Integrate your online service with PayPal

Are you a budding entrepreneur (or even a well-established one), offering a service which involves invoicing customers and collecting payments on a regular basis? And are you interested in doing this over the Web? Until recently this was even more difficult than it soundedâ€"you had to run from pillar to post dealing with payment gateways and secure servers. It was usually more trouble than it was worth.

All that changed, however, when PayPal started offering users the ability to piggyback on its payment gateway and offer customers easy online payment. And I do mean easyâ€"a little bit of code hooking into PayPal's published API, and you're usually good to go!

This article will show you how easy it is to integrate your online service with PayPal's Subscriptions and Recurring Payments feature and start accepting recurring payments from your customers.

Recurring payments case study
In order to explain this PayPal feature, consider a simple case study. An online service offers customers a monthly subscription for US$10.00 per month. Users may sign up for the service through the online service's Web site, and each user is assigned a unique account username that serves as an identifier.

With such a service, subscribers would normally be invoiced on a monthly basis. To understand how this would work with PayPal's Subscriptions And Recurring Payments feature, consider the following process flow:

1. The user (let's name him Sam Subscriber) arrives at the service Web site to sign up and, after entering and saving the required profile information, is assigned a unique username. Sam can then either try the service out for free (if a free trial is available) or immediately sign up for paid service. The latter is accomplished by hitting a clearly-visible Subscribe button.
2. The Subscribe button is actually an entry point into the PayPal system. On clicking it, Sam is redirected to the PayPal Web site, where he can either log in to an existing account or create a new one. This is because, to use PayPal to send or receive money, both parties in the transaction must have PayPal accounts; PayPal does not process payments between non-PayPal parties (for this same reason, the service provider must have a business account with PayPal to receive payments). Account signup is free.

   The Subscribe button is preprogrammed with certain important informationâ€"the service provider's account details on PayPal, the billing cycle and amount, and the currency in which the payment is to be billed. This tells the PayPal system how much money is to be billed, how often, and where to send it. Since Sam's account name at PayPal may not necessarily match his newly-minted account on the service provider's site, the account username assigned to Sam is also passed to PayPal to simplify reconciliation later.

3. Once Sam authorises the PayPal payment, an e-mail containing details about the transaction is dispatched to the service provider (who also has a PayPal account, remember). The provider then logs in, checks that the payment has been received, and activates paid service for Sam. The account username passed to PayPal also appears in the e-mail, and helps the service provider identify which user made the payment and thus activate the correct account.
4. Because the first payment took place through PayPal's Subscriptions And Recurring Payments, PayPal automatically keeps track of the billing cycle stated at the time of first payment, and rebills Sam on a monthly basis until Sam manually cancels his subscription. The service provider receives e-mail notification of payment from PayPal on a monthly basis, and thus keeps Sam's service alive until a cancellation notice arrives from PayPal.

   This recurring payment process is completely automatic, and requires no intervention from either Sam or the service provider.