Top 7 Subscription Payment Gateways To Elevate Your Subscriptions in 2024
15 MIN READ
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Updated on February 28, 2024
The remarkable growth of the global subscription and recurring billing management market, expected to escalate from $5.9 billion in 2021 to $14.5 billion by 2027, underscores the increasing preference for subscription services over one-time purchases among consumers worldwide. This surge necessitates deploying a robust payment processing system to harness the full potential of subscription models.
Despite the opportunities, businesses face challenges such as revenue loss from failed subscription payments, unscalable billing systems, limited out-of-the-box integration capabilities, and lack of support for regional payment methods. Addressing these issues is crucial for companies to capitalize on the booming market and meet the evolving needs of their customer base.
Subscription businesses want a payment system that enables seamless collection while removing all the complexities involved in automatic recurring billing and payments.
This article will explain what subscription payments are, how they work, and the top seven subscription payment gateways that are useful for both startups and enterprises.
Table of Contents
What Are Subscription Payments?
Subscription payments are scheduled recurring transactions that occur on a predetermined billing cycle. This cycle can be weekly, monthly, annual, or any other frequency that suits both the customer and the business.
For example, a monthly subscription to pet food and treats, an annual membership at your gym, or a subscription to your favorite OTT app like Netflix are all subscription payments.
Subscription payments can be fixed or variable. A fixed subscription plan charges the same amount every cycle. Streaming services like Netflix are an example of this model.
A variable subscription payment model charges the customer based on usage. The customer’s bill changes every cycle, but the payment information and cycle remain the same. SaaS applications that bill on a “per user per month” basis are an excellent example of this.
To facilitate seamless recurring transactions and capitalize on the benefits of this payment structure, businesses opt for a robust subscription payment gateway with automated billing, smart dunning, integrations with payment gateways, and dynamic analytics and reporting.
How Does Subscription Payment Processing Work?
There are four key components of a subscription payments processing system.
- Billing System
- Subscription Payment Gateway
- Dunning System
- User Interface
Let’s cover each in more detail.
1. Billing System
A billing system checks customers’ payment plans, generates invoices, and handles general customer subscriptions.
Recurring billing platforms are used to send customer invoices on fixed dates. They can use different dates for every customer or send all invoices on a specific date. Bills can also be calculated based on usage.
Billing can be further customized to accommodate multiple subscriptions, changes to the payment plan, different payment cycles, and more.
2. Subscription Payment Gateway
When customers sign up for a subscription, their payment information is stored with the merchant. A subscription payment gateway uses this information to complete recurring transactions.
A subscription payment gateway connects with processors and completes transactions by transferring funds from the customer’s bank account to the merchant’s.
For safe transactions, your subscription payment gateway must comply with security standards that include encryption, verification methods, and point-of-sale security.
Stripe, Checkout.com, GoCardless, and PayPal are commonly used recurring payment gateways.
3. Dunning System
Customers can churn due to involuntary churn — when recurring payments fail due to insufficient funds, expired cards, and network issues. In this scenario, the first step is to retry the payment. If that fails, then dunning is needed.
Dunning is a system of sending payment reminders to customers via email. These emails are personalized for every customer to optimize the customer experience and prevent cancellations.
An automated dunning system is the best option for businesses to recover failed payments.
Systems like Chargebee allow businesses to set up a custom dunning logic that defines how many emails will be sent and when. These emails can include why the payment failed and nudge the customer to take action.
You can also align your dunning logic with your billing logic. For example, you can cancel a subscription after X number of dunning attempts.
Chargebee also identifies which payments should not be retried. This is crucial since constant retries after failed payments can get businesses blacklisted by payment gateways and processors.
4. User Interface
The user interface is an end-customer touchpoint that lets them manage their subscriptions. Using this, subscribers can edit existing payment plans, update card details, download invoices, and more.
Allowing customers to easily manage their recurring payments builds trust and boosts retention.
These four systems, along with other accounting and tax software, work together to ensure that companies can collect subscription payments on time.
Subscription businesses can use Chargebee’s billing and dunning capabilities to set up a robust payment system along with the payment gateway options outlined here.
