What is Recurring Billing?
Recurring billing is an automated payment model where a business charges a customer's payment method at regular intervals — weekly, monthly, quarterly, or annually — for ongoing products or services. It is the foundation of subscription-based business models.
How Recurring Billing Works
The customer provides their payment details once and authorises the business to charge them on a recurring schedule. The payment system automatically processes the charge on each billing date without requiring the customer to take any action.
Types of Recurring Billing
Fixed Recurring
The same amount is charged each period — typical for subscriptions, memberships, and fixed-rate services.
Variable Recurring
The amount varies each period based on usage — typical for utilities, metered services, and usage-based pricing.
Hybrid
A base fee plus variable charges — common in telecoms and SaaS with usage-based add-ons.
Key Components
- Tokenisation: Card details are stored as secure tokens, not raw numbers
- Retry logic: Failed payments are automatically retried after a delay
- Dunning: Automated communications to customers when payments fail
- Proration: Calculating partial charges when customers upgrade or downgrade mid-cycle
Recurring Billing and PCI DSS
Storing card details for recurring billing requires PCI DSS compliance. The safest approach is to use tokenisation — storing a token that represents the card rather than the card number itself. The payment processor holds the actual card data.
Paytia's recurring payments platform handles the entire recurring billing lifecycle. Card details are captured securely via DTMF suppression or payment links, tokenised, and stored for automated future charges. Failed payments are retried automatically, and the Payment Chase feature follows up on missed payments.
Frequently Asked Questions
What is the difference between recurring billing and a subscription?
A subscription is the business model — the customer pays regularly for ongoing access. Recurring billing is the payment mechanism that makes subscriptions work — the automated charging process.
How do I handle failed recurring payments?
Use automatic retry logic (attempting the charge again after 1, 3, and 7 days) combined with dunning communications (emails/SMS notifying the customer). Most payment platforms offer these features built in.
Do customers need to re-enter card details when their card expires?
Many card networks now support automatic card updating, where the new card details are provided to the merchant's payment processor when a card is reissued. This reduces failed payments due to expired cards.
Related Terms
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