Glossary
Clear, practical definitions for the metrics, processes, and terminology that shape how subscription businesses operate — from billing and revenue recognition to churn, retention, and customer lifetime value.
3D Secure (3DS)
3D Secure (3DS) is an authentication step for online card payments that confirms the person entering a card is the actual cardholder, usually by routing them through a verification challenge controlled by their card issuer, and it's the mechanism used to satisfy Strong Customer Authentication requirements under regulations like the EU/UK's PSD2.
3D Secure 2 (3DS2)
3D Secure 2 (3DS2) is a card authentication protocol that lets an issuing bank verify a shopper's identity during an online payment, shifting fraud-related chargeback liability to the issuer when the issuer approves the authenticated transaction.
Account hierarchy
Account hierarchy models complex billing relationships by linking child accounts to a parent account, so a business can represent a headquarters, franchise network, or multi-entity customer as one connected structure.
Account updater
An account updater is a service that automatically refreshes a customer's stored card details, such as a new number or expiration date, when the card issuer reports a change, so a recurring payment does not fail because the card on file is outdated. It works with card networks directly to reduce involuntary churn.
Accrual accounting
Accrual accounting is a method that records revenue when it is earned and expenses when they are incurred, regardless of when cash actually changes hands, so that financial statements reflect economic activity rather than cash timing.
Accrued revenue
Accrued revenue is revenue a business has earned by delivering a product or performing a service but has not yet billed or collected cash for, recorded as an asset on the balance sheet until it is invoiced and collected.
ACH payments
ACH payments are electronic bank-to-bank transfers processed through the Automated Clearing House network in the United States, where a customer authorizes a business to pull funds directly from their checking or savings account rather than charging a card, with the transfer clearing asynchronously over the following days.
ACH return
An ACH return is a rejected or reversed bank transfer sent back through the Automated Clearing House network with a standardized return code explaining why the payment could not be completed.
Acquiring bank
An acquiring bank, or acquirer, is the financial institution that holds a merchant's account and processes card payments on the merchant's behalf.
Add-ons
An add-on is an optional or required additional charge attached to a subscription plan, priced and configured separately from the plan's base price, letting a business sell extra products, services, seats, or usage without creating a new plan for every combination.
Address verification (AVS)
Address verification (AVS) is a fraud-prevention check that compares the billing address a customer enters at checkout against the address their card issuer has on file, returning a match, partial match, or mismatch response.
Alternative payment methods (APM)
Alternative payment methods (APMs) are ways to pay outside traditional card networks, including bank transfers, wallets, and local payment schemes.
Annual contract value (ACV)
Annual contract value (ACV) is the average annualized revenue value of a single customer contract, used to compare deals of different lengths.
Annual plan discount
An annual plan discount is a price reduction offered to customers who commit to and pay for a year of a subscription at once, rather than paying month to month.
Annual recurring revenue (ARR)
Annual recurring revenue (ARR) is the annualized value of the recurring revenue a subscription business is currently generating from its active subscriptions, calculated as MRR times 12. It is the yearly counterpart to monthly recurring revenue used for long-term planning and reporting.
API
An API (application programming interface) is a set of rules that lets a merchant's software communicate with a billing platform, such as Recurly, to create accounts, manage subscriptions, and process payments programmatically instead of through a manual web interface.
API key
An API key is a secret string that an application sends with each request to identify and authenticate itself to an API, such as Recurly's billing API.
ARPPU
ARPPU (average revenue per paying user) is a metric that measures how much revenue a business generates on average from each paying user over a defined period, calculated by dividing total revenue by the number of paying users.
ASC 606
ASC 606 is the U.S. GAAP accounting standard that defines how and when a company recognizes revenue from contracts with customers, using a five-step model covering contract identification, performance obligations, transaction price, allocation, and recognition.
Authorization
An authorization is the step where a card issuer approves or declines a transaction and places a temporary hold on funds, without transferring any money until the transaction is later captured and settled.
Authorization reversal
An authorization reversal is a message a merchant sends to release a card authorization hold, in full or in part, before the transaction is captured, freeing funds the merchant will not collect. Recurly releases a held authorization only through a full void.
Auto-renewal
Auto-renewal is a subscription term setting that automatically starts a new billing term when the current one ends, so the subscriber does not have to take any action to keep their service active.
Average order value (AOV)
Average order value (AOV) is the average dollar amount a customer spends per order, calculated by dividing total revenue by the number of orders in a given period.
Average revenue per user (ARPU)
Average revenue per user (ARPU) is a metric that measures the average revenue a subscription business generates per user or account over a given period, calculated by dividing total revenue by the total number of users in that period.
Bad debt
Bad debt is the portion of accounts receivable a business does not expect to collect, typically because a customer is unable or unwilling to pay an outstanding balance.
Batch settlement
Batch settlement is the process of submitting a group of authorized card transactions together to be captured and cleared, most often once at the end of the day, so funds move from the cardholders' issuers to the merchant.
Billing cycle
A billing cycle is the recurring period between charges on a subscription, such as monthly, quarterly, or annually, with its length set by the plan's billing interval. It repeats automatically until the subscription is canceled, paused, or its term ends.
Billings
Billings is the total dollar amount a subscription business invoices its customers in a given period, regardless of when that revenue will be recognized. It is a forward-looking read on demand that often signals a change in trajectory before recognized revenue does.
BIN
BIN, or Bank Identification Number, is the first 6-8 digits of a payment card number that identify the issuing institution and card attributes.
Boleto
Boleto (Boleto Bancario) is a Brazilian payment method in which the customer receives a voucher with a barcode to pay at a bank, ATM, retail outlet, or online banking, rather than by charging a card.
