Advice for setting up recurring billing?

Question

I have a bit of experience setting up online payment systems that accept credit card numbers and then pass them over to a gateway for a one time payment.

However, I now need to setup a system that can handle automatic recurring billing - where a user provides their credit card number and is automatically billed on a monthly basis from that point forward.

I am wondering what the best way to approach something like this is? (I notice that Paypal Payflow Pro does have a recurring billing feature, but I am a bit unclear on how it works.)

Any advice on the best method / service / gateway for implementing recurring billing? If possible, I would greatly prefer to avoid keeping a local record of credit card numbers for repeat processing.

Thanks (in advance) for your help.

Answer 1

There's a midpoint between building your own recurring billing and Auth.net's ARB or PayPal's recurring billing (both of which have their disadvantages). There are a number of providers that handle all the details and complexities of recurring billing, and simply report the charges to your payment gateway for processing at the interval you determine.

The most critical piece to look at is which services to credit card tokenization and support credit card data portability - this will ensure that your customer data isn't locked in with a billing provider and that you can take it with you if you choose another provider in the future. This also means that these providers store the customer credit card data for you, so you can greatly reduce your PCI compliance.

Take a look at Recurly (Disclaimer: I manage their customer and technical support) and Braintree. Both services will handle your recurring billing, credit card tokenization, and support credit card data portability.

Answer 2

Recurring billing is easy to handle and offload to a third party if your recurring amount is constant (e.g. the amount a user pays never changes in amount or frequency). Services like Authorize.Net's Automated Recurring Billing (ARB) and Paypal Payflow Pro recurring billing allow you to have those companies handle the actual recurring payments which means you don't have to store credit card information on your servers or even do anything once the subscription is created through their APIs.

If your subscriptions will vary in terms of cost or frequency, you'll need to use a service like Authorize.Net's Customer Information Manager (CIM) to create payment profiles for your customers. Basically you're storing credit card information on Authorize.Net's servers and whenever you want to make a subscription payment you tell Authorize.Net to charge the amount due to that payment profile. The drawback to this is you essentially have to build your own subscription system.

Answer 3

You usually find the recurring billing features in middleware gateways like Payflow Pro. In that case, it is invoked by a variation of the API you use for card processing. You usually set up the time span between billings and they perform the billing. You usually then reconcile the billing with the report that your processor sends you each month. In some cases, the payment gateway will post a notification to you that the billing was performed. You still have to reconcile the payments with the processor report because sometimes the notifications fail.

Canceling the recurring billing is also another API call.

If your gateway doesn't have the recurring feature, you obviously have to set up the billing yourself. This of course leads to storing card info and so forth. In this case, you usually tell the processor that it is a recurring transaction (which the gateway will do for you) so you get a discount on the transaction fees.

Answer 4

First, let apend the statement above "...tell the processor that it is a recurring transaction ...so you get a discount on the transaction fees". The true cost of credit card processing is a percentage fee and a per item fee based on the type of card presented ( and some other factors I won't delve into here.) The point being, on a wholesale price plan, the price would be the same regardless of whether it was recurring or not because there are no special rates for 'recurring' in interchange. But I digress.

"Any advice on the best method / service / gateway for implementing recurring billing?" Don't take on storing credit card data no matter what. You can't afford the liability. The right choice depends on several factors.

As to credit card portability, has anyone gone to Wells Fargo/ First Data and gotten their data out? (Braintree ISO/MSP). I guarantee it won't be pretty no matter what so I would focus on the right long term solution, rather than the exit strategy, though it will certainly weigh in.

Here's questions that need to be answered: How many transactions per month? For very low volume, maybe a few hundred, pick paypal pro. It's easy to get into/ out of.

Are people more likely to pay with consumer cards or business credit cards? Interchange optimization is important if business cards. (CenPOS automatically optimizes the transaction for lowest interchange qualification, paypal and authorize.net do not)

What methods does my client accept payments? self pay on internet only? Phone orders? Mobile payments (special events or retail)? Choose a gateway that fits all their needs.

Do you need to charge on specific days- ie the 1st and 15th? Or any time? If on specific days, how will you prorate? Check the answer against the gateway flexibility.

What happens when a card expires? What happens when a transaction is declined? Who will need to see the payment data for customer service? How will they access it?

Determine your needs, then figure out which ones meet them. For the record, CenPOS is the most robust solution, but may require more steps to integrate since they are newer to ecommerce. Disclaimer: I've been a business user of paypal and authorize.net for probably a decade and more recently CenPOS. I'm also an authorize.net reseller, and CenPOS direct agent.

Answer 5

Just a heads-up about Payflow Gateway's Recurring Billing: Their Instant Payment Notifications (IPN) is a fantastic feature, but only applies to their legacy APIs. For the time being, THE ONLY WAY to be notified by PayPal of a successful (recurring) billing transaction, is by inquiry. You will need to maintain a schedule to inquire, and send an individual inquiry for each, scheduled recurring billing transaction, one at a time. PayPal will not notify you if, for example:

1. A transaction is approaching
2. A transaction has occurred
3. This transaction was successful
4. This transaction resulted in fault
5. A credit card is approaching expiration
6. A dispute occurred

... and so on.

In my opinion, this renders their service useless.