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Blog on e-business and online payments.

How to Use Subscriptions (Recurring Payments) in Your Business

A subscription (recurring payments) in a SaaS based company?

Boy oh boy. Simply irreplaceable thing. Businesses based on these types of services breathe subs like air!

But this solution is so important not only for them. It’s a method of payment that became practically our second skin. It won’t be too much to say that every human connected to the Internet uses it in everyday life. Be it a purchase of Adobe software, some productivity tool or Microsoft Office – that’s just how you pay for stuff these days.

How does a subscription look and work behind the scenes? Which model would be a good solution for your business? You’ll find it out in this blog post.

What Are Subs All About?

Generally speaking, subscription payments (also called recurring payments, licenses etc.) rely on automated collecting fees from cards. It occurs on a regular basis, and takes place each time after a pre-established period of time passes.

The service itself may vary. It can be, for instance, a monthly access to a SaaS type tool or an online course, a magazine subscription… and so on. There are plenty of companies that offer a wide spectrum of products.

The kinds of recurring payments that are most common are monthly and yearly plans. There are other options available though. If you really wanted, you could use two week, one week, three day model. You could even implement daily charging – there is no rule set in stone when it comes to choosing an exact form of your venture. It can be whatever you want it to be.

As for the available ways of paying – it’s all highly customizable. Subscriptions operate on most types of payment cards, direct debits and some alternative methods (e.g. PayPal.)

You have to be aware of one thing: you can’t automate collecting money if you use a standard wire transfer. (A good example here would be Polish Pay-By-Link or Dutch iDEAL solution.)

The Variety of Subscriptions

There are two main approaches to initializing and processing recurring charges. You can automate the whole process with easy to use, ready to go dedicated tools, or apply the ones that rely more on operating them manually. They need extra work but in exchange they give you bigger flexibility.

Both kinds have their own set of traits – advantages along with disadvantages.

Fixed Subscription Plans

Firstly – we have subscriptions that use various sorts of subscription plans. Most often for this kind of implementation you’ll need to use external SaaS tools (e.g. Recurly or Chargify.)

We merge our account in said SaaS with merchant account from our PSP service, and create the integration with an external tool of our choice. When new clients subscribe, we send the information about them to the tool and it takes care of charging them in specific time intervals. Works all by itself.


a tremendous ease of operation. There is no necessity to trigger every charge manually whatsoever. We only have to declare once that we want to collect payment from a subscriber. Then we clarify how often we do it. Done. The money is being collected automatically every billing cycle.


unfortunately, there are also some serious limitations. The possibility to change anything in the process here is minuscule. Sometimes, you could say, the options of any sort of customization are next to none, and various constraints prevail.

And so, the main issue: you are not able to manipulate the charged amounts or modify the period of time after which you charge your clients. You can’t automate the collection of additional fees either (e.g. if you offer some supplementary services while the recurring payment period lasts.) This all renders the solution almost useless to those who supply their subscribers with the highly flexible and personalized experience.

Merchant-Managed Recurring Billing

Secondly – we have subscriptions offered by PSP type payment companies (like PayLane). There you have  API with which you invoke the first payment (you initiate a recurring process.) To do this you have to use all the data necessary to successfully collect the funds via Internet (credit card number, client’s data etc.)

After this, when the time to make a charge comes again in a, let`s say, month or so, you will trigger another payment (a resale) by hand, using a token/id acquired after finishing the initiating payment.


it’s necessary to do everything by yourself. Each billing cycle you’ll have to initiate every single payment manually. Not such a great thing if your offer is quite simple and there are no variations of subscription plans or additional products to buy during every billing cycle.


you can do a lot more with this kind of tool, and by saying that I mean that you can change the quotes each month, you are able to tinker with time intervals for the charges, or automatically collect money from cards used in recurring payment process for other client’s purchases, e.g. for additional services you offer for separate acquisition.

Before you decide  on this kind of tool you need to be sure you’ll actually make use of it. If not, you’ll save yourself some hassle by choosing rather the automated solution.

Which Solution Is Best for You?

With automated tools you have less work to do, but you can’t change much within the system you use. Employing recurring payments processing operated manually (via payment service provider’s API) gives you more possibilities, but also adds some responsibilities.

As you are probably aware by now, there are some factors to contemplate on before you employ any kind of strategy in your business. There is no need to take on the manual process if all you provide is one product in one plan only. Using the merchant-managed model in such case would be like using a magical sword to open a can of tuna. There’s no need to overdo stuff like that.

Sometimes all you need is a plain can opener.

You should also read about subscription cancellation & annual vs monthly billing.

If you were a merchant making the big decision right now, what would your choice be and why? I’d love to hear your thoughts on that!


Experienced executive, people-oriented leader, doer, entrepreneur. CEO at PayLane. Business educator on Also on Twitter.

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