Buy now pay later (BNPL)
Buy now pay later (BNPL) lets a customer receive a product or service right away while paying for it in scheduled installments over time, or paying the full price at a later date, with a third-party provider fronting the merchant the funds and collecting from the customer directly.
CAC payback period
CAC payback period is the time, typically in months, it takes a business to recover the customer acquisition cost of a customer through the gross margin that customer generates. It is a capital efficiency metric that shows how quickly acquisition spend can be reinvested into further growth.
Calendar billing
Calendar billing is a subscription billing model in which every subscriber renews on a fixed calendar date, such as the first of the month, instead of on the individual anniversary of the day they signed up.
Cancellation policy
A cancellation policy is the set of rules a subscription business publishes and enforces to govern how, when, and under what conditions a customer can end a recurring subscription, including timing, refunds, notice, and fees.
Capitalized commissions (ASC 340)
Capitalized commissions are sales commissions and other incremental costs of winning a contract that a business records as an asset and amortizes over the expected benefit period, rather than expensing them all at signing. Under ASC 340-40, this matches acquisition cost against the revenue the contract generates over its life.
Capture
A capture is the transaction that finalizes a payment by moving funds a prior authorization had placed on hold, rather than merely confirming they're available. It completes the authorization-and-capture flow subscription businesses use to separate verifying a card from actually collecting payment.
Card network
A card network, such as Visa, Mastercard, American Express, or Discover, is the payment rail that connects card issuers, merchants, and acquiring banks to move a card payment from a cardholder to a merchant.
Card on file
Card on file is both the practice of securely storing a customer's card for future charges and the card-network mandate that governs how merchants must do it.
Card scheme
A card scheme, such as Visa, Mastercard, American Express, or Discover, is the network that sets the rules, branding, and infrastructure for processing payments made with a particular type of card.
Card testing
Card testing, or carding, is a fraud technique where stolen or generated card numbers are run through small transactions to identify which cards are still valid before using them for larger fraud.
Cash-basis accounting
Cash-basis accounting records revenue when cash is received and expenses when cash is paid, rather than when they are earned or incurred.
Chargeback
A chargeback happens when a customer disputes a transaction directly with their bank or card issuer and the funds are forcibly returned to the customer, unlike a refund, which the merchant agrees to and initiates voluntarily.
Chargeback representment
Chargeback representment is the process a merchant uses to dispute a chargeback by submitting evidence to the card network that the original transaction was valid.
Churn prediction
Churn prediction is the practice of using customer data to estimate which subscribers are likely to cancel before they actually do, so a business can act while the customer is still active.
Churn rate
Churn rate is the percentage of subscribers who cancel or fail to renew during a given period, typically measured monthly or annually. It comes in voluntary and involuntary forms, and can be tracked by subscriber count or by the recurring revenue lost.
CIT vs MIT
CIT and MIT describe who starts a card payment: a customer initiated transaction (CIT) is one the cardholder actively begins, while a merchant initiated transaction (MIT) is charged later using stored credentials with no cardholder present, such as a subscription renewal. Recurly tags each charge correctly and carries the original CIT reference into later MITs.
Cohort analysis
Cohort analysis groups subscribers who share a common starting point, most often signup month, and tracks how that group's behavior changes over time rather than relying only on blended company-wide averages. It reveals retention trends and the effects of pricing, onboarding, or channel changes that aggregate metrics can hide.
Collections
Collections is the process a subscription business uses to recover payments that are outstanding or overdue, moving an unpaid invoice back to paid through automated retries and customer communication and, when those fall short, manual follow-up or external escalation.
Competitive pricing strategy
Competitive pricing strategy is a pricing approach in which a company sets its prices based primarily on what competitors charge for similar products or services, rather than solely on internal cost or the specific value delivered to a customer. A business can use it to match the market, undercut it, or price at a premium above it.
Consolidated invoicing
Consolidated invoicing is the practice of combining charges from multiple subscriptions, products, or business units belonging to the same customer into a single invoice with one total due, rather than issuing a separate invoice for each. It reduces friction for customers with complex account structures and cuts internal billing overhead.
Contract asset
A contract asset is a company's right to payment for goods or services already delivered when that right depends on more than the passage of time, such as completing another performance obligation. Under ASC 606 it sits on the balance sheet as recognized but unbilled revenue.
Contract liability
A contract liability is the obligation a business records on its balance sheet when it has received payment, or has the unconditional right to it, before delivering the promised goods or services. Deferred revenue is the most common example, and it is a core output of revenue recognition under ASC 606 and IFRS 15.
Contract terms
Contract terms are the commitment length and conditions a subscriber agrees to when signing up for a plan, including how long they are bound, how billing is scheduled, and what happens at renewal or cancellation.
Contribution margin
Contribution margin is the revenue left from a sale, plan, or customer after subtracting the costs that sale drives directly. For a subscription business it is commonly gross margin minus the sales and marketing cost of acquiring and serving the customer.
Conversion rate
Conversion rate is the percentage of people who complete a desired action — such as finishing checkout, starting a paid plan, or converting from a free trial — out of everyone who had the opportunity to complete it, making it a direct lever for revenue that doesn't require any increase in traffic or acquisition spend.
Conversion rate optimization (CRO)
Conversion rate optimization (CRO) is the practice of improving a website or checkout flow to increase the percentage of visitors who complete a desired action, such as making a purchase or starting a subscription.
Cost-plus pricing
Cost-plus pricing is a pricing method in which a business calculates its cost to produce or deliver a product or service and adds a fixed markup on top to arrive at the selling price, so the price moves with cost rather than with demand or competitor pricing.
Coupons and discounts
A coupon is a code that applies a discount to a customer's charges, either a fixed amount off, a percentage off, or a free trial period. Recurly models each coupon with an explicit discount type, redemption scope, and duration, so a merchant can see exactly what a discount does and how long it lasts.
