Recurring Payments as a SaaS

You’re in business to make money, but if you don’t choose the right recurring billing software, you may end up losing money. In this guide, we discuss what recurring payments are, why this billing model makes sense for SaaS businesses, and how you can set up recurring payments for your own business.

Let’s get started. 

What Are Recurring Payments?

Recurring Payments as a SaaS

A recurring payment, also known as a subscription, an automatic payment, or AutoPay, is a type of payment where a business automatically charges a customer on a set schedule for services rendered.

The recurring payment model is a convenient way for businesses to collect payment on a regular (i.e. recurring) basis. 

Recurring payments are usually collected monthly or annually, but customer funds can also be withdrawn weekly, bi-weekly, daily, or on some other interval that’s agreeable to the business and the customer. 

Recurring payments are perfect for businesses of all types, but it’s specifically geared towards subscription services, such as cloud-based software, meal kit delivery services, print or digital magazines, vehicle leasing, and local gyms, just to name a few.

The majority of businesses that offer software as a service operate on the recurring revenue model, and offer a subscription to customers. These subscriptions can either be set at a fixed price or a variable rate based on different factors, such as usage. 

Recurring payments can have a specific end date, be set to auto-renew, or continue in perpetuity. 

What Are the Benefits of Accepting Recurring Payments?

Why should you accept recurring payments for your services? Here’s a list of reasons why recurring payments are perfect for every type of SaaS.

Increased Customer Retention

If you can convince your customer to sign up for a subscription, you’ve increased the likelihood that they’ll stick around for a while. Customers who’ve taken the time to subscribe to your service won’t want to unsubscribe unless they really dislike your service. Unsubscribing is a hassle and, for most people, it’s easier to stick with your product if it’s useful to them. 

Plus, some customers actually forget that they’ve subscribed to your service. That, of course, is not the goal, but when it does happen, at least you’re getting added revenue.

Reliable Revenue

When you operate on a subscription model, you’ll be able to forecast your revenue more accurately. Having this insight into your revenue will allow you to make smart financial decisions and grow your business steadily. It’s easier to make budgets for marketing, payroll, and vendors when you know how much you have coming in.

An Added Convenience

Offering a subscription is not just good for your business. It’s also valuable for your customers.

Customers love the “set it and forget it” convenience that a subscription service offers. They can enter their payment information once and not have to worry about re-entering all of that information again in the future. 

Reduced Administrative Costs

Accepting recurring payments can cut your administrative costs dramatically. You don’t need to reach out to customers when it’s time to pay their bill. You also don’t need to manually input their payment information each time they pay. Everything happens automatically without much direct involvement from you. 

Quicker Payments

With a recurring payment model, you don’t need to hound your customers and then wait for them to pay. You also don’t need to manually enter or approve payments. You get paid on a predictable schedule. And, depending on the payment processor you choose, you may have access to your funds almost immediately.

Reduced Stress

When you accept automatic payments, you eliminate stress—for you and your customers. 

Constantly convincing your customers to pay for your service (no matter how awesome it is) is stressful. And exhausting. You should only have to convince your customers to buy (i.e. subscribe) once. 

Accepting recurring payments will take the pressure off of your sales team so they can direct their energy to reaching out to new customers instead of re-engaging current ones.

Recurring payments also make it easier for your customers because they won’t find themselves having to remember to pay every month. This payment model creates a more seamless experience for your customers.

How Do You Accept Recurring Payments?

Accepting recurring payments is a simple and straightforward process. Here’s how it works:

You offer your customer a subscription to your service.

Your customer subscribes to your service, and agrees to pay for your service on a recurring basis. They also accept your other terms and conditions, typically by ticking a checkbox. They enter their billing information.

After submitting their payment information, your payment service provider springs to action. The payment service provider handles all payment processing. This service collects payment information, communicates with the customer’s bank or credit card company, gets approval for the funds, and then deposits the funds into a merchant account.

To accept electronic card payments from your customers, you must have a merchant account. A merchant account is a special business bank account that allows you to accept and hold payments from your customers. Funds from a customer payment first go to your merchant account. From there, you can transfer the money into your main business account. 

