Choosing a subscription commerce platform is a complicated business, and one that’s critical to every subscription commerce business. The choice you make will impact the day-to-day operations of your business and will be hard to change later. It’s worth taking the time to get it right.
When I set up our beauty subscription box business in 2011, we opted to use Magento as our shopping cart software (using the AheadWorks Subscriptions and Recurring Payments extension) and PayPal Website Payments Pro for recurring payments processing. This setup seemed like a good choice because several similar companies were already up and running using something similar. The system certainly wasn’t without its issues, though, and things weren’t all plain sailing.
Recurring payments software has been improving all the time since then, with existing solutions becoming more robust and new providers emerging. Whilst what’s on offer is now better than ever before, choosing between all the different options is, if anything, even more difficult.
What Components do You Need to Take Recurring Payments?
In general, your system will need two or three key components:
- a website or shopping cart platform
- a recurring billing management system (may be integrated into the shopping cart)
- a payment gateway
The shopping cart is what powers your website, displaying products and checkout pages, etc.
Unless your shopping cart platform has sufficient support for recurring billing, you’ll want a recurring billing management system, too. This handles the many subtle complexities of subscription-based payments, such as automatically emailing customers about credit cards expiring.
Lastly, the payment gateway is the system that the shopping cart or recurring billing system talks to. It takes your customers’ payment details (e.g. credit card details) and talks to the payment networks (e.g. Visa and MasterCard) to process the transaction.
How to Choose a Shopping Cart for a Subscription Commerce Business
Choosing an e-commerce shopping platform is a complicated decision as there are many factors to consider. In some ways, when looking at a subscription business, your choice is easier because there are fewer good platforms that support recurring payments.
Some popular choices at the moment include:
- Magento - an increasingly popular open source shopping cart system that was bought by eBay in 2011. It has very extensive generic e-commerce functionality. Out of the box, the platform has limited support for subscription billing. Some 3rd-party providers sell extensions offering extra subscription functionality.
- Memberly – a dedicated subscription commerce platform allowing you to start offering a simple subscription service without any coding (as of August 2012 they are not currently taking on new customers).
- Bespoke website - you may want to have a subscription commerce website built from scratch using a technology such as Ruby on Rails or PHP. If taking this route, integrating with a dedicated recurring billing management system may be a good choice as it will do a lot of the subscription management legwork that would otherwise require extensive custom development work.
How to Choose a Recurring Payments Management System for a Subscription Commerce Business
You may or may not need a dedicated recurring payments system as basic subscription management functionality is built into some shopping carts and payment processors (e.g. PayPal’s recurring billing service). Dedicated recurring payments systems add an extra expense but typically provide advanced subscription-specific features such as the ability to automatically send customers emails about their payment cards are expiring.
- Recurly – allows you to easily build PCI compliant transaction forms to be integrated into your website. (Has support for the SagePay payment gateway which is popular in the UK.)
- Chargify – well-funded company with a very good set of features.
- Zuora – another major player. Seems to have more of an enterprise / large-company focus.
Factors to consider:
- Does the system support a suitable payment gateway in your country?
- How easily can you integrate it into your shopping cart platform?
- Can you rely on the business being around for the long haul?
- Are key features present (e.g. dunning management)?
- Are costs reasonable?
How to Choose a Payment Gateway for a Subscription Commerce Business
Choosing a payment gateway is another rather complicated decision and it’s not one we can go into in depth in this article. A few key factors to consider, however, are:
- Does the payment gateway work for businesses in your country?
- Does it integrate with your chosen shopping cart platform or recurring payments system?
- Does it have suitable support for subscription payments?
Choosing which providers to use for a recurring billing system is a fairly complicated and important choice as it’s one that strongly impacts your day-to-day operations and is hard to change later. You need to take into account a large number of factors and it is worth involving someone with experience in subscription commerce businesses to make sure you get this right.
Currently, a key decision is whether or not to use a dedicated recurring payments management system.
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