Credit balance
A credit balance is money a subscription business owes back to a customer's account, held and applied against future invoices rather than paid out as cash. It commonly arises from overpayments, prorated downgrades, refunds issued as credit, or goodwill gestures.
Cross-border payments
Cross-border payments are transactions in which the payer and payee are located in different countries, typically involving currency conversion and international banking or card network routing.
Current ratio
The current ratio is a liquidity metric that measures whether a business can cover its short-term obligations with its short-term assets, calculated as current assets divided by current liabilities. A higher ratio points to more short-term financial cushion.
Customer acquisition cost (CAC)
Customer acquisition cost (CAC) is the average amount a subscription business spends to win one new customer, found by dividing total sales and marketing spend over a period by the number of new customers acquired in that period.
Customer churn
Customer churn is the rate at which a subscription business loses customers over a given period, whether they actively cancel (voluntary churn) or a renewal payment fails and is never recovered (involuntary churn), usually expressed as a percentage of the customers a business had at the start of that period.
Customer concentration
Customer concentration measures how much of a business total revenue comes from a small number of its customers, indicating how exposed the business is to the loss of any single account.
Customer health score
A customer health score is a composite metric, usually expressed as a single number, letter grade, or color, that summarizes how likely a customer is to renew, expand, or churn based on multiple underlying signals.
Customer lifetime
Customer lifetime is the average length of time a customer continues paying before churning, typically expressed in months or years and calculated as the inverse of churn rate. It is a foundational input into customer lifetime value.
Customer lifetime value (LTV / CLV)
Customer lifetime value (LTV or CLV) is the estimated total profit or revenue a subscription business can expect from an average customer across their entire relationship, from signup until they churn, calculated as average revenue per customer times gross margin divided by the churn rate.
Data migration
Data migration is the process a subscription business uses to move its existing customer, billing, and subscription data out of a legacy system and into a new platform, so that accounts, subscriptions, and stored payment methods remain intact and keep billing without interruption.
Decline codes
A decline code is the short code or message an issuing bank or card network sends back when it refuses to authorize a payment, indicating why the transaction was not approved.
Decline recovery
Decline recovery is the set of processes — automated retries, card refreshes, and dunning communication — a subscription business uses to recapture revenue from payments that failed on the first attempt.
Deferred revenue
Deferred revenue, also called unearned revenue, is money a business has billed or collected from a customer but has not yet recognized as earned income because it has not yet delivered the product or service, and it sits on the balance sheet as a liability until earned.
Digital subscription
A digital subscription is a commerce model in which a customer pays on a recurring basis for ongoing access to digital content, software, or services rather than for a one-time purchase or a physical product.
Digital wallet
A digital wallet is a software application that securely stores a person's payment credentials, often protected by tokenization, letting them pay without re-entering card details each time.
Discount strategy
A discount strategy is a deliberate, structured approach to reducing the price a customer pays, used to influence a specific business outcome such as winning a new customer, encouraging a longer commitment, or reducing churn.
Dunning
Dunning is the automated process a subscription business uses to recover a failed payment by retrying the charge on a set schedule while prompting the customer to fix the underlying issue before the subscription lapses. It combines payment retries with customer communication to recover revenue that was already earned but not yet collected.
Dunning management
Dunning management is the structured, often automated process a subscription business uses to recover failed payments by combining scheduled retry attempts with a sequence of customer communications asking them to update their payment details. It is one of the main levers for reducing involuntary churn.
Dynamic currency conversion
Dynamic currency conversion (DCC) is a service that lets a cardholder see and pay a transaction amount in their home currency instead of the merchant's local currency, with the conversion calculated at the moment of purchase.
Dynamic pricing
Dynamic pricing is the practice of adjusting the price of a product or service in response to changing conditions such as demand, timing, customer segment, or competitor pricing, rather than holding one fixed price.
E-invoicing
E-invoicing is the exchange of invoice data between a supplier and a buyer in a structured, machine-readable format, rather than a PDF or paper document, so a buyer's system or government platform can process it automatically.
EBITDA
EBITDA stands for earnings before interest, taxes, depreciation, and amortization, a measure of operating profitability that starts with net income and adds back those items. It lets businesses with different financing and tax situations be compared on how well their core operations perform.
Entitlement management
Entitlement management is the process of defining, granting, and automatically updating the access rights that determine which features, content, or services a subscriber can use based on their current plan or purchase. It keeps access consistent across web, mobile, and app store surfaces by centralizing those rights against the subscription record rather than hardcoding them into each product separately.
Exit survey
An exit survey, also called a cancellation survey or churn survey, is a short questionnaire presented to a customer at the moment they cancel, asking why they are leaving.
Failed payment recovery
Failed payment recovery is the combination of automated retries and dunning campaigns Recurly uses to win back revenue from a declined charge before it becomes lost, involuntary churn.
Flat-rate pricing
Flat-rate pricing is a model in which customers pay a single fixed price for access to a product or service, regardless of how much they use it or how many people use it.
Fraud prevention
Fraud prevention is the set of tools and processes a subscription business uses to detect and stop fraudulent transactions — such as stolen-card use, account takeover, and fake sign-ups — before they cause lost revenue or chargebacks, typically combining automated risk scoring, verification checks, and configurable approval rules.
Fulfillment
Fulfillment is the set of operations required to complete a customer order after it is placed, including receiving and storing inventory, picking and packing items, shipping them, and handling any returns or exchanges.
GAAP revenue
GAAP revenue is the amount of revenue a company reports on its financial statements under Generally Accepted Accounting Principles, generally recognized as a service is delivered rather than when cash is collected.
Gateway routing
Gateway routing is the practice of directing each payment to one of several connected payment gateways based on transaction attributes or rules.
