Recurring billing charges a customer the same way on a repeating schedule, such as monthly or yearly, for continued access to a product or service. It usually runs until someone cancels it. An installment plan is different: it splits one fixed price into a set number of payments and ends when the balance reaches zero. On Stripe, a subscription generates an invoice each billing period and either charges the saved payment method or emails the invoice. A subscription can be set to end after a number of billing periods, which makes it behave more like an installment plan.
What is recurring billing?
It is charging a customer on a repeating cycle for something they keep receiving. Software, memberships and service contracts are common examples. The customer agrees once, and each charge follows the cycle until the agreement ends.
How is recurring billing different from an installment plan?
They look alike because both charge on a schedule. The difference is what's being paid for.
| Recurring billing | Installment plan | |
|---|---|---|
| What's owed | A fee for each period of access | One fixed price |
| How long | Until canceled | Until the balance is paid |
| Number of payments | Open-ended | Set at the start |
| If the customer stops | Access usually ends | The unpaid balance is still owed |
| Typical amounts | The same each period | Equal, often with a deposit and a rounding adjustment |
A worked example of a plan: $14,800 with a $1,500 deposit, then eleven payments of $1,108.33 and a last payment of $1,108.37. It ends after payment twelve. A $99 a month membership has no end date and no balance.
How does a subscription work on Stripe?
Stripe's docs describe the cycle:
- When you create a subscription, Stripe "automatically generates invoices, attempts payment collection, and manages the subscription status."
- With
charge_automatically, Stripe charges the saved payment method. A first payment that needs the customer has 23 hours. After that the subscription becomesincomplete_expired. - With
send_invoice, Stripe emails the customer a link to the invoice with a due date you set. - A subscription becomes
past_duewhen payment on the latest invoice fails or isn't attempted. Your settings then decide whether it moves tocanceledorunpaid, or stayspast_due. - Stripe's cancel guide says subscriptions cancel automatically "after up to eight unsuccessful attempts to bill the customer," and the number is configurable.
These are subscription behaviours. They don't describe what happens to a fixed installment plan built another way.
Can a subscription be used as a payment plan?
Sometimes. Stripe lets you schedule a subscription to end "after a specified number of billing periods" with a subscription schedule set to cancel. Twelve monthly periods of the same amount behave like a twelve-payment plan.
Limits to watch for:
- Equal amounts. A plan with a deposit or a different last payment needs extra setup.
- Pausing collection on a subscription is possible on Stripe. On a fixed plan, a pause changes the schedule and may need the customer's agreement.
- Canceling a subscription stops future invoices. On a plan, it doesn't erase what's owed.
Does recurring billing need the customer's authorization?
Yes. For a consumer's bank account, Regulation E requires a written or similarly authenticated authorization for preauthorized transfers, and a copy for the consumer. See autopay and ACH authorization.
When should you use which?
Use recurring billing when the customer pays for ongoing access and can stop at any time. Use an installment plan when the customer is buying one thing, such as a program, a treatment or a project, and paying for it over time.
- Stripe: How subscriptions work
- Stripe: Cancel subscriptions
- CFPB: Regulation E, 12 CFR 1005.10, Preauthorized transfers
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.