6 Best Ways to Accept Recurring Payments 2020

A recurring payment is an electronically processed, automatic payment that repeats according to a preset schedule. Businesses often set up recurring payments to collect fees for memberships, subscriptions, lessons, and services. Customers enjoy the convenience of a set-it-and-forget-it payment option. The easiest way to collect recurring payments is through an all-in-one payment processing solution.

After conducting an extensive review of all recurring payment processing options, we recommend Square as an economical way to manage recurring payments. Square has no startup, monthly, or cancellation fees; all you pay is a low per-transaction fee. Plus, you get Square’s full suite of payment, sales, and business management tools for free.

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6 Best Recurring Payment Providers for 2020

What a Recurring Payment Is & How It Works

A recurring payment is an automatic, repeat payment authorized by customers. Recurring payments are executed by businesses to collect payments from buyers according to a mutually acceptable, predetermined schedule. Businesses set up recurring payments for a number of reasons, including to accept fees for subscriptions, memberships, training, and various routine professional or personal services.

To enable automatic repeat payments, a business needs to save a customer’s credit card or bank account information in the business’ payment processing system. The customer must grant permission for both storing the information and for executing the recurring charge. Stored payment data can then be used to automatically process recurring payments.

Payment processing services can automate all types of business billing needs. Some run recurring payments based on invoice cycles, others initiate and manage these types of payments online. These are very different payment solutions, so it’s important to first identify your billing needs before shopping for a provider that can process automatic repeat payments for you.

Recurring Payments for Businesses That Use Invoices

Invoice-based recurring payments automatically charge customers’ credit cards each time invoices are processed. Processors that support this method let customers save payment information via an initial invoice and approve subsequent payments within the invoicing system. When new invoices process, payments charge automatically and customers receive “invoice paid” receipts.

Invoice-based recurring payments are ideal for:

• Service providers: Lawn care, house cleaning, personal training, and childcare can process automatic repeat payments via single or batch invoices.
• Monthly tuition or lesson fees: Fitness clubs, music lesson providers, dance studios, and tutoring businesses can run invoices and automated payments on a monthly basis.
• Subscription services or club sales: Wine-of-the-month clubs and store loyalty programs can use recurring payments to automate monthly club sales or fees.

If you offer services or product subscriptions where you need to collect payments on a regular schedule, then you’ll need a payment processor that can handle automatic payments. It’s important to select a payment processing solution that fits your unique needs.

Recurring Payments for Businesses That Sell Online

Online recurring payments are initiated with an online purchase, like a subscription box order or online membership registration. After the initial purchase, subsequent payments process automatically. These types of payments can be scheduled, like a monthly membership payment, or run as needed, such as when subscription orders ship.

Online recurring payment solutions are ideal for:

• Subscription box businesses: Subscription box sellers use online websites and marketplaces to sell subscriptions, then automatically run recurring charges for subscribers prior to shipping scheduled boxes.
• E-learning academies: E-learning businesses make online course content and instruction accessible on an ongoing basis via an online checkout with scheduled recurring payments.
• Membership blogs with restricted content: Informational bloggers can manage access to members-only content using recurring membership payments.
• Online services: Recurring payments are what make all types of online services possible, including software as a service (SaaS), online advertising, gaming products, virtual service providers, and mobile apps.

If you’re selling anything online that auto-renews or requires periodic automatic payments, you’ll need a payment processor that can handle the recurring transactions. The easier you make it for customers to pay you, the better.

What It Costs to Process Recurring Payments

Recurring payment processing fees are typically a small percentage of the transaction total. Each payment provider sets its credit card processing fees and some tack on monthly account fees. For example, Square charges 3.5% plus 15 cents per recurring payment, so a $100 charge costs $3.65 in fees. With Square, that’s all you’ll pay because Square has no other account fees.

Some automatic payment solutions match Square’s no-monthly-fee model, such as Stripe and certain QuickBooks Payments plans. In contrast, PayPal and PaySimple both charge monthly fees for recurring payments but both providers have lower per-transaction fees.

Fattmerchant works on a monthly subscription plan, so the more payments you process, the less you’ll pay when calculated on a per-transaction basis. To determine the best recurring payment solution for your business, balance processing costs with the type of billing model—invoice or online sales.

You’ll also want to consider other payment processing services or perks that these providers offer. Value-added benefits, such as Square’s free business management suite or QuickBooks Payments’ seamless integration with QuickBooks, might be the deciding factor. We explore these factors below to help you find the best recurring payment solution for your business.

6 Top Recurring Payment Processing Providers for 2020

Recurring payments are supported by most payment processing services, but some providers are geared to meet the specific recurring payment needs better than others. Below, we explore how each of these six top providers handles automatic repeat payments, their processing fees, and related costs.