General ledger
A general ledger is the central accounting record that holds all of a company's financial transactions, organized into accounts for assets, liabilities, equity, revenue, and expenses, with every transaction recorded as a balanced double-entry.
Gift subscription
A gift subscription is a subscription one customer (the gifter) purchases so someone else (the recipient) can use it instead, delivered either as a redeemable gift card or as a gift plan that starts immediately.
Good-better-best pricing
Good-better-best pricing is a tiered pricing strategy that presents the same product in three ascending versions, letting customers self-select the tier that fits their needs and budget.
Grace period
A grace period is a defined window of time after a subscription payment fails or a billing term ends during which a customer keeps access to the service before it is suspended or canceled, giving both sides time to resolve the issue.
Grandfathering
Grandfathering is the practice of letting existing subscribers keep their current plan, pricing, or terms after a company changes pricing or packaging for new customers, so only new signups move to the updated terms.
Gross burn rate
Gross burn rate is the total cash a company spends each month to operate, before subtracting any incoming revenue. It measures the raw cost of running the business and, paired with net burn and cash on hand, helps a company judge its worst-case spending and runway.
Gross margin
Gross margin is the share of revenue a business keeps after subtracting the direct cost of delivering its product or service, expressed as a percentage. It measures the efficiency of the core delivery engine and sets the ceiling on how profitable a business can be.
Gross merchandise value (GMV)
Gross merchandise value (GMV) is the total value of goods or services sold through a marketplace or platform over a period, before deductions.
Gross revenue
Gross revenue is the total amount a business earns from selling its products and services over a period, counted at full value before refunds, credits, discounts, or allowances are subtracted. It is the top-line figure that shows the full scale of what a business sold.
Hard decline
A hard decline is a payment failure the card issuer flags as permanent, meaning the same card will fail again unless the customer provides an updated payment method.
Hard vs soft declines
A hard decline is a permanent card refusal that will not succeed on retry, while a soft decline is a temporary failure, such as insufficient funds, that may succeed if the charge is attempted again. Recurly reads the issuer's decline code to decide whether to retry.
Headless commerce
Headless commerce is an architectural approach that separates the customer-facing front end of a store or subscription experience from the back-end commerce engine, connected through APIs.
Hybrid billing
Hybrid billing is a pricing model that combines more than one billing method in a single subscription, most often a fixed recurring base fee paired with usage-based charges for consumption beyond an included allowance. It gives a business a predictable revenue floor with upside from usage.
Idempotency
Idempotency is the property that lets an operation, such as a payment or subscription API call, be safely repeated without producing a duplicate result.
IFRS 15
IFRS 15 is the international accounting standard that governs how and when a company recognizes revenue from contracts with customers, using a shared five-step model with its US counterpart ASC 606. For subscription businesses, it determines how recurring revenue is recognized over the service period rather than when cash is collected.
Incremental authorization
Incremental authorization is a payment operation that increases the amount held on an existing card authorization instead of creating a new one, letting a merchant's hold track a total that keeps growing during an open transaction. Recurly does not support incremental authorization.
Integration
An integration is a connection that links a subscription or billing platform to an external system, such as a CRM, accounting tool, data warehouse, or support desk, so that data and actions can flow between them automatically.
Interchange fees
Interchange fees are the fees charged by credit card networks on a transaction, with the rate depending on the transaction data submitted, amount, card brand, merchant category, and other factors.
Interchange optimization
Interchange optimization is the practice of structuring how a payment is processed and what transaction data is submitted so the transaction qualifies for the lowest available interchange rate.
Inventory management
Inventory management is the practice of tracking, controlling, and optimizing the goods a business holds so it can meet demand without tying up more capital in stock than it needs.
Invoice management
Invoice management is the process of creating, sending, tracking, and reconciling invoices from the moment a charge is billed to the moment it is paid and recorded.
Invoicing
Invoicing is the process a subscription business uses to record, present, and collect payment for each recurring or one-time charge a customer owes, with each invoice capturing what was purchased, the price, and the payment status in a single document that acts as both a request for payment and, once paid, a proof of purchase.
Involuntary churn
Involuntary churn happens when a customer's subscription lapses because a payment failed — such as an expired card or a declined transaction — rather than because the customer chose to cancel, which makes it a largely preventable form of revenue loss that dunning and account-updater tools are designed to catch.
Issuing bank
The issuing bank is the financial institution that issued a subscriber's card and makes the final decision to approve or decline any charge on it, including recurring subscription payments.
Level 2 and 3 data
Level 2 and 3 data are additional transaction details — such as tax amounts, customer codes, and line-item detail — that a merchant can pass with a card payment beyond the basic amount and card number, often qualifying B2B transactions for lower interchange rates.
Liability shift
Liability shift is the transfer of financial responsibility for a fraudulent or disputed transaction from the merchant to another party, typically the card issuer, when required authentication was completed.
Local payment methods
Local payment methods are the payment types customers in a specific country or region prefer or expect to use, such as bank transfers, direct debit, digital wallets, or region-specific card schemes.
Logo churn
Logo churn is the percentage of customer accounts that cancel or fail to renew during a given period, measured without regard to how much revenue each account represented.
Logo retention
Logo retention is the percentage of customer accounts that remain active at the end of a period compared with the number active at the start, counted by account rather than revenue.
Loyalty program
A loyalty program is a structured initiative that rewards customers for continued purchasing or engagement, using incentives such as points, tiers, discounts, or exclusive perks to encourage repeat business.
LTV:CAC ratio
The LTV:CAC ratio compares a customer's lifetime value to the cost of acquiring that customer, showing whether a business generates enough long-term value to justify its acquisition spend. A higher ratio generally points to a more efficient go-to-market motion.