This same process happens with recurring payments.

Some payment service providers, like the ones we recommend in the next section, are actually considered “payment facilitators.” Instead of routing your funds to a separate merchant account, they act as a master merchant account and create a sub-account for you. This means that you don’t need to get a separate merchant account. The goal is to simplify the payment deposit process.

3 Ways to Accept Recurring Payments in 2021

Recurring Payments as a SaaS

Now that we’ve discussed the many benefits you stand to gain from accepting recurring payments, let’s look at the top payment service providers that are available to you. There are a lot of great options out there, but we’ve whittled it down to the top three contenders.

Here’s a list of what to look for in a payment service provider.

1. Stripe

Stripe is a trusted international online payment processing platform that works with currencies from all over the globe. Setting up subscriptions through Stripe’s payment gateway is hassle-free. Stripe is our recommended payment service provider.

Standout Features

  • No hidden fees – Stripe offers transparent pricing.
  • Tons of documentation – Stripe is great for developers. It has a huge library of help files, geared toward developers, to help businesses prepare to accept payments online. 
  • Easy to set up – Canceling is easy, too.

Top Considerations

  • Set up can be complicated – Because Stripe is feature-rich and customizable, setting up your account is not as simple as other services on this list. But the good news is that Stripe can be integrated with most billing software, including Stunning.
  • Complicated user interface – The Stripe UI isn’t as intuitive as others on this list. It’s easier for developers to set up and navigate. 
  • Deposit waiting period – When you first step up an account, there is a seven-day waiting period before you can receive your first payment. After that, you’ll be able to access your funds within two days on average. However, Stripe does offer an Instant Payouts feature that will allow funds to appear in your account within 30 minutes.


Stripe Billing is free.

For recurring payments, you’ll be charged 2.9% plus a $0.30 transaction fee.

Here’s How to Set Up Recurring Payments Through Stripe

2. Square

Square is one of the most popular digital payments and financial services available, mostly due to its affordability and ease of use. However, you are likely to pay more per transaction. 

Standout Features

  • Free invoicing software – Additionally, Square won’t make you pay a fee for chargebacks.
  • The ability to offer discount codes – You can create automatic discounts based on a special date or for a specific time period.

Top Considerations

  • Higher transaction fees – While Square Invoices is free, you will pay more to process each transaction. 
  • Not suitable for larger companies with a high number of transactions – Because of the higher transaction percentage, Square works best for smaller SaaS that are just getting started.


Square Invoices is free.

For recurring payments, you’ll be charged 3.5% plus a $0.15 transaction fee.

Here’s How to Set Up Recurring Payments Through Square

3. PayPal 

PayPal is the online payment solution that you know and have probably used personally at some point online. PayPal has over 21 million merchants and can accommodate businesses of all types and sizes. Many consumers prefer to use PayPal instead of more traditional payment options, like credit or debit cards.

Standout Features

  • Easy to set up – If you’re already familiar with PayPal (and/ or have a business account), setting up your account will be easy and intuitive.
  • Trusted – PayPal is a popular financial service and enjoys brand recognition. This familiarity increases customer trust.

Top Considerations

  • Payments cannot be handled exclusively on your website – Instead, your customers will be routed through PayPal’s secured website so they may enter and process payment.
  • Limited forms of payment accepted – You aren’t able to accept all forms of payments, such as ACH, directly through PayPal. 


Setting up a PayPal business account is free. You will pay $10 per month for recurring billing. Plus, you’ll need to sign up for a PayPal Payments Pro, which is PayPal’s customizable payments system that allows you to accept credit and debit cards. This will cost an additional $30 per month. Also, you’ll be charged 2.9% plus a $0.30 transaction fee.

Here’s How to Set Up Recurring Payments Through PayPal

Which Recurring Payment Solution Is Right for You?

Weigh the pros and cons of each payment service provider. Remember that price isn’t the only or even the most important factor. You also need to consider the level of customization, ease of use, and fund availability. 

Don’t forget to download this list of what to look for in a payment service provider.

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