Challenges Involved in Manual Subscription Payment Processing
There are five main challenges involved in processing payments for subscription businesses manually.
- Managing Recurring Payments
- Retrying Failed Payments
- Handling International Payments
- Dealing with Automatic Collections
- Manual Dunning
Let’s take a look.
1. Managing Recurring Payments
Manual subscription payment processing might be feasible for a small business, but it’s not an option for growing companies with active plans to gain new customers.
Sending recurring invoices for a large number of subscribers and handling each subscriber’s plan can become tedious and error-prone in manual systems — especially when also accounting for flexible plans with upgrades and downgrades, tracking receivables, and consolidating multiple invoices.
Secure information storage is another obstacle in manual subscription payment processing, with businesses having to comply with numerous national and international regulations for their industries and banks.
These problems can be mitigated by using an automated recurring payment platform that streamlines subscription management and information storage.
2. Retrying Failed Payments
Accounting teams that work with manual payment systems often struggle to track failed payments, send out reminders, and follow up with customers. These issues significantly increase their workload, leading to untracked payments and involuntary churn.
A revenue recovery platform can alleviate these issues with smart dunning, backup payment methods, and effortless card updates.
3. Handling International Payments
Businesses that operate internationally have two major payment-processing issues: cross-border interchange fees and foreign exchange fees. Both of these fees eat up a significant amount of revenue.
While businesses can connect with local banks in all the regions they operate to reduce these fees, setting up local payment infrastructures in different areas can quickly become expensive and resource-intensive.
Businesses can combat this by using a payment processing provider with a global bank network, such as the one provided by Chargebee and BlueSnap.
This integration allows international transactions to be processed in the currency and region in which they are issued. This reduces transaction fees and increases revenue.
4. Dealing with Automatic Cancellations
An automatic cancellation occurs when a customer fails to pay after multiple attempts. In manual systems, businesses must track all customers’ payments to see which have failed and therefore require subscription cancellations.
When you have a large subscriber base and have to deal with cancellations manually, the likelihood of subscriptions being kept active when payments have not been received is higher. This impacts revenue. To prevent this from happening, you need a subscription payment gateway that instantly cancels the subscription after a set number of payment retries.
5. Manual Dunning
Dunning is the process of sending a reminder to a customer after a failed payment. Manual dunning is not feasible for most businesses since each customer needs a custom process to maximize the chances of repayment.
One customer might need reminders every two days, while another could be dealing with a bank issue that delays payments for a week. Sending incessant reminders across the board leads to frustrated customers and cancellations.
Dunning is streamlined on a smart recurring payment platform that lets you define how many reminders to send each customer when to send them, and the maximum number of retries.
The 7 Best Subscription Payment Gateways
To maximize revenue and provide a seamless subscription experience for customers, companies can use the following seven subscription payment gateways.
- Stripe
- Checkout.com
- GoCardless
- Braintree
- PayPal Payments Pro
- BlueSnap
- Worldpay
Here’s a review of each to help you make an informed decision for your business.
1. Stripe
Stripe is a renowned payment platform that helps millions of companies with billing, invoicing, and payments.
You can connect Stripe with your subscription management platform to automate recurring payments and access advanced features.
By integrating Stripe with Chargebee, you can:
- Support a large array of global payment options
- Easily accept high-value transactions across the U.S. and Europe
- Safeguard against online fraud
- Scale your subscription processes globally
- Experiment with different pricing and discount campaigns
- Change subscriptions mid-cycle
- Customize the checkout experience
These features help SaaS companies and online subscription businesses get future-ready with little to no developer dependency.
2. Checkout.com
Checkout.com is a payments solutions provider for global businesses that supports 150+ currencies and domestic processing capabilities in around 50 countries.
Using the Checkout.com with Chargebee integration, you can:
- Automate invoicing
- Tailor billing experiences in customers’ local languages
- Enable GAAP-compliant revenue recognition
- Automate tax profiles
- Gain smart fraud protection
Chargebee and Checkout.com use machine learning and AI to help businesses unlock their global potential and reach new subscribers.
