How to Pick a Recurring Billing and Payment Provider

image courtesy of iosphere/

When it comes to subscription management and recurring billing for web apps, it can be a bit overwhelming to track down what it all means. We’ve decided to come to the rescue with our beginner’s guide to subscriptions, payment gateways, merchant accounts, and the companies that provide them.

What is a Payment Gateway?

Payment Gateways are the backbone of online payments and e-commerce of all kinds. If someone is taking your credit card online, they are probably using a payment gateway. It is these guys that connect to all the credit card companies like VISA, Mastercard and AMEX to make it easy to collect any kind of credit card you want without having to submit to Payment Card Industry (PCI) compliance.

What is a Merchant Account?

Once a credit card is charged, the money needs to go somewhere. That’s where a merchant account comes in. A merchant account is a type of bank account that allows businesses to accept money from payment cards. If you want to accept credit cards online, you will need a merchant account. You might not realize this because some payment gateways will provide you with a merchant account behind the scenes, but there will always be a merchant account in the mix.

What is a Recurring Billing service?

Charging someone’s credit card and making sure that the money ends up in your account is what Payment Gateways and Merchant Accounts are all about, but what about handling a subscription that needs to get charged every month? That’s where the subscription and recurring billing systems come in. These services have a credit card vault, and a list of recurring charges, and it’s their job to make sure that every month the right people get charged the right amount.

Some services, like Recurly, focus entirely on this problem, and were built on top of other payment gateways and merchant accounts. Meanwhile, payment gateways have evolved and launched simple recurring billing modules on top of their payment gateways.

While some payment gateways have existed for decades, the recurring billing space is not nearly as old. The companies that focus on recurring billing as their core have developed a bunch of features to make your life as a software developer easier, such as sending emails to your customers with their invoices, pro-rating upgrades and downgrades, and managing dunning (i.e. handling when a credit card has expired or rejected a charge).

Comparison Chart

Heads up! Hover over entries with a star / asterix (*) to see more information

  Subscriptions Payment Gateway Merchant Account Number of Employees

Subscription Management

Recurly Required 3rd party Built-in 3rd party 22
Zuora Required 3rd party 3rd party 259
Chargebee Required 3rd party 3rd party 17
Chargify Required 3rd party 3rd party 10
Licensario Required 3rd party 3rd party 4

Hybrids (gateways with subscription layers)

Stripe Optional Built-in Built-in 33
Paymill Optional Built-in Built-in 29
Braintree Optional Built-in Built-in 124 Optional Built-in Built-in 150
Spreedly Optional Built-in Built-in 4

Payment processors (gateways only)

BeanStream   Built-in Built-in 10

So, How do I pick?

Here are three questions that will help you narrow down your search.

Question 1 – What do your payments look like?

Are you doing simple plan-based billing, or are you going to be charging for variable usage? If you’re building something complicated, then you probably want to look at a company that focuses on SaaS as their primary business instead of a “Hybrid” payment gateway. If you’re doing simple plan-based billing, then you’ll be pleasantly surprised at how quick and easy it can be to configure some of the Hybrid gateways to do just that.

Question 2 – Where are you?

Some providers are only available in a select few countries. For example, Stripe is only available in the USA and Canada, while others, such as Paymill, focus on the European market. Payment processing law is a complicated, region-dependent beast, so you want to make sure that you have the right mix of payment gateway and management layer to help you navigate the legal maze for where your company is headquartered.

Question 3 – How much can you spend?

Most hybrid gateways don’t charge extra for their subscription layer. That’s great news if you’re doing something simple, but if you need the power of the subscription-focused services, you’re going to have to pay extra. Most companies have a mix of monthly fee plus transaction fee, and don’t charge anything to get started. That said, there are some companies, like Zuora, that charge a five-figure price tag to get set up and don’t work with companies under $1M in yearly revenue.


If you still have multiple options after you answer these questions, then try a game — post a support request or a tweet and see which providers gets back to you the quickest. If that still doesn’t help, then take a look the API documentation and pick the one with the cleanest and easiest to use API. At the end of the day, you need to make sure that you trust your provider to be easy to use, give good support, and grow along with you.

How to Pick a Recurring Billing and Payment Provider by
  • Ryan Pfleger

    I would just like to point out PayWhirl ( as a cheaper option than all those listed above. They don’t charge a monthly fee and only take 1% of total processing. Some of the people in the list above take as much as 9.9% for the same features :-/

    • Will Fraser

      Ryan, thanks for the info. We will be updating this article in the near future and will take this into account.

      • bob

        I would like to update this thread – is another option which is non-credit card, non-ACH so it avoids all % transaction fees and only charges a low flat-fee. They own a patent on the fully electronic check under Check 21 rules. It’s exactly the same as ACH to the end-consumer (enters bank info just like ACH) but it’s cheaper, faster (clears in 24 hours) and you get 90 characters to write in plain english what the charge actually is – not bank statement ACH jibberish you can’t decipher.

    • Yohan Park

      I believe that’s 1% on top of Stripe’s fees.

    • Sales & Support

      not international :(
      Anyone knows something like 2co?

  • Mary Rosberg

    Hey there – I’m over at Recurly and wanted to share that we’ve doubled in size since the writing of this article, and are continuing to grow!

    • Will Fraser

      Hi Mary! Thanks for the update. We are actually putting together an update to this article right now to be released in the fall.

      If we email you will you be able to help us get the most recent info for the update?

      • Mary Rosberg

        We’d be delighted to. I’m also eager to learn more about how you’ve integrated to Recurly. We get a fair number of requests on how to handle referrals, and if you’ve already built an integration that is tried/true at this point….

      • ChargeOver

        Hi Will! Chargeover would also be a good one to put on your list. Companies that are growing rapidly or have complicated billing scenarios (multi-currency, metered billing, all of those things) tend to be a fabulous fit for us. Oh — and we now are integrated with Quickbooks, Xero, and Avalara! GUI & API. Happy to help anyone who needs help figuring out the payment gateway/merchant account thing. We were there once too. Tweet us @chargeover or email or visit Thanks!

  • Kevin Coleman

    Please include in your due diligence. You will find this platform full featured, powerful and affordable.

  • Anand Radhakrishnan

    Hi, interesting post on payment gateways. My first question is do B2B companies in the US and India prefer net banking over credit card? for a simple subscription plan with no monthly billing which payment gateway works well for a company based in India.

  • Kevin Coleman

    Please be sure to check out
    Full featured cloud billing and membership platform.

  • Brad W

    A strong player for the SMB market is Fusebill.

  • John William

    I’d like to mention Invoicera, as the best recurring billing software. It’s an online solution that allows you to automate your billing.

  • Balamurugan Natarajan

    Hi Will Fraser,

    Can you add Zoho Subscriptions here. Its an online recurring billing and subscription management app. Helps merchants to accepts payments via Credit card & ACH. In addition, you can also record offline payments. The pricing is Flat $49/month and provides free access and integration to Zoho Books, online accounting software.

  • saif

    I represent a company based in Dubai, UAE. We have a PayPal business account and soon we’re getting a payment gateway based in UAE. We want to use software to manage online subscriptions and also to charge customers periodically. Are there any available for international market such as UAE? if software cannot integrate with our local payment gateway, we’re OK to use it to only manage subscriptions and mark payments done manually for now. Any recommendations on any software that does that?

Read previous post:
The Missing Growth Hack – Don’t Get Left Behind

Growth Hacks are often fun and exciting techniques that, with little effort, can put your company on a rocket-ship trajectory,...