Recurring billing is a payment arrangement where a business charges the same customer repeatedly on a schedule for ongoing goods or services. Each cycle can use a saved card token, wallet, bank debit or mandate.
Why it matters
It is the money engine behind SaaS and other subscription models. Beyond charging on a date, a billing system has to handle proration when plans change, trials, taxes, invoices, failed payments and cancellations. Failed charges are common because cards expire or lack funds, so businesses use retry schedules and reminder emails, a process often called dunning. Involuntary churn from payment failures can be a notable share of lost subscribers. Webhooks from the payment provider notify the app of successes and failures.
Example
Day 0 Sign up, 14-day trial, card saved as token
Day 14 First charge 999, invoice sent
Day 44 Second charge fails (insufficient funds)
Day 47 Retry succeeds, subscription stays activeIf retries all fail, the system might pause access and email the customer to update their payment method.
Common mistakes
- Charging without clear consent, price and cancellation terms. Consumer rules vary by country.
- Not handling webhooks idempotently, which can grant access twice or miss a failure.
- Retrying too aggressively and annoying customers or banks.
Rules vary by country; this entry is a definition only.
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