Merchant category code (MCC)
A merchant category code (MCC) is a four-digit number card networks assign to a business to classify what it sells, shaping the interchange rate, rewards eligibility, and reporting treatment applied to every transaction.
Merchant ID (MID)
A merchant ID (MID) is a unique identifier that a payment processor, acquiring bank, or card network assigns to a business so transactions can be routed to and settled with the correct merchant account.
Merchant of record (MoR)
A merchant of record (MoR) is the entity legally responsible for a transaction, including collecting payment, remitting applicable taxes, and handling refunds and chargebacks. A business can act as its own MoR or use a partner that takes on that role and its associated compliance burden.
Metered billing
Metered billing is a pricing and invoicing model in which a customer is charged based on actual usage of a product or service during a billing period, rather than a fixed recurring fee. Usage is tracked continuously and the final invoice reflects however much or little the customer consumed.
Month-end close
Month-end close is the process finance teams run at the end of each accounting period to verify, reconcile, and finalize the financial records before reporting results.
Monthly recurring revenue (MRR)
Monthly recurring revenue (MRR) is the revenue a subscription business recognizes each month from its active subscriptions, normalized across billing frequencies into a single monthly figure. It is broken into new, expansion, contraction, churned, and reactivation categories that explain what drove the change.
Months of runway
Months of runway is the number of months a business can keep operating at its current net cash burn rate before running out of money, calculated by dividing cash on hand by net monthly burn. It converts cash position and burn rate into a concrete time horizon that guides fundraising timing and spending decisions.
Multi-currency billing
Multi-currency billing is the ability to charge subscribers in more than one currency, with a distinct, explicit price set for each currency and the currency fixed to the subscription once it begins.
Negative churn
Negative churn occurs when the revenue a subscription business gains from existing customers through upgrades and expansions exceeds the revenue it loses through downgrades and cancellations.
Net burn rate
Net burn rate is the rate at which a company cash balance declines over a given period, after accounting for both cash going out and cash coming in, typically expressed as a dollar amount per month.
Net revenue
Net revenue is the revenue a business keeps from sales after subtracting refunds, returns, discounts, and allowances or credits from gross revenue. It gives a truer measure of earned revenue than gross revenue alone.
Net revenue retention (NRR)
Net revenue retention (NRR) is the percentage of recurring revenue retained from a company's existing customer base over a period, after accounting for expansion, contraction, and churn, excluding new customer revenue. It shows whether the existing base is gaining or losing value on its own.
Net terms (Net 30 / 60)
Net terms are a payment arrangement where a business invoices a customer and gives them a set number of days, such as 30 or 60, to pay in full after the invoice date rather than charging at time of purchase. They are common in B2B subscription contracts and require a deliberate collections process since they extend short-term credit to the customer.
Network tokenization
Network tokenization is a security process where a card network like Visa or Mastercard replaces a customer's actual card number with a unique digital token tied to a specific card, merchant, or platform.
NSF
NSF, or non-sufficient funds, is a payment failure that occurs when a customer's bank account or card lacks enough money to cover a charge.
Open banking
Open banking is a framework in which banks give licensed third-party providers secure, standardized access to customer financial data and payment initiation through APIs, with the customer's consent.
Order form
An order form is the commercial document that records what a customer has agreed to buy, including products or plans, quantities, prices, discounts, billing frequency, and contract term for a given deal.
Order management system (OMS)
An order management system (OMS) is software that tracks and coordinates an order from the moment it is placed through fulfillment, delivery, and any returns.
Overage
An overage is a usage-based billing charge a customer incurs for consumption beyond the allowance included in their plan, such as extra API calls or storage. Charges are calculated after usage occurs and billed at the end of the cycle at a defined overage rate.
Partial capture
Partial capture is settling less than the full amount of a card authorization, charging only the true amount owed and releasing the rest of the hold. Recurly does not support partial capture; a capture must match the full authorized amount.
Pay by bank
Pay by bank, or account-to-account (A2A) payment, moves funds directly from a customer's bank account to a merchant's account without routing through a card network.
Payment decline
A payment decline is when a card issuer or processor refuses to approve a transaction, and declines fall into temporary soft declines and permanent hard declines that call for different recovery actions.
Payment gateway
A payment gateway is the secure conduit that tokenizes a customer's payment details, passes them to a payment processor for authorization, and returns an approval or decline for each charge, serving as the entry point every subscription payment must pass through.
Payment link
A payment link is a URL that takes a customer to a hosted page where they can complete a payment, letting a business collect a payment or start a subscription without building a custom checkout.
Payment method
A payment method is the specific instrument a customer uses to pay, such as a credit or debit card, a bank debit, or a digital wallet, stored securely so recurring charges can run automatically.
Payment orchestration
Payment orchestration is the practice of routing and managing payment transactions across multiple processors and payment methods through a single integration layer, rather than integrating with each processor separately.
Payment processor
A payment processor is the entity that moves money between a customer's bank and a merchant's account during a transaction, routing the request through the card network to the issuing bank, receiving an approval or denial, and transferring funds once the payment is authorized — distinct from a payment gateway, which tokenizes and transmits the payment data at checkout.
Payment retries
Payment retries are the automated, scheduled re-attempts a business makes to collect a charge after a subscriber's payment first fails, working independently of dunning to recover revenue without any subscriber-facing action.
Payout
A payout is the transfer of collected funds from a payment provider or acquiring bank into a business's bank account, representing the net cash a subscription business receives after transactions are settled, fees deducted, and refunds or chargebacks accounted for.
PCI DSS compliance
PCI DSS compliance means meeting the Payment Card Industry Data Security Standard, the security framework created by the major card networks that governs how any business storing, processing, or transmitting payment card data must protect it, through requirements like encryption, access control, and vulnerability monitoring.
