Recurring revenue is only as good as the billing behind it. Businesses that charge memberships, maintenance plans, retainers, subscriptions or installments lose money in two places: cards that silently fail, and fees that were set when the business had twenty subscribers and never revisited at two hundred. This page covers how gateway recurring billing works, what stops the leaks, and when a dedicated subscription platform is worth paying for.
How it works inside a gateway
- The card or bank account is vaulted. Entered once, on a hosted page, an invoice link, or by staff in the virtual terminal. The gateway stores it and returns a token.
- A schedule is created. Amount, interval (weekly, monthly, annual, custom), start date, optional end or number of payments, optional trial.
- The gateway charges the token on schedule. Receipts go out automatically. Your reporting shows successes, declines and upcoming charges.
- Declines are retried on a schedule you set, and the customer can be emailed a link to update their card.
- Account Updater refreshes expired and reissued cards between cycles, so most “expired card” declines never happen.
accept.blue, NMI, USAePay and Fluidpay all do this. Authorize.net does it through Automated Recurring Billing (ARB) with the Customer Information Manager (CIM) vault.
The leak: card churn
Roughly a fifth of cards are reissued each year for expiry, loss, fraud or bank mergers. Without Account Updater, a subscriber base loses 1% to 2% of successful charges a month for that reason alone. On 300 subscribers at $80 a month that is $250 to $500 in failed billing every month, plus the staff time to chase it, and some customers who never come back.
Account Updater costs cents per update. It is the highest-return setting in the gateway and it is off by default on many accounts.
The other leak: retries and dunning
A decline is not a cancellation. Insufficient funds on the 1st often clears by the 4th. A good retry schedule (for example, retry at 3 days, 7 days, and 14 days) recovers a large share of soft declines. Dunning is the email sequence around it: a receipt on success, a polite “your card did not go through, update it here” on decline, and a final notice before the service is paused. The gateway sends these; you set the wording once.
Cards vs ACH for recurring
| Cards | ACH | |
|---|---|---|
| Cost per $100 charge | $2.50 to $3.20 on flat rate; $2.00 to $2.50 interchange-plus | 25¢ to $1 flat, or 0.5% to 1% capped |
| Expiry | Cards expire and are reissued | Bank accounts rarely change |
| Failure mode | Decline at authorization, instant | Return 2 to 4 days later (NSF, closed) |
| Disputes | Chargebacks up to 120 days | Unauthorized returns up to 60 days for consumers |
| Sign-up friction | Low | Slightly higher (routing and account number, or instant bank verification) |
| Best for | Consumer subscriptions, small tickets | B2B retainers, large or long-lived plans, memberships over $50 |
Offering both and defaulting higher tiers to ACH is the usual answer. ACH mechanics are on the ACH gateway page.
Gateway tools vs subscription platforms
| Gateway recurring (accept.blue, NMI, Fluidpay, Authorize.net ARB) | Subscription platform (Chargebee, Recurly, and others) | |
|---|---|---|
| Cost | Included in gateway fee | $100 to $500+ a month, sometimes a percentage of revenue |
| Plan management | Basic: amount, interval, trial | Full: plans, add-ons, proration, upgrades, coupons |
| Customer self-service portal | Limited or none | Yes |
| Revenue reporting, MRR, churn | Basic | Detailed |
| Invoicing and tax | Basic or via add-on | Built in |
| Best for | Under a few hundred subscribers, simple plans | SaaS, complex catalogs, finance reporting needs |
A gym, a lawn service with monthly plans, a law firm on retainers, an HVAC company with maintenance agreements, or a nonprofit with monthly donors does not need a subscription platform. A software company with tiered plans and usage billing does. Either way the payments still run through a gateway, so the gateway and processing pricing apply in both cases.
Pricing recurring billing
Recurring transactions are card-not-present and price like any keyed or online transaction. On a flat rate that is 2.9% + 30¢ regardless of volume. On interchange-plus it is interchange plus a fixed markup, and for a subscription business with a large base the difference is significant: 500 subscribers at $60 a month is $30,000 in volume, which is about $1,020 on flat rate and about $760 on interchange-plus, every month.
Watch for per-subscription fees (some gateways charge cents per active subscription per month) and Account Updater fees, both of which belong on the quote.
Migrating subscribers
Vaulted cards move between gateways through an encrypted export from the old gateway to the new one. The new gateway imports the cards, returns new tokens, and schedules are recreated against them. Time the cutover for the day after a billing run so no customer is charged twice or missed. Authorize.net’s export process, including its schedule and limits, is described in switching from Authorize.net.