Decoding the Complexities of Subscription Payment Systems

Recurring payments, especially for subscription-based services, may appear to be simple but in reality, are quite complex.  𝗟𝗲𝘁’𝘀 𝘁𝗮𝗸𝗲 𝗮 𝗹𝗼𝗼𝗸:

Merchants need to pay very close attention to ensure payments get processed and not provide a service without getting paid.

Payment Expert Arthur Bedel 💳 ♻️ explained it very well, so I like to share it here with you (and see the picture below👇):

𝟭 A consumer subscribed or purchased a service, on a regular frequency. First off, the amount may not always be the exact same which may cause billing problems.

𝟮 Recurring Payment is now due.

𝟯.𝟭 Payment Successful ✅
🔸Subscription’s next billing date is updated
🔸Recurring order is created with a paid payment status
🔸The invoice is sent to the customer

𝟯.𝟮 Payment Unsuccessful ❌

𝟰 Recurring Order created with a Failed Payment Status

𝟱 Payment failed e-mail is sent to the customer

𝟲.𝟭 Customer updates payment method and payment retried successfully ✅
🔸Same completion process as above

𝟲.𝟮 Customer doesn’t update his payment method or Payment is declined ❌
🔸Subscription is canceled at the start of the next cycle

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In order to provide #RecurringBilling service, Payment Service Providers are one option, 3rs Party Recurring Platforms are another👇

🔸In this example, Recurly is utilizing its subscription and billing engine to store the card information securely and pass the payment request to the Payment Service Provider.

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Now this complex process, especially when using a credit or debit card, can be simplified using Account Updater Services:

This payment solution provided by some Acquirers - Nuvei and Worldpay - and 3rd Party providers - Recurly and Zuora - updates the card in file for the consumer automatically (token). It enables the card on file to always be the current one creating a much more seamless experience for the consumer!

Recurring payments are mostly completed using cards but Alternative Payment Methods are and will continue to also disrupt this payment model 🚀

Thanks for this great overview and explaination Arthur! I highly recommend following this guy on Linkedin for more great insights👌