Introduction
Recurring billing can be complex, but Firmhouse simplifies the process of recurring payments, invoicing, and order creation for your subscription-based business. In this article, we'll explain how recurring charges work, how invoices and orders are generated, and what you need to consider about payment processing times and risks.
How Recurring Charges Are Authorized
Firmhouse supports customer sign-up and initial payments via methods like iDeal, Bancontact, and SOFORT (now Klarna). Although these payment methods don’t support recurring payments directly, subsequent charges are processed automatically via SEPA Direct Debit.
Here's how it works:
During the initial payment via iDeal, Bancontact, or SOFORT, the Payment Service Provider generates a SEPA mandate for the bank account used.
This mandate is then used to initiate future payments directly from your customer’s bank account.
Each Payment Service Provider may have slightly different processes for SEPA Direct Debit:
If you have questions, consult your Payment Service Provider's documentation.
Payment Processing Times and Chargebacks
Different payment methods have varying processing times and risk considerations.
SEPA Direct Debit (incl. iDeal): Payments can take several days to finalize, depending on the Payment Service Provider and how long it takes to the SEPA network to confirm the payment status.
Credit Cards: Typically, payments take 3-4 days to process.
PayPal: Payments are usually instant.
For all of the above, we consider the date on which the payment was initiated as the effective payment date.
Chargebacks
Dealing with chargebacks is a part of running an e-commerce business. It's normal to want to completely prevent them, but it's often more practical to focus on reducing their occurrence and impact.
You can reduce the impact of chargebacks by setting up a payment dunning flow. Another option is to delay the order creation until the payment is confirmed. This will make fraudulent chargebacks more difficult, but it can't eliminate them entirely.
Billing and Order Creation Dates
For new subscriptions, the initial payment and order are processed immediately.
Recurring payments and orders are processed in batches twice a day:
03:30 AM UTC
07:00 AM UTC
The day on which we create the payment, invoice (and order if it's an Order-based project) depends on the project's type.
Order-based projects - based on the ordered product's
shipmentDatePlan-based projects - based on the subscription's
chargeDayOfTheMonth
There are some exceptions to the above, such as projects configured to use the new Native Shopify Checkout. In those cases, the subscribedPlan's nextBillingDate is used.
To learn more about each of the above objects and properties, take a look at our API documentation.
Summary and Key Considerations
Firmhouse supports recurring payments via SEPA Direct Debit, allowing customers to make initial payments with methods like iDeal, Bancontact, and Klarna.
The timing of payment, invoice, and order creation depends on whether your project is order-based or plan-based.
Payment methods like SEPA Direct Debit, credit cards, and PayPal have different processing times and chargeback risks, which you should consider when configuring your billing settings.
If you have further questions about recurring billing, feel free to reach out to our support team.