Here are the six best recurring payment processing providers for 2020:

Square: Best Omnichannel Solution for Invoice-based Recurring Payments

Square is a top-rated retail point-of-sale (POS) system that covers every base when it comes to processing credit cards—including recurring payments. Like everything else with Square, recurring payments are simple to set up and easy to manage long term.

Here’s a quick look at Square’s recurring payments feature:

• Best for: Invoice-based omnichannel businesses
• Startup and monthly fees: $0
• Recurring payment processing fee: 3.5% plus 15 cents per transaction
• Payments accepted: Credit and debit cards, e-wallet payments
• Cannot accept: eCheck, ACH payments, or PayPal payments

Square Recurring Payment Processing Fees by Type of Sale

At 3.5% plus 15 cents per transaction, Square’s recurring payment is a bit higher than some other providers on our list. However, if you want to accept automatic repeat payments alongside your in-store, mobile, and online sales, Square’s fully integrated system ties everything together seamlessly.

How Square Recurring Payments Work

Square’s PCI-compliant payment system allows your customers to store their credit card information as a card on file (CoF) in Square’s secure payments vault. Customers can enter this information via a link from your emailed invoice, or you can enter this on their behalf using your Square POS system or online dashboard.

Recurring payments are triggered by Square’s invoicing function. When invoices are run—either individually or in a batch—any CoF customer payments are automatically charged. Customers are then notified of the payment via email with a “paid” invoice receipt.

The entire process is quick and requires very little setup or ongoing management. Being invoice-based, Square recurring payments make it easy to process regular payments plus add-on charges as needed. Added fees can be entered as a separate invoice or added to regular recurring charges—whatever fits the billing need.

What Users Think About Square

Square user reviews offer mostly favorable feedback for Square’s recurring payment services. Customers cite ease of use as the biggest plus for using Square for processing automatic repeat payment processing. Users who posted negative comments would like to see lower processing rates.

PayPal: Best for Credit Card & PayPal Recurring Payments

PayPal is one of the best ways to accept credit card payments online, and it’s easy to manage online automatic repeat payments via online invoicing, email marketing, and website sales. PayPal recurring payments is an ideal solution for online-based businesses that need to bill customers for online memberships, repeat services, and subscriptions.

Here’s a quick look at PayPal’s recurring payments feature:

• Best for: Online-based businesses for membership access and subscriptions
• Monthly fees: $40 ($10 plus $30 for the needed Virtual Terminal feature)
• Recurring payment processing fee: 2.9% plus 30 cents per transaction
• Payments accepted: PayPal payments, credit and debit cards, e-wallet payments
• Cannot accept: eCheck, ACH payments

PayPal Recurring Payment Processing Fees by Type of Sale

To use PayPal recurring payments, you’ll need either PayPal’s Virtual Terminal feature or a Payments Pro account—and both have a $30 monthly fee. Add the $10 recurring payments service and you will spend $40 per month to accept automatic repeat payments with PayPal.

For that price, you get other features like tidy online shopping cart integrations and online invoicing, which can make it well worth the cost. Plus, your per-transaction fee is lower than Square’s and a few others on our list—just 2.9% plus 30 cents per sale. PayPal also provides lower fees for nonprofits, which can be helpful for nonprofits setting up a subscription donation program.

How PayPal Recurring Payments Work

There are several ways to connect PayPal’s recurring payment service to a website, blog, or even an email marketing campaign. PayPal tutorials show you how to quickly add “Subscribe” buttons like the one shown below to any online sales and marketing tools. You can also accept recurring payments via PayPal’s fully integrated ecommerce checkout solutions.

However you connect to PayPal, recurring payment setup is a simple, four-step process:

1. Create your recurring charge: Set up the automatic repeat payment amount and processing schedule in PayPal’s recurring payments dashboard, then create “Subscribe” buttons.
2. Publish your product or service: Add “Subscribe” buttons to your website product pages, blog posts, or marketing emails.
3. Customers purchase and sign up: As customers subscribe, PayPal creates a recurring payment profile for each customer at checkout.
4. PayPal automatically bills per schedule: PayPal processes scheduled payments automatically and deposits funds into your PayPal account until the term expires or you or your customer cancels the subscription.

Customers use PayPal’s secure checkout screen, shown below, to complete their recurring payment purchase or registration.

What Users Think About PayPal

As expressed in PayPal Business user reviews, PayPal is considered a top-notch solution for all payment processing needs, including invoicing and recurring payments. Business users report that they feel they have a customer trust advantage using PayPal since it’s so widely used and is known for superior security. Users also state that setting up payment processing is seamless. The one downside that business users report is that they wish PayPal’s Pro account and transaction processing fees were lower.

