant website. ​

Conclusion

Subscriptions along with eNACH are the best way to delight customers and grow your business! At PayU, we leave no stone unturned to implement the latest features and updates of the fintech industry for you. To know more about PayU features,

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