Penetration pricing
Penetration pricing is a go-to-market strategy in which a business launches a product or subscription at a deliberately low price to win market share quickly, then raises or normalizes the price once it has built a customer base.
Per-seat pricing
Per-seat pricing is a subscription pricing model in which a customer pays a set fee for each individual user, or seat, that can access the product, so the total bill scales with the number of assigned seats rather than with usage.
Per-unit pricing
Per-unit pricing is a pricing model in which a customer is charged a set price for each individual unit of a product or service they use or purchase.
Percentage of completion
Percentage of completion is a revenue recognition method that lets a business recognize revenue and expenses for a long-term contract in proportion to the work finished during each reporting period, rather than waiting until the contract is fully delivered.
Performance obligation
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and it's the unit of account used under ASC 606 and IFRS 15 to determine when and how much revenue can be recognized.
PIX
PIX is Brazil's instant payment system, letting a payer send money directly from their bank account to a recipient in seconds.
Plan migration
Plan migration is the process of moving existing subscribers from one pricing plan to another while keeping their subscriptions active, typically when a business renames, reprices, restructures, or retires a plan. It requires deciding how each subscriber moves, when, and how any mid-cycle price difference is handled.
Pre-authorization
A pre-authorization is a request that confirms a card is valid and has sufficient funds for a specified amount by placing a temporary hold, without transferring any money until the merchant later captures the charge.
Prepaid subscription
A prepaid subscription is a subscription where the customer pays for multiple billing periods upfront in a single payment, usually at a discount, instead of being charged each cycle.
Price anchoring
Price anchoring is a pricing technique rooted in behavioral economics in which the first price a customer sees, the anchor, shapes how they judge every price they encounter afterward. A well-placed anchor can make a later price feel like a bargain or a premium option feel more justified.
Price elasticity
Price elasticity of demand measures how much the quantity a customer buys changes in response to a change in price, calculated as the percentage change in quantity demanded divided by the percentage change in price.
Price increase
A price increase is a deliberate change that raises the amount an existing customer is charged for a subscription, applied immediately, at renewal, or on a specified future date, and requires notice, communication, and often a grandfathering decision.
Price localization
Price localization sets a deliberate price for each market in its local currency, based on local buying power and payment norms, rather than a raw exchange-rate conversion.
Pricing strategy
A pricing strategy is the deliberate approach a business takes to decide what customers pay, how they pay it, and when that price changes.
Primary account number (PAN)
A primary account number (PAN) is the full digit sequence on a payment card that uniquely identifies the cardholder's account with the issuing bank.
Product bundling
Product bundling groups multiple individual products or services together and sells them as a single offering, often at a combined price and often as a recurring subscription.
Product-led growth (PLG)
Product-led growth (PLG) is a go-to-market strategy in which the product itself is the main driver of acquiring, converting, and expanding customers, rather than sales outreach.
Promotional pricing
Promotional pricing is a temporary reduction in price, or another short-term incentive, used to drive a specific business outcome such as acquiring new customers, boosting sales, launching a product, or winning back a lapsed customer. Unlike a permanent price change, it has a defined start and end point.
Proration
Proration is the practice of calculating a partial charge or credit for a subscription based on the portion of a billing period actually used, most commonly applied when a subscriber changes plans, changes quantity, or changes their bill date in the middle of a billing cycle.
Provisioning
Provisioning is the process of granting a customer access to the product, features, or service level they paid for once a subscription event, like a signup or upgrade, is confirmed.
Psychological pricing
Psychological pricing is a pricing strategy that sets prices to influence how customers perceive value, rather than basing price solely on cost or market positioning, drawing on documented patterns in consumer behavior such as the left-digit effect.
Reactivation
Reactivation, also known as winback, is the process of bringing a lapsed or canceled customer back to active, paying status on a subscription, whether they resubscribe after canceling or return to good standing after a failed payment or a pause.
Recurring billing
Recurring billing is the practice of automatically charging a customer at regular intervals for ongoing access to a product or service, rather than requiring a new purchase each time. It is the model most subscription businesses run on, with the collection method (automatic or manual) and net terms determining exactly when and how each charge is collected.
Recurring payments
Recurring payments are charges a business collects from a customer automatically on a repeating schedule, using a payment method the customer has agreed to keep on file.
Referral program
A referral program is a structured marketing approach in which a business encourages its existing customers to recommend its products or services to new prospects, offering a reward once a qualifying action is completed.
Refund
A refund reverses all or part of a previous subscription charge back to the customer, always tied to the original transaction it is refunding.
Renewal rate
Renewal rate is the percentage of subscriptions or customers up for renewal in a given period that actually renew, rather than canceling or lapsing.
Replatforming
Replatforming is the process of migrating a business core technology stack, such as an ecommerce platform, subscription billing system, or content management system, from one vendor or architecture to another.
Replenishment
Replenishment is a subscription commerce model in which a business automatically ships a consumable product to a customer on a recurring schedule, so a fresh supply arrives before the current one runs out.
Resurrection revenue
Resurrection revenue is recurring revenue generated when a previously churned customer reactivates a subscription, distinct from revenue from new signups or expansion of existing accounts.
Retention rate
Retention rate is the percentage of customers a subscription business keeps over a given period, measured against the customers it started with and excluding any newly acquired customers, making it the inverse of churn rate and a key driver of customer lifetime value.
Retrieval request
A retrieval request is a request from a cardholder's issuing bank asking a merchant for more information about a transaction, often before a chargeback.
Retry cascade
A retry cascade is an ordered sequence of automatic attempts to collect a failed subscription payment, varying timing, gateway, or method.
Retry schedule
A retry schedule is the set of rules a subscription business uses to determine when and how many times to reattempt a failed recurring payment before giving up. It balances recovering revenue from temporary payment failures against avoiding excessive fees or customer annoyance.
