Recurring payments & subscriptions
How automatic subscription billing works, what you need to set it up, and what to expect from Stripe's subscription tools.
Recurring payments — charges that happen automatically on a schedule — are the foundation of subscription businesses, membership sites, retainer agreements, and any service billed monthly or annually. This guide explains how subscription billing works and what is involved in setting it up.
Quick summary
Recurring billing means your customers are charged automatically at regular intervals — weekly, monthly, annually, or any schedule you set. You need a processor that supports subscriptions (Stripe is the most capable option). Once set up, charges happen in the background. You receive payouts on your regular schedule. Failed payments are retried automatically.
What "recurring payments" means
A recurring payment is a charge that repeats automatically on a schedule without the customer having to re-enter their card each time. The customer enters their details once, and their card is charged again at the next billing date.
Recurring payments are used for:
- Monthly or annual memberships
- Software or service subscriptions
- Maintenance retainers
- Installment plans for a one-time purchase
- Automated invoice schedules
How subscription billing works
Customer subscribes. They enter their card details and agree to a recurring charge. Your site creates a subscription record in Stripe (or your processor).
First charge is processed. The initial payment is taken immediately (or at a specified future date).
Subsequent charges happen automatically. On each billing date, Stripe attempts to charge the stored card. If it succeeds, you receive a payout as normal.
Customer can cancel. Depending on your setup, customers can cancel themselves (through a customer portal) or by contacting you.
What you need to set up subscriptions
A Stripe account. Stripe has the most comprehensive subscription tools for web businesses. See Stripe basics for business owners and What we need to set up Stripe.
A clear subscription product. You need to define what the customer is subscribing to, the price, and the billing interval (monthly, annual, etc.).
Terms of service and cancellation policy. These must be clearly displayed before a customer subscribes. Requirements vary by country and state.
A plan for failed payments. Cards expire, get replaced, or have insufficient funds. You need a process for handling these situations.
What happens when a payment fails
When a recurring charge fails, Stripe does not give up immediately. It uses a retry logic called Smart Retries, which attempts the charge again at intervals based on patterns that suggest the best time to retry.
You can configure what happens after a set number of failures: pause the subscription, cancel it, or mark the invoice as unpaid and notify the customer.
Stripe can also send customers automatic emails asking them to update their card details (called dunning emails — a billing term for collection reminders). These can reduce involuntary churn (customers who lose access because their card failed, not because they want to cancel).
Prorating and mid-cycle changes
If a customer upgrades, downgrades, or cancels partway through a billing period, Stripe can automatically calculate the pro-rated difference — charging or crediting appropriately. This keeps billing fair without you having to calculate anything manually.
The Stripe customer portal
Stripe offers a hosted Customer Portal — a webpage your customers can visit to:
- View their subscription details
- Update their payment method
- Download invoices
- Cancel their subscription
You can link to this portal from your website without building a custom account management page. We configure this as part of your subscription setup.
Subscriptions in WooCommerce
If your store runs on WooCommerce, subscriptions are handled via the WooCommerce Subscriptions plugin (separate from WooCommerce itself). It works with Stripe and PayPal. See Selling subscriptions (WooCommerce overview) for more.
Common questions
Related guides
- Stripe basics for business owners
- What we need to set up Stripe
- Stripe payouts & fees explained
- Chargebacks & disputes explained
- Selling subscriptions (WooCommerce overview)
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