3. GoCardless
GoCardless is a direct debit platform that lets you collect money from customers’ bank accounts in 30+ countries. Merchants can also collect payments in the customer’s currency and settle them in their home country.
By using GoCardless with Chargebee, you can:
- Accept direct debit payments, ACH, and E-checks from your customers in 7+ countries
- Checkout in-app or via GoCardless
- Conduct workflow testing via Test and Live accounts
- Enable smart emails about mandates and payments
- Enable notifications about invalid payment methods
GoCardless and Chargebee create an excellent recurring payment system for businesses that want to receive payments directly to their bank accounts.
4. Braintree
Braintree is a payment processor that helps businesses accept payments via card, PayPal, Venmo, Google Pay, Apple Pay, and more.
By integrating Braintree with Chargebee, you can:
- Support global payment methods
- Prevent fraudulent transactions
- Ensure Level 1 PCI-compliant data security
- Offer custom checkout pages
- Ensure robust reporting
- Allow presentment in 130+ currencies
Chargebee’s subscription management features, combined with Braintree’s payment processing, can elevate your subscription payments.
5. PayPal Payments Pro
PayPal’s online payment processing solution, PayPal Payments Pro, works with merchants in the United States, Canada, and the UK. Recurring payments can be made using credit cards in your PayPal account.
Integrating PayPal Payments Pro with Chargebee allows companies to:
- Accept payments via major cards
- Automatically charge recurring payments to customers’ cards
- Design and host custom checkout pages
- Access fraud protection services
PayPal is a globally trusted service, and using it as part of your subscription management process within Chargebee can streamline billing and subscription payments. Chargebee also supports Paypal Payflow Pro and PayPal Express Checkout.
6. BlueSnap
BlueSnap is an all-in-one payment processing platform that enables businesses to collect card payments. It supports transactions from most countries and 90+ currencies.
Using Chargebee + BlueSnap, eCommerce, B2B, and SaaS companies can:
- Streamline recurring payments globally
- Use webhooks to get event notifications, such as payment statuses
- Increase authorization rates
- Find solutions for tax compliance and regulation
- Ensure automated fraud and chargeback management
You can integrate BlueSnap directly with Chargebee or via Speedly, a third-party card vault. You can also integrate your BlueSnap and Chargebee test accounts to check your payment workflow and run experiments.
7. Worldpay
Worldpay is a leading payment processing provider that accepts 300+ payment methods and 126 currencies. It currently supports companies based in the U.S., the UK, Hong Kong, Israel, and Singapore.
You can integrate Worldpay with Chargebee via Spreedly to capitalize on the platform’s features, which include:
- Accepted payments from most major credit and debit cards
- “Capture delay” to prevent charging customers twice
- Support for payments via prepaid cards
Companies can also opt for direct integration with Worldpay or to use Worldpay US eCom, which supports merchants based in the U.S. and Canada.
8 Reasons Why Leading Businesses Set Up Subscription Payments With Chargebee
Industry leaders across the globe trust Chargebee to set up and manage their subscription payment gateway systems.
- Integrations With Popular Payment Gateways
- Streamlined Global Subscriptions
- Seamless Subscription Management
- Simplified Recurring Billing and Accounting
- Stellar Subscriber Experience
- Advanced Reporting and Analytics
- Customized Pricing and Plan Management
- Enhanced Revenue Recovery
Here’s why
1. Integrations With Popular Payment Gateways
Chargebee integrates with 30+ payment gateways and supports 100+ currencies from the get-go.
This enables businesses to set up and start collecting their subscription payments in minutes via most major credit and debit cards, Google Pay, Amazon Pay, and other digital wallets.
Our platform also reduces revenue leakage caused by transaction fees via Smart Routing. This feature allows you to pick a specific gateway account for each payment method available to your customers.
For example, you can choose Stripe to handle card payments from European countries and Authorize.net for US payments.
Implementing Smart Routing can significantly reduce lost revenues for subscription payments.
2. Streamlined Global Subscriptions
Chargebee enables companies to scale globally with ease via multi-currency support. Merchants can accept payments in multiple global currencies and payment methods, creating the optimal subscriber experience and reducing cancellations.