Revenue backlog
Revenue backlog is the total value of contracted revenue not yet recognized, including both billed-but-unearned amounts and unbilled amounts still owed under signed contracts. It gives finance and leadership visibility into future revenue beyond what deferred revenue alone shows.
Revenue churn
Revenue churn is the percentage of recurring revenue a subscription business loses over a period due to cancellations, downgrades, or non-renewals.
Revenue forecasting
Revenue forecasting is the process of estimating a company's future revenue using historical performance, pipeline or subscriber data, and assumptions about growth, churn, and pricing. For a subscription business, it starts from recurring revenue already under contract and layers on assumptions about new, expansion, contraction, and churned revenue.
Revenue leakage
Revenue leakage is revenue that a business has earned or is entitled to collect but never actually receives or recognizes, due to gaps, errors, or inefficiencies in billing, pricing, contracting, or collections.
Revenue per employee
Revenue per employee is an efficiency metric measuring how much revenue a company generates for each employee, calculated as revenue divided by headcount.
Revenue recognition
Revenue recognition is the accounting principle that determines when and how a business records revenue it has earned from a customer contract, rather than simply when cash arrives, so that a subscription's billed amount is separated from the portion actually earned as service is delivered over the contract's life.
Revenue run rate
Revenue run rate projects a company's future annual revenue by extrapolating a recent period, commonly a month or quarter, across a full year.
Revenue waterfall
A revenue waterfall is a report that projects how contracted revenue will be recognized across future periods based on each contract's service dates, showing when deferred revenue is expected to convert into recognized revenue rather than as a single figure.
Rolling reserve
A rolling reserve is a risk-control arrangement where a payment processor withholds a percentage of a merchant's card sales for a set period before releasing it.
Rule of 40
The Rule of 40 is a guideline for software and subscription businesses that says revenue growth rate plus profit margin should add up to at least 40 percent. It balances the trade-off between growing fast and being profitable in a single number.
SaaS magic number
The SaaS magic number is a sales efficiency metric that measures how much new recurring revenue a company generates for each dollar spent on sales and marketing in the prior quarter. It gives a quick, standardized gauge of go-to-market efficiency using only standard revenue and spend figures.
Sales tax
Sales tax is a consumption tax that businesses collect from customers at the point of sale and remit to state and local tax authorities, and for subscription businesses each billing event — a renewal, plan change, add-on, credit, or refund — can require its own separate tax determination based on the customer's location and the product's taxability there.
Sandbox
A sandbox is a test environment for a subscription or billing platform, letting a business configure and try out plans, pricing, and payment gateway setups using simulated transactions before it has any real, paying customers. Configuration built in a sandbox is generally designed to carry over to production, but test data must typically be cleared before going live.
SCA exemption
An SCA exemption is a qualifying case, such as a low-value or merchant-initiated transaction, that lets a card payment skip strong customer authentication even in a market that normally requires it, subject to the issuer's approval.
SDK
An SDK (software development kit) is a bundled toolkit of libraries, code samples, and documentation that makes it faster and less error-prone to integrate a service like a billing API.
Seat expansion
Seat expansion is when an existing customer adds more user seats or licenses to a per-seat subscription, growing recurring revenue on the account without a new sales deal. It is a form of expansion revenue that reflects real product adoption within the account.
Self-service portal
A self-service portal is a web interface that lets subscription customers manage their own account, billing, and payment method without contacting support.
SEPA direct debit
SEPA direct debit is a payment method for processing euro-denominated one-time and recurring payments across the UK and EU, using a customer's name and IBAN bank account number instead of a card.
SEPA mandate
A SEPA mandate is the authorization a customer gives a business to collect payments from their bank account via SEPA Direct Debit within the euro area.
Settlement
Settlement is the process that finalizes an approved and captured card transaction, moving funds from the cardholder's bank to the merchant's account, net of fees.
Smart retries
Smart retries is a dunning technique that reattempts a failed subscription payment at intelligently chosen times, rather than on a fixed schedule, to maximize the chance each retry succeeds. It uses signals like the decline reason and historical recovery patterns to recover revenue lost to involuntary churn.
Soft decline
A soft decline is a payment failure caused by a temporary condition, such as insufficient funds or an issuer hold, rather than a permanent problem with the card itself. Because the cause is usually short-lived, it's a strong candidate for an automatic retry rather than a request for a new payment method.
Standalone selling price (SSP)
Standalone selling price (SSP) is the price at which a business would sell a good or service on its own, and it is the basis ASC 606 and IFRS 15 use for allocating a bundled contract's total price across its separate performance obligations.
Statement descriptor
A statement descriptor is the short line of text that appears next to a charge on a customer's bank or card statement, identifying the merchant that billed them.
Stored credential
A stored credential is a customer's payment information, such as a card number, that a business keeps on file with the customer's consent so it can charge that payment method again later without asking for the details each time.
Straight-line recognition
Straight-line recognition is a method of recognizing revenue in equal amounts across each period of a contract's service term, rather than all at once. It is the standard approach under ASC 606 and IFRS 15 for subscriptions where value is delivered evenly over time.
Strong customer authentication (SCA)
Strong customer authentication (SCA) is a PSD2 regulatory requirement mandating that electronic payment authentication use at least two of three independent factors: something the customer knows, has, and is.
Subscribe and save
Subscribe and save is an e-commerce program in which a customer agrees to receive a product on a recurring schedule, often in exchange for a discount off the regular one-time purchase price.
Subscription billing
Subscription billing is the process of automatically and repeatedly charging customers on a recurring schedule, such as monthly or annually, for ongoing access to a product or service. It also covers everything that keeps recurring revenue accurate over time, including plan changes, prorations, failed payments, taxes, and cancellations.
