Billing Agreements for PayPal and WooCommerce Autoship

One of the questions I am asked by retailers who want to know why subscription integrations can’t handle the features that our Auto-Ship features does is how the billing process is different.  After all, aren’t subscription payments automatically recurring?  Isn’t that what an Auto-Ship is?

The short answer is: yes.  Subscription payments and Auto-Ship payments are both automatically recurring payments.

BUT…

There is a big difference between purchasing a subscription and placing products on Auto-Ship.

Purchasing a subscription is typically handled entirely by your payment gateway.  To explain, let’s look at the difference between purchasing subscriptions with your PayPal account and integrating Auto-Ship orders with PayPal.

Subscriptions with PayPal

To sell a subscription to your PayPal customers, you are limited to selling each subscription as a single product.  Here are the main rules you need to consider:

  1. You can only sell 1 subscription product at a time.
    • While this is great for selling a magazine subscription where you always pay $9.99 per month, this can be a big problem for retailers looking to sell a different mix of products in the same recurring order.
  2. The recurring payment of that subscription happens according to how it was setup at purchase.
    • For example, if you buy a monthly subscription product, that subscription will need to be paid for each month for the exact same price that was set at the time of purchase.
  3. You can’t change a subscription product.
    • This doesn’t meant that there aren’t ways to make it appear as if the customer is changing or upgrading their subscription, but the reality is that PayPal will need to cancel the old subscription and your customer will be purchasing a different subscription.

After learning these rules, I’m almost always asked WHY? Why can’t these behaviors be customized by plug-ins and scripting?  Can’t you just modify the subscription plugin?

Alas, no. And here’s why: WooCommerce isn’t creating a subscription process that integrates with PayPal.  Instead, Woo (and other similar shopping carts) are simply integrating with PayPal’s ability to sell a subscription.  The amount, schedule and payment are all managed by PayPal and not by the shopping cart.

Another way of putting it is that a store owner could sell the same subscription products just by setting them up on their PayPal account.  The subscription would be billed exactly the same way. The shopping cart is simply integrating with PayPal’s ability to create a subscription for the customer.

WooCommerce does a fantastic job of integrating with PayPal’s subscription module, but because PayPal is ultimately creating, managing and billing the subscription plan, the plugin can do nothing to customize PayPal’s subscription module.

Auto-Ship Only Needs PayPal For One Thing: Payments

So how does Auto-Ship do this differently?

First off, WC Auto-Ship only utilizes payment gateways for what they’re best at: securely billing orders.  This is true for all of the payment gateways it integrates with.  This enables customization of orders, scheduling and other key features:

  1. Customers can create an order and checkout with any mix of products.
    • Fill your cart with both auto-ship items and one-time purchases. WC Auto-ship will separate them automatically on checkout.
  2. The scheduling and recurring payments can be modified after the Auto-Ship has been created.
    • For example, if your customer puts a product on a monthly Auto-Ship, but wants to change the shipment date or items, they can simply login to their account and make that change.
  3. You can change an Auto-Ship without canceling the order.
    1. WC Auto-Ship only uses PayPal to securely bill each order.   The order is automatically created in WooCommerce and all PayPal has to do is bill the customer for the order – just like it would do for any order at checkout.

How can you automatically bill a customer’s PayPal account this way?  Is this even safe to do?

We’ve got no secrets here, so let me introduce you to a PayPal feature called Billing Agreements.

What is a Billing Agreement?

A billing agreement allows PayPal to withdraw funds from the buyer’s PayPal account without requiring the buyer to log-in to PayPal. The customer approves the billing agreement with PayPal the first time they pay for an order. The integration then uses the billing agreement to bill the customer for upcoming Auto-Ship orders.

Our team worked directly with PayPal to create this integration perfectly for WooCommerce retailers wanting to allow customers to create and pay for Auto-Ship orders with their PayPal accounts. (Shout out to Monica, Matt, Kurt and Collin at PayPal for the great teamwork).

In short, once billing agreements are enabled on your business’s PayPal account, you are then able to utilize PayPal to create Auto-Ship orders with your customers just like you would with a credit card payment.

Of course, there are a few major advantages to letting customers create Auto-Ship orders with PayPal:

  1. PayPal accounts can access multiple payment methods and even backup payment methods to help ensure that recurring payments go through without a hitch.
  2. Payments and customer information is secured by PayPal (in fact, they’ve never been hacked)
  3. Customers like paying with PayPal: over 150 million active users worldwide in 2014 (according to statista.com http://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/)

Comments are closed.