Direct debit vs. recurring card payments: Choosing the best option for gyms and wellness centers

When it comes to health and wellness, having things easy is super important. With gyms and wellness centres drawing in members who want smooth experiences, picking the right payment system is critical. Recurring transactions have two main payment options that really stand out: direct debit and recurring card payments. Each one brings its own set of perks, especially when it comes to memberships and subscriptions that are essential for gyms and wellness businesses.

 In this post, let's explore the differences between recurring card payments and direct debit. We’ll also take a look at how open banking payments and the pay-by-bank app can really help small businesses. If you run a small yoga studio or a big fitness chain, knowing your options can really help you make a smart choice that boosts customer satisfaction and cuts down on those time-consuming admin tasks.

What are recurring card payments and direct debits?

There are two major types of automatic payments that gyms can accept: recurring card payments and direct debit. Both ways of making payments are automated, so there are fewer missed payments and a steady flow of cash. But they are not the same when it comes to price, ease of use, and freedom.

 Recurring card payments: With this method, the customer's card is charged automatically every billing cycle, which is usually once a month. This choice is great for customers who like to keep track of their spending by using a credit or debit card. Many people like using credit cards because they give them the freedom to change their spending limits or switch cards whenever needed. Recurring card payments are easy to set up for gyms and work with various point-of-sale (POS) and small business payment systems.

 Direct debit: When a member signs up for a long-term membership, direct debit takes money directly from their bank account. This is a safe and inexpensive way to pay. Businesses usually pay less for direct debit than for regular card payments. This method is often chosen by gyms with a large member base or wellness centres with long-term plans because it is more stable and less likely to cause problems.

Pros and cons of direct debit vs. recurring card payments

Hits and misses of direct debit

Direct debit is stable and cost-effective; therefore, gyms and wellness centres use it. This direct bank account connection makes regular payments, especially for long-term memberships, more secure and consistent. Direct debit has lower fees, which might benefit firms with a high monthly transaction volume. They are also not dependent on card networks, so lost or expired cards do not hinder the membership renewal process.

 Nevertheless, direct debit is subject to certain constraints. It’s not a flexible option for customers, as they must contact their bank to modify their payment methods, which may discourage members who prioritise convenience. Additionally, the initial setup process may be somewhat delayed, which impacts businesses that require membership activation to occur promptly.

Hits and misses of recurring card payments

Members can easily switch between credit and debit cards or update their payment information on the gym's platform with recurring card payments. Individuals with short-term responsibilities or occasional gym visitors who prefer credit cards for financial management will like this strategy. Many card networks provide real-time updates for lost or expired cards, reducing the chance of missed payments.

 Nonetheless, the convenience of card payments incurs a cost, as card networks often impose elevated fees, which can accumulate substantially for businesses handling high transaction volumes. The dependence on physical cards may result in payment problems if the card on record expires or gets misplaced, thereby affecting the gym's cash flow.

Why do small business payment systems matter for fitness centres?

Gyms and wellness centres, frequently classified as small enterprises, have distinct payment requirements that demand dependable and effective payment systems. An effective payment system is capable of managing memberships, class payments, and product sales while also supporting various payment methods such as direct debit and recurring card payments.

 For small wellness centres, selecting the appropriate payment provider can assist in managing expenses, lessening administrative burdens, and providing a more customer-oriented experience. Many small businesses are exploring open banking and the pay-by-bank app because they offer a straightforward and effective method for managing transactions without high fees.

Popular direct debit service providers for gyms and wellness centres

GoCardless

Established direct debit service GoCardless handles recurring payments for businesses of all sizes, including gyms and wellness centres. GoCardless integrates seamlessly into invoicing systems and offers a seamless payment experience. Its clear pricing helps small firms manage their budgets by keeping costs predictable. Gyms can track transactions and resolve issues in real-time with GoCardless, assuring a smooth and reliable service for members and the business.

Stripe

Stripe, best known for credit card processing, also offers direct debit options for recurring billing, making it a versatile choice for gyms and wellness centres. Stripe's extensive API lets organisations create variable charging systems for users with varied membership periods or payment cycles. Stripe's direct debit option can be connected with other payment methods on the same platform, allowing businesses to give members multiple payment alternatives without engaging with different service providers. The platform is optimised for online and mobile payments, which suits digitally aware gym members.

 Other recurring payment modes

Fixed recurring payments via open banking and variable recurring payments are two alternate modes that are gaining increasing traction in the UK.

 Fixed Recurring Payments using Open Banking Standing Orders improve the standing order architecture with APIs. This strategy eliminates card reliance by automating the transfer of a predetermined amount from a customer's bank account at regular intervals. These payments are ideal for rent, subscriptions, and memberships, giving businesses a stable revenue stream and customers a smooth payment experience.

 Variable recurring payments (VRPs) are a sophisticated Open Banking payment system that improves flexibility, transparency, and control over repeating transactions. VRPs allow flexibility in payment amounts and schedules based on customer characteristics, unlike fixed recurrent payments. This modern alternative to Direct Debit and card-based recurring payments benefits consumers and companies.

 Wonderful, a rising payment service provider in the UK, is integrating several of these open banking-enabled services to enhance the online payment experience for consumers and merchants alike.

Conclusion

When it comes to fitness centres and gyms, the choice between direct debit and recurring card payments is a matter of company model, member preferences, and cost. Ideal for longer memberships and high-volume gyms, direct debit can be more stable and cost-effective. Members with short-term or casual objectives may find the flexibility and immediate updates offered by recurring card payments to be more convenient.