Subscription Billing Software
Best platforms for managing recurring payments, dunning, and failed charges
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Common Questions
How much does Square charge per transaction?
Square charges 2.6% + $0.10 for in-person card swipes, dips, and taps; 3.5% + $0.15 for manually keyed transactions; and 2.9% + $0.30 for online payments. There are no monthly fees on the free plan. Paid plans (Square Plus at $29/month) reduce rates for high-volume sellers in categories like restaurants.
How does payment processing actually work?
When a customer swipes or taps their card, the transaction travels from the merchant's terminal to their acquiring bank, through the card network (Visa/Mastercard), to the customer's issuing bank for approval, then back. The whole process takes 1-3 seconds. Funds typically settle to your bank account within 1-2 business days.
What happens when a customer swipes a card?
Swiping triggers an authorization request: your POS sends card data to your payment processor, which routes it through the card network to the issuing bank. The issuing bank checks available credit or balance and returns an approval or decline code. The actual money movement happens in a separate batch settlement process at end of day.
What is interchange and who sets it?
Interchange is the fee paid to the customer's card-issuing bank on every transaction. Visa and Mastercard set interchange rates, which vary by card type, transaction type, and merchant category. Rewards cards and business cards carry higher interchange than basic debit. Interchange is the largest cost component of processing and typically ranges from 0.5% to 2.7%.
What is interchange-plus pricing?
Interchange-plus passes the exact interchange rate through to you, plus a fixed markup from your processor (e.g., interchange + 0.3% + $0.10). This is the most transparent pricing model because you see exactly what Visa/Mastercard charges versus what your processor keeps. It's usually best for businesses processing over $10,000 per month.
Key Terms
Recurring Billing
Automatically charging a customer on a set schedule (weekly, monthly, annually) for subscription-based services. Requires stored payment credentials and explicit customer authorization. Stripe Billing, Chargebee, and Recurly are specialized platforms. Dunning management handles failed payment retries.
Authorization Hold
A temporary hold placed on a cardholder's account when a transaction is authorized but not yet captured. The funds are reserved but not transferred until the merchant submits the capture request, typically within a few days.
Capture
The process of finalizing a previously authorized transaction to initiate the actual transfer of funds from the cardholder's bank to the merchant. Capture must occur after authorization for funds to settle.
Partial Capture
Capturing an amount less than the original authorization hold. Common in hospitality and shipping when final costs differ from the estimated amount authorized at time of purchase.
Void
Canceling an authorization hold before it is captured, releasing the reserved funds back to the cardholder. Voids prevent settlement and are faster than refunds since no money actually moves.
Refund vs. Void
A void cancels an uncaptured authorization while a refund reverses a settled transaction. Voids are immediate; refunds take 3–7 business days to appear because funds must be returned after settlement.
Subscription Billing
A recurring billing model where customers pay a fixed fee at regular intervals (monthly, annually) for continued access to a product or service. Requires robust dunning management to handle failed payments and reduce churn.