QuickBooks Payments: Best for Processing Payments Within QuickBooks

QuickBooks users can use QuickBooks Payments’ automatic payments feature to process payments seamlessly within QuickBooks. This feature lets you offer your customers the convenience of automated payments for whatever type of repeat service or purchase you provide—from dance lessons to donation collections to beer-of-the-month club payments.

Here’s a quick look at QuickBooks’ recurring payments feature:

• Best for: Invoice-based businesses and sales receipt services
• Monthly fees: Vary based on your plan, covered below
• Recurring payment processing fee: Varies based on your plan, covered below
• Payments accepted: Credit and debit cards, ACH, and eCheck payments
• Cannot accept: PayPal payments

QuickBooks Recurring Payment Processing & Account Fees

What you pay for your QuickBooks Payments account and processing fees depends on which QuickBooks software you’re using—QuickBooks Online or QuickBooks Desktop. Each offers two QuickBooks Payments plan options: lower fees with a monthly fee, or higher fees with no monthly fee, as detailed below.

QuickBooks Online Recurring Payment Processing Fees by Type of Sale

*Per transaction

QuickBooks Desktop Recurring Payment Processing Fees by Type of Sale

*Per transaction

The best plan for you depends on your sales volume. For some, plans with monthly account fees but lower per-sale fees can save businesses money in the long run. You’ll want to compare plans using your own sales numbers.

How QuickBooks Recurring Payments Work

Like the other automatic repeat payment solutions on our list, QuickBooks Payments saves your customers’ payment data in a secure vault. To enable recurring payments in QuickBooks, simply click a button when you create a sales receipt. QuickBooks has a handy tutorial that walks you through the process step by step for both the QuickBooks Online and Desktop versions.

After you create and schedule the initial recurring payment for your customer, QuickBooks has a final step. It prints a customer authorization form for your client to sign. This keeps everything nice and tidy—and keeps the lawyers happy too. Other providers, like Square, PayPal, and Stripe, record authorizations electronically, but QuickBooks also provides a hard copy for your files.

What Users Think About QuickBooks

There aren’t a lot of online user reviews for QuickBooks Payments, but the ones that do exist offer positive comments. While a few users feel the fees could be lower, most applaud QuickBooks Payments’ easy integration with other QuickBooks features.

Stripe: Best for In-app, Online & International Recurring Payments

Stripe is a leading online payment processing solution and a major competitor of PayPal in general. Like PayPal, Stripe delivers excellent recurring payment options for online subscription sales, online blogs, e-learning memberships, and online invoicing. It even supports mobile app-based services that handle in-app subscription services payments.

Here’s a quick look at Stripe’s recurring payments feature:

• Best for: Online or app-based businesses selling membership access and subscriptions services or products in the U.S. or internationally
• Monthly fees: $0
• Recurring payment processing fee: 2.9% plus 30 cents per transaction
• Payments accepted: Credit and debit cards, e-wallet payments, ACH, eCheck, plus many international payment methods
• Cannot accept: PayPal payments

Stripe Recurring Payment Processing Fees by Type of Sale

Because there’s no monthly account fee, Stripe can be a more economical recurring payment option than PayPal. It delivers the same range of automatic repeat payment services as PayPal, but a drawback to Stripe is that it doesn’t accept PayPal payments, which many customers prefer. That’s something online businesses need to consider when deciding between the two payment processing options.

How Stripe Recurring Payments Work

Stripe recurring payments are simple to set up and integrate into most ecommerce platforms and blog sites. In fact, many online subscription box marketplaces like CrateJoy seamlessly integrate with Stripe as their primary payment solution. Setup takes just seconds.

Using Stripe, you can quickly attach subscription payments to most ecommerce platforms using Stripe’s automated integrations. Or, you can create quick pop-up membership or subscription forms that easily embed in your blog or website pages, and even in emails and online apps.

Like the other online recurring payment solutions on our list, Stripe saves your customer’s payment data in their PCI-compliant virtual vault to ensure security. Plus, Stripe can send e-receipts to notify customers that their automated payment has been successfully processed.

Stripe has no monthly fee, which is a plus compared to PayPal’s $40 monthly account cost. Plus, Stripe accepts more international payment methods than virtually any other online payment processor—including PayPal.

What Users Think About Stripe

Stripe users offer rave reviews for the payment processing platform. Users appreciate that Stripe integrates seamlessly with popular website platforms and setting up recurring payments is simple. One user wrote that she loves that Stripe was a set-it-and-forget-it service that never lets you down. Negative comments mention a need for stronger technical support and that, while Stripe is easy to set up for credit card processing, integration of ACH payments is more difficult.

PaySimple: Best for Managing Membership & Subscription Payments

PaySimple is more than a payment processor. It’s a full-service ecommerce platform with particularly strong membership, subscription, order, event, and booking management features. With PaySimple, you can create your own secure online sign-up forms or standalone membership site, accept one-time and recurring payments, and manage it all within PaySimple’s tidy package.

