Why Some Subscription Merchants Choosing Standalone Billing When There is Stripe Billing
You might be surprised by an answer
The payments industry is more competitive than ever, with merchants taking advantage of the many providers available to get better deals. For payment providers relying only on transaction fees is not enough – they need to offer more services to keep growing.
Stripe has turned itself into the “Amazon of payments” by adding extra services like Connect, Radar, Taxes, Billing, Treasury, Atlas, Issuing, and others. These tools help merchants handle their payments and business needs all in one place.
When was introduced, Stripe Billing was seen as missing some features, but it has improved into a strong solution that now competes with established platforms like Chargebee and Recurly.
Stripe has even created tools to make it easier for businesses to switch from other billing systems.
Stripe Billing vs Competitors
But why haven’t all merchants switched to Stripe Billing? The answer is payment orchestration.
Standalone billing platforms like Zuora, Chargebee, and Recurly, traditionally have payment orchestration modules. This modules allow merchants to use multiple payment providers and optimize transaction success based on routing strategies like geography, currency, volume, card type or others.
Stripe’s answer to this challenge is the Forward API, the tool that lets merchants use Stripe as a vault while sending transactions to other providers like Adyen, Braintree or others.
So what is a blocker?
While Forward API sounds great, it is currently supports only card payments. PayPal is one of the most popular payment methods in the US and they do not let third-party providers, including Stripe, to process PayPal or Venmo payments for US merchants. To accept PayPal, merchants have to work directly with PayPal through PPCP or Braintree.
This forces merchants to make a choice:
Use Stripe Billing and Forward API for card payments, without accepting PayPal
Use a 3rd party billing system and manage multiple vendors
Build own billing solution
What’s next
Stripe is heavily investing in improving the Forward API to handle more payment types, better integrations, and additional providers. Stripe also trying to turn the table by introducing its own proprietary wallet, Stripe Link (see my LI post).
If PayPal opens up its system or Stripe finds a solution, it could significantly boost Stripe’s Billing growth.
For merchants, the takeaway is clear: build a payments strategy that balances your business needs and customer experience while considering the strengths and limitations of each platform.