Subscription box
A subscription box is a recurring commerce model in which a customer signs up to receive a curated package of physical goods on a set schedule, most often monthly, in exchange for a recurring fee.
Subscription business model
A subscription business model is one in which customers pay a recurring fee for ongoing access to a product or service, rather than buying it once, keeping access for as long as they keep paying.
Subscription cancellation
Subscription cancellation is a subscriber's request to stop an active subscription — a distinct moment from expiration, since a canceled subscription typically stays active through the end of its current billing cycle or term, leaving a window where it can still be retained, won back, or reactivated.
Subscription lifecycle
The subscription lifecycle is the full sequence a subscriber moves through with a recurring business, from first discovering the offer to eventually canceling or lapsing.
Subscription management
Subscription management is the set of processes and systems a business uses to handle the full lifecycle of a recurring customer relationship, from signup through billing, plan changes, renewals, and cancellation.
Surcharging
Surcharging is the practice of adding an extra fee to a transaction when a customer pays with a credit card, to offset the interchange and processing costs the merchant incurs for accepting that card.
Take rate
Take rate is the percentage of total transaction volume that a platform, marketplace, or payment facilitator keeps as its own revenue for enabling the transaction. It is a core monetization metric blending transaction fees, subscription fees, advertising, and value-added services.
Tax calculation
Tax calculation is the process of determining the correct sales tax, VAT, GST, or other transaction-based tax to apply to an invoice, based on the customer's location, what is being sold, and any applicable exemptions.
Tokenization
Tokenization is the process of replacing sensitive card data with a non-sensitive substitute called a token, letting merchants bill saved cards for recurring payments without storing the actual card number.
Total contract value (TCV)
Total contract value (TCV) is the full value of a customer contract over its entire term, including recurring subscription fees, one-time charges, and any other billable amounts specified in the agreement.
Transaction price
Transaction price is the amount of consideration a business expects to receive for transferring goods or services to a customer, and it is the third step of the ASC 606 and IFRS 15 five-step revenue recognition model.
Trial-to-paid conversion
Trial-to-paid conversion is the share of people who start a free or discounted trial and then become paying customers, usually expressed as a rate.
True-up
A true-up is a billing adjustment that reconciles what a customer was originally billed against actual usage, seat counts, or contract terms measured over a period, usually invoiced at renewal.
Unbilled revenue
Unbilled revenue is revenue a business has earned and recognized under accrual accounting rules but has not yet invoiced to the customer, typically because billing lags behind delivery or performance obligations. It is common in subscription and contract-based businesses whose billing schedules do not align exactly with revenue recognition.
Unearned revenue
Unearned revenue is money a business has collected from a customer for goods or services it has not yet delivered, recorded as a liability on the balance sheet until the company delivers.
Unit economics
Unit economics are the direct revenues and costs of a business model measured on a per-unit basis, usually a single customer in a subscription business. They combine CAC, LTV, and payback period to show whether acquiring and serving a customer generates more value than it costs.
Upgrades and downgrades
Upgrades and downgrades are changes a subscriber makes to move to a higher or lower plan tier, quantity, or set of features within an existing subscription without canceling it, with the billing system adjusting pricing going forward and often generating a prorated credit, charge, or both for the change happening mid-cycle.
Upsell and cross-sell
Upsell and cross-sell are two ways of growing revenue from an existing subscriber: an upsell moves them to a higher-value plan, while a cross-sell adds a complementary product or service.
Usage metering
Usage metering is the process of measuring how much of a product or service a customer consumes, in countable units like API calls or gigabytes stored, so that consumption can be billed accurately. It is the measurement layer underneath usage-based and hybrid pricing models.
Usage-based billing
Usage-based billing charges customers based on how much of a product or service they actually consume, rather than a fixed amount agreed to in advance.
Value-based pricing
Value-based pricing is a pricing strategy that sets price primarily on the value a product or service delivers to the customer, such as cost savings, revenue gained, time saved, or risk avoided, rather than on production cost or competitor prices.
VAT
VAT, or value added tax, is a consumption tax applied at each stage of production or distribution — with each business reclaiming the VAT it paid on its own purchases — so that the full cost ultimately lands on the end consumer, who cannot reclaim it.
Virtual card
A virtual card is a payment card that exists only as digital details — a card number, expiration date, and security code — with no physical plastic, issued electronically and often restricted by spend, merchant, or time.
Void
A void is the payment step that cancels a card transaction, such as an authorization or a captured charge, before it settles, so no money ever changes hands.
Volume pricing
Volume pricing is a pricing model in which the per-unit price a customer pays is determined by the total quantity purchased, with that single unit price applied retroactively to the entire quantity once a threshold is reached. It gives businesses a simple, predictable way to reward larger commitments.
Webhook
A webhook is an automated HTTP message a system sends to a URL the instant a qualifying event happens — such as a new account, a renewal, a failed payment, or a cancellation — so another application is notified immediately instead of having to repeatedly poll for changes.
Willingness to pay
Willingness to pay, often abbreviated WTP, is the maximum price a customer is willing to pay for a product or service before deciding not to buy it. It reflects the perceived value a customer places on an offering and is a foundational input to pricing strategy.
Win-back (campaign)
A win-back campaign is targeted outreach designed to bring back customers who have cancelled or lapsed, using a relevant message or offer to restart the relationship.
Working capital
Working capital is the money a business has available to cover day-to-day operations, calculated as current assets minus current liabilities. A positive figure means a company can fund short-term obligations from its own resources; a negative figure signals a need for outside financing.
Write-off
A write-off is an accounting action that removes an uncollectible asset, most often an unpaid customer invoice, from a company's books and recognizes it as a bad debt expense. It typically happens at the end of the collections process, after dunning, retries, and other recovery efforts have failed.