Here’s a quick look at PaySimple’s recurring payments features:

• Best for: Online membership, registration, booking, and subscription-based businesses
• Monthly fees: $49.95
• Recurring payment processing fee: 2.49%
• Payments accepted: Credit and debit cards, e-wallet payments, ACH, eCheck
• Cannot accept: PayPal payments

PaySimple Recurring Payment Processing Fees by Type of Sale

*If you process more than $50,000 per month, you may qualify for lower processing rates; contact PaySimple directly to get a custom quote.

How PaySimple Recurring Payments Work

Recurring payments are a built-in feature of PaySimple’s online sales platform. With PaySimple, you get an array of online tools that let you accept and manage all sorts of customer registrations, memberships, and subscriptions. It also provides robust booking management tools, complete with prepayments and deposits.

In PaySimple, recurring payments can be initiated by your customer via online forms on your PaySimple registration or membership website. Or, you can create them yourself in the PaySimple dashboard on a customer’s behalf using the Manage Recurring Payments tab.

In the PaySimple dashboard, you can set up repeat billing schedules, manually process or refund payments, and manually initiate or cancel subscriber accounts. PaySimple will even prorate monthly billing amounts automatically.

What Users Think About PaySimple

User reviews for PaySimple are mixed. Ease of use and simplicity of setup are reasons customers recommend PaySimple. Negative reviews cite high monthly fees, slow payouts, and difficulty resolving unexpected charges as issues for some customers.

Fattmerchant: Best for High-volume Recurring Payment Processing

Fattmerchant is different from the other payment processing providers on this list in that it offers subscription-style payment processing services. With Fattmerchant, you pay more upfront, but if you are a high-volume business, you’ll pay less overall per transaction.

With other payment processing companies, total processing expenses are less predictable because fees are mostly tied to transaction size. With Fattmerchant, you have a good handle on the total you’ll pay for payment processing upfront, and hence, you can predict your expenses more accurately month over month.

Here’s a quick look at Fattmerchant’s recurring payments features:

• Best for: Businesses that process a high volume of recurring payments
• Monthly fees: $99 per month when processing less than $500,000 annually; $199 per month when processing more than $500,000 annually
• Recurring payment processing fee: 12 cents to 15 cents per transaction plus direct-cost interchange fees
• Payments accepted: Credit and debit cards, ACH
• Cannot accept: PayPal payments

Fattmerchant Recurring Payment Processing Fees by Type of Sale

*The interchange fee is the fee credit card companies charge businesses to accept credit cards, and therefore, varies by credit card company.

How Fattmerchant Recurring Payments Work

When setting up an invoice in Fattmerchant, you have the option to create a single invoice or a recurring invoice. If you want to set up a recurring payment or invoice, simply navigate to the Advanced Payment option in Fattmerchant’s Omni dashboard. From there, you can enter the price you want to charge and the invoicing frequency schedule.

What Users Think About Fattmerchant

Fattmerchant user reviews make it crystal clear that Fattmerchant is one of the best payment processing providers in business today. Users rave about Fattmerchant’s customer support and streamlined processes. They also say it is a dependable platform and glitches are virtually non-existent. Users who process a high volume of payments attest that Fattmerchant is one of the most affordable payment processing solutions available.

A few Fattmerchant users report that it took a bit of time to get used to navigating the Fattmerchant interface. One user reported that getting to the reporting software was a tad clunky and unclear.

An Alternative Recurring Payment Solution: Chase Merchant Services

Traditional merchant services, like Chase Merchant Services, also support recurring payments. However, unlike the all-in-one payment processing services covered above, traditional merchant services don’t have set fee structures for payment processing.

With traditional merchant services providers, the account and per-transaction fees that you pay depend on many factors. These include your overall sales volume, the types of products and services you sell, and how you sell them—online, in-store, mobile, or via invoiced billing. The ecommerce platforms or point-of-sale systems that you use can also affect your processing and account costs.

Traditional merchant services’ processing fees can be far lower than all-in-one providers. Most notably, the interchange-plus fees from Chase Merchant Services can beat all-in-one providers by as much as a percentage point or two. Again, this depends on the factors mentioned above.

Bottom Line

If you sell subscriptions, memberships, or services that require regular payments, you’ll need a way to process recurring payments. Affordability and flexibility are the key reasons Square tops our list for the best invoice-based recurring payment provider. Every business has unique needs, though, so be sure to select a provider that addresses your business requirements.

For startups and small service businesses, we recommend Square for recurring payments. With it, you can accept payments anywhere you do business—in-person, online, and mobile—plus you get a robust sales and business management platform for free. Sign up for a free account and start accepting recurring payments today.

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