Recurring payments
DEFINITION
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.
TABLE OF CONTENTS
RELATED TERMS
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. Rather than asking the customer to pay each time, the business charges the saved method at a set interval, such as monthly or yearly.
Recurring payments are the mechanism behind subscriptions, memberships, and any service billed on a cycle. They rest on two things: the customer's consent to be charged again, and a stored payment method the business can charge without the customer present. The interval can be fixed, such as the same amount every month, or it can vary when the amount depends on usage. A subscription platform such as Recurly runs recurring payments by storing the payment method, charging it on schedule, and retrying charges that fail. Recurly supports multiple billing models, including fixed, volume, tiered, stairstep, usage-based, and ramp pricing, stores the payment method as a token, and runs Intelligent Retries for card declines, treating hard declines as non-retryable by default and scheduling soft-decline retries based on the specific decline reason.
Why recurring payments matter for subscription businesses
Recurring payments turn one sale into ongoing revenue. Because the charge repeats automatically, the business collects payment each cycle without re-selling the customer every time, which is the foundation of predictable subscription revenue. For the customer, the arrangement removes the effort of paying manually, so access continues without interruption as long as the payment succeeds.
The trade-off is that revenue now depends on charges clearing every cycle. When a card expires or a payment is declined, the business loses revenue from a customer who may still want the service. This is why recovery tools such as retries and card updaters matter so much in a recurring model, and why handling failed payments well protects both revenue and retention. Recurly runs Intelligent Retries for cards, a separate static retry process for direct debit methods, and Account Updater, which proactively refreshes stored cards through Visa, Mastercard, American Express, and Discover.
How recurring payments work
The customer agrees to recurring charges and provides a payment method.
The business stores that payment method securely as a token with the customer's consent.
On each billing date, the business charges the stored method for the amount due.
If the charge succeeds, the customer's access or service continues for the next cycle.
If the charge fails, the business retries it and may contact the customer to update their details.
The customer can change or cancel the arrangement, which stops future charges. Recurly's Hosted Account Management lets customers view their account, update billing information, and cancel or reactivate their subscription.
How to use recurring payments
Capture clear consent for repeat charges and record when and how it was given.
Store the payment method as a token rather than holding raw card data.
Choose billing intervals that fit the product, such as monthly, annual, or usage based.
Set up retries and card updating so failed charges do not become lost customers.
Give customers an easy way to view, change, or cancel their recurring payments. Recurly's Hosted Account Management page covers this, letting customers view account status, update billing details, download invoices, and cancel or reactivate a subscription.
Benefits and examples
Predictable revenue: charges repeat automatically each cycle.
Less friction for the customer: no need to pay manually every time.
Uninterrupted service: access continues as long as the payment clears.
For example, a customer subscribes to a streaming service at a monthly price and saves a card. Each month on the same date, the service charges the saved card automatically, and the customer keeps access without doing anything. When the card later expires, the service updates the stored card and retries the charge, so the subscription continues without the customer having to step in.
Frequently asked questions
What are recurring payments? They are charges a business collects automatically on a repeating schedule from a payment method the customer has agreed to keep on file, such as a monthly subscription charge.
How are recurring payments different from a one-time payment? A one-time payment is charged once. Recurring payments repeat on a schedule against a stored payment method, so the customer is charged each cycle without acting again.
What happens when a recurring payment fails? The business usually retries the charge and may ask the customer to update their payment details. Good handling of failed charges recovers revenue and keeps customers who still want the service. Recurly separates the two: Intelligent Retries handles the timing and mechanics of retrying a charge, while dunning manages the customer communication in parallel.
Can a customer cancel recurring payments? Yes. The customer can change or cancel the arrangement, which stops future charges, though access usually continues until the end of the paid period.
