Business Models
Subscription Billing
Definition
Subscription Billing a payment model where customers are charged on a recurring schedule (monthly, annually, etc.) for ongoing access to products or services. Requires card-on-file capability and careful attention to authorization rates, dunning, and involuntary churn. Card networks have specific rules for subscription billing including clear disclosure and easy cancellation. Higher risk classification due to chargeback patterns.
Related Terms
Recurring Payments
Transactions that repeat automatically at set intervals using stored payment credentials. Includes subscription billing and installment plans. Requires proper cardholder consent and clear terms. SCA exemptions may apply for fixed-amount recurring in Europe. Card updater services essential to maintain payment continuity when cards are reissued.
Card-on-File
Storing customer payment credentials for future transactions without requiring re-entry. Essential for recurring billing, one-click checkout, and repeat purchases. Must use tokenization for PCI compliance. Card networks have specific rules including obtaining consent and identifying stored credential transactions. Network tokens improve approval rates for card-on-file.
Dunning
The process of recovering failed subscription payments through retries and customer communication. Includes automated retry attempts, customer notifications, and grace periods before cancellation. Effective dunning recovers 10-30% of failed payments. Optimize retry timing based on decline reason. Balance persistence with customer experience - over-aggressive dunning annoys customers.
Need help navigating payment terminology?
We speak fluent payments. Let us translate for your business.
Talk to Us