Recurring Payments at a Glance
Recurring payments (where money is collected on a repeating schedule) cover subscription software, membership fees, regular service contracts, and any situation where a business collects from the same customer more than once. UK businesses can collect by Direct Debit from a bank account, charge a stored card at agreed intervals, or use a subscription platform that also handles failed-payment recovery, mid-cycle plan changes and trials. We checked the published fees for the main UK options in October 2026, and your choice depends on who you bill, whether the amount changes, and how much revenue failed payments put at risk.
- GoCardless: Best for Direct Debit recurring collection
- Stripe Billing: Best for card-on-file subscription billing with developer control
- Chargebee: Best subscription management platform for SaaS
- PayPal Subscriptions: Best for B2C subscriptions with a consumer audience
- Recurly: Best for high-volume subscription businesses
Recurring Payment Mechanisms Compared
| Method | Mechanism | Fee | Failed payment rate | Best for |
|---|---|---|---|---|
| GoCardless Direct Debit | Bank pull (Bacs) | 1% + 20p (cap £4) | 2.2% (GoCardless figure) | B2B and consumer invoices |
| Stripe Billing | Card-on-file | 0.7% billing fee + card rate | 5–15% or higher for recurring cards (GoCardless figure) | SaaS, digital subscriptions |
| Chargebee | Card or bank (via gateway) | From $0 + 0.80% of billing volume | Depends on gateway | SaaS revenue operations |
| PayPal Subscriptions | PayPal wallet or card | 2.1–2.9% + fixed fee depending on volume | Not published | Consumer-facing subscription products |
| Recurly | Card (via gateway) | From $249/month + 0.9% of billing volume (Starter) | Depends on dunning logic | High-volume subscription businesses |
Rates correct as of October 2026. Chargebee and Recurly pricing is quote-based above entry tiers. Failure rates are GoCardless’s published figures; GoCardless sells Direct Debit, and its card figure cites IDC research.
How Recurring Payments Work
Direct Debit
UK Direct Debit runs over the Bacs network. The customer authorises a mandate (a standing permission to debit their bank account). You then pull payment on the schedule you set: monthly, quarterly, or on a fixed date. We rate GoCardless the default Direct Debit provider for UK businesses outside the high-street banks. The collection timeline is three business days from instruction to cleared funds, with advance notice of any change to the amount, date or frequency (normally 10 working days, unless otherwise agreed). The failure rate is low (GoCardless reports 2.2% across more than 3 million payments) because a mandate does not lapse when a card expires; the customer has to cancel it.
GoCardless also collects by Direct Debit outside the UK: SEPA Core in the euro area, plus local schemes in the US, Canada, Australia, New Zealand, Sweden and Denmark.
Card-on-File
Card-on-file (COF) stores a tokenised card credential after the customer’s first payment, so later charges can run without the customer entering their details again. Stripe Billing, Chargebee and most subscription platforms use this method. Its speed matters when access depends on immediate payment confirmation, but expired or lost cards and soft declines leave you with more failed charges to recover. GoCardless, citing IDC research, puts recurring card failure rates at 5% to 15% or higher, so we would not run card-on-file billing without a dunning sequence in place from day one; every failed charge you do not recover is revenue you have already earned and then lost.
COF charges that are not customer-initiated require Strong Customer Authentication (SCA) under UK PSD2 for the initial setup. Subsequent charges run as merchant-initiated transactions (MIT) under the agreed subscription mandate. Most platforms handle this automatically.
Subscription Billing Platforms
A dedicated platform is worth the fee when your subscriptions need trials, mid-cycle price changes, failed-payment recovery and tax calculations across jurisdictions. Stripe Billing, Chargebee and Recurly all handle that work above the payment layer. For a simple monthly plan at a fixed price, we would stay with Stripe Billing rather than pay for features you will not use.
Failed Payments and Dunning
A failed card payment leaves you chasing revenue that the customer has already agreed to pay. Dunning handles that recovery by retrying the charge on a schedule and emailing the customer when their payment details need updating.
Retry timing. Spread retries over days, not hours. Stripe’s Smart Retries uses machine learning to pick the retry times, and Stripe’s recommended default is 8 tries within 2 weeks.
Account Updater. The card networks can pass new card details to a merchant when a card is replaced or renewed. Stripe automatically attempts these updates for saved cards, though it says support outside the US varies by country and depends on the card issuer taking part. We put Account Updater first because it can quietly prevent expiry-related failures without asking a paying customer who never meant to leave to enter their card details again.
Customer communication. An email at the first failure asking the customer to update their card recovers a significant portion of failed charges. The email should link directly to a card update page, not just the account homepage. Friction in the update flow is the main reason customers churn due to payment failure rather than intentional cancellation.
GoCardless for Recurring Payments
For regular UK invoices, we put GoCardless ahead because its published £4 cap matters more as each collection gets larger. The fee is 1% + 20p per collection, capped at £4. So a £500 monthly invoice costs you £4 to collect rather than £8.75 on a 1.75% card processor; over a year of monthly billing, that gap is real money. The cap makes GoCardless increasingly attractive as invoice values rise above £380.
GoCardless provides a hosted mandate page, a redirect flow, or an embedded flow for collecting the mandate. Once set up, payment collection is automatic. The integration covers both fixed and variable Direct Debit collections.
Frequently Asked Questions
Direct Debit pulls from a bank account via the Bacs network. The customer sets up a mandate once and you collect on your schedule. Card subscriptions charge a stored card token. Direct Debit has lower failure rates (GoCardless reports 2.2%) and lower fees on larger amounts via the GoCardless £4 fee cap. Card subscriptions process in real time but require dunning to manage higher failure rates (5% to 15% or higher, on GoCardless’s figures). For UK B2C subscriptions below £50/month, cards are often easier to convert. For B2B invoices and larger regular amounts, Direct Debit is usually cheaper and more reliable.
For the initial card collection, yes: you must authenticate with 3D Secure. Subsequent charges under a recurring subscription can use the merchant-initiated transaction (MIT) exemption. Most subscription billing platforms (Stripe Billing, Chargebee, Recurly) handle this automatically. If you are charging cards directly via API, you are responsible for marking subsequent charges as MIT and including the correct transaction references.
GoCardless works well for UK subscription businesses charging fixed or predictable amounts, particularly where customers are businesses or where values exceed £50/month. The main constraint is that UK Direct Debit takes three working days to settle and requires advance notice for variable amounts. For subscription models where customers expect immediate payment confirmation and real-time access, card billing via Stripe or Chargebee is a better fit. For membership organisations, professional service retainers, and B2B SaaS, GoCardless is often cheaper and more reliable than card-on-file billing.
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