To simplify international subscriptions even more, Chargebee can fetch exchange rates in real-time or companies can set the exchange rates themselves.
Customers also have a wide array of payment options, eliminating a crucial hurdle during checkout. Chargebee supports most major credit and debit cards, direct debit, bank-based payments (in Europe), and digital wallets. It can also help you manage your offline payments.
3. Seamless Subscription Management
Chargebee simplifies subscription management and subscriber scaling. You can manage subscriptions, experiment with different pricing models, and get all of your subscription and customer data in one place, enabling companies to discover opportunities for revenue growth.
The platform also automates customer engagement interactions, like nudging trial users to opt for paid plans, collecting payment information, subscription renewals, and billing adjustments, allowing your marketing and customer teams to focus on more important conversations.
Companies can also grow subscribers with promotional campaigns, gift subscriptions, and trial experiments — all of which run without any operational interruptions. To increase revenue, Chargebee can also recommend add-ons and product bundles.
4. Simplified Recurring Billing and Accounting
Take control of your billing process with Chargebee’s automated recurring billing and invoicing system. Send recurring invoices automatically and customize your subscription billing logic to align with current business goals.
Our platform can handle complex billing scenarios, eliminate human errors, and help you grow globally. You can also build custom invoicing processes that accommodate special buying cycles.
Finance teams can also use Chargebee RevRec to automate revenue recognition and ASC 606/IFRS-15 compliance while implementing revenue recognition rules.
In addition, advanced financial reporting features can help teams create reports and dashboards in minutes to identify trends, analyze current systems, and create data-driven strategies for growth.
5. Stellar Subscriber Experience
You can eliminate friction from cart to payments via personalized checkout pages on Chargebee and an easy-to-use self-service portal.
Complex, cluttered checkout pages can lead to drop-offs at the last stage before subscriber conversion. Prevent this by using no-code checkout pages that clearly show available payment options, automatically apply taxes, and offer a smoother overall experience.
Support international customers with checkout pages in local languages and support for 100+ currencies.
Provide transparency and build subscriber trust by letting subscribers manage their subscriptions on Chargebee’s self-service portal. Developers can use this open-source portal to create a system that caters to current business cases without interrupting operations.
6. Advanced Reporting and Analytics
Use Chargebee’s advanced reporting features and intuitive dashboards to gain complete visibility into your subscriptions and make data-driven decisions.
Track crucial factors like monthly recurring revenue (MRR), revenue leakage, and transaction analytics. Go beyond the basics and delve into related analytics to get a complete picture of your subscription plans and customer retention rate.
Chargebee lets you create no-code custom reports and dashboards to monitor metrics that are relevant to your business model.
The platform also delivers detailed churn reports to monitor retention and growth. These reports help determine when and why your customers are leaving.
7. Customized Pricing and Plan Management
Chargebee enables sales teams to offer custom subscription pricing for each customer and set up flexible billing rules that dictate when and how customers are billed.
You can use rapid pricing model experiments, like multiple pricing models and changes to current plans, to discover new opportunities for optimizing revenue.
However, new pricing doesn’t always work and may frustrate existing customers. To prevent fallouts, apply your experiments to new customers while grandfathering prices for existing customers.
Chargebee can also streamline product catalog pricing and organizations so that companies can roll out subscription plans and go to market faster.
8. Enhanced Revenue Recovery
Lost revenue and poor customer retention can hurt businesses.
Chargebee offers payment recovery programs and personalized retention features to solve these issues, including customizable cancel workflows that can grab would-be-canceling customers’ attention through statistics, surveys, and offers.
The deflection funnel tracks metrics related to customers you saved and lost, along with those whose chances of canceling are high.
Revenue recovery is also made easier with smart dunning, which helps recover failed payments and avoid involuntary churn. Backup payment methods add a fallback layer that can help prevent payment failures going forward.
Conclusion
A robust subscription management system is crucial for businesses that want to innovate and scale. On the other hand, a frustrating payment experience will push customers toward a business’s competitors.
Choosing the right subscription payment gateway and complementing it with a dynamic recurring revenue platform like Chargebee can lead to satisfied customers and create opportunities to grow your subscriber base.
Sign up for a free trial now