Billing is much more than a financial transaction; it’s a fundamental part of your product’s user experience and a critical piece of your business infrastructure. For developers, product managers, and technical leaders, understanding how to build a scalable and flexible billing system is non-negotiable. A well-architected billing system can unlock new revenue models, improve customer retention, and scale effortlessly with your growth. A poorly designed one can lead to revenue loss, frustrated customers, and significant technical debt.
This guide explores the developer’s essential role in building billing infrastructure. We’ll cover how to choose the right tools, design a system that can adapt to future needs, and manage the complexities of handling payments at scale.
At its core, billing is a complex, stateful system that needs to be as reliable as your primary application. Engineering decisions made early on directly impact everything from customer satisfaction to your ability to iterate on pricing.
Developers are responsible for the technical implementation that determines:
- Customer Experience: How easily can users subscribe, upgrade, downgrade, or update their payment method? A clunky experience can directly lead to churn.
- Business Agility: Can the business easily introduce new pricing tiers, offer discounts, run promotions, or test different billing models (e.g., usage-based, tiered, freemium)? A rigid billing system stifles growth.
- Reliability and Accuracy: The system must handle payments, prorations, credits, and invoices with perfect accuracy. Mistakes here can damage customer trust and create a support nightmare.
- Security: Handling payment information requires strict adherence to security standards like PCI DSS to protect sensitive customer data.
A payment gateway is a service that authorizes and processes payments from customers, acting as the secure bridge between your application and financial networks. While many gateways exist, the choice often comes down to more than just transaction fees.
When evaluating a payment gateway, consider it from a developer’s perspective. Here are the key factors to weigh:
- API Quality and Documentation: Is the API well-documented, intuitive, and easy to work with? A clean API with robust documentation (like those from Stripe or Adyen) drastically reduces integration time and complexity.
- Developer Experience: Does the gateway offer comprehensive SDKs for your programming language, testing environments (sandboxes), and a helpful developer community?
- Scalability and Reliability: Can the gateway handle your projected transaction volume? Look for high uptime guarantees and a proven track record.
- Global Reach: If you plan to sell internationally, does the gateway support multicurrency payments and local payment methods?
- Security and Compliance: The gateway should handle the bulk of PCI compliance for you, reducing your security burden.
While a payment gateway handles the transaction, you still need to build the logic that manages your customers’ subscriptions and entitlements. The best practice is to create an internal billing service or API that acts as a layer between your main application and the payment gateway.
This approach prevents you from being locked into a single payment provider and gives you a central place to manage all billing logic. Your internal billing API should be responsible for:
| Component | Description | Key Considerations |
|---|---|---|
| Customers | Represents the entity being billed (an individual or an organization). | Map your internal user/organization model to the customer object in your payment gateway. |
| Plans | Defines the pricing, features, and limits for each subscription tier. | Store plan details in your own database so you can easily change them without deploying new code. |
| Subscriptions | Connects a customer to a specific plan. It tracks the status (active, canceled, past_due) and billing cycle. | This is the core of your system. It should handle activations, cancellations, upgrades, and downgrades. |
| Invoices | A record of what a customer was charged for. | While the payment gateway generates these, your system needs to know they exist and be able to retrieve them. |
| Webhooks | Events sent from the payment gateway to your application to notify you of billing events. | Essential for keeping your system in sync. Use webhooks for events like invoice.payment_succeeded, invoice.payment_failed, and customer.subscription.deleted. |
Building a billing system comes with its share of hurdles. Acknowledging them upfront helps you design a more resilient system.
- Handling Failed Payments (Dunning): Payments can fail for many reasons (e.g., expired cards, insufficient funds). You need an automated process, known as dunning, to notify customers and retry payments before canceling a subscription.
- Idempotency: Network issues can cause duplicate requests. Your API must use idempotency keys to ensure that a single logical operation (like creating a subscription) is only performed once, even if multiple identical requests are received. This prevents accidental double-charging.
- Prorations and Seat Management: When a user upgrades or downgrades mid-cycle, your system must calculate the prorated charge or credit accurately. This gets especially complex in per-seat B2B models where the number of users changes frequently.
- Data Synchronization: Your database must always be in sync with the state of subscriptions in your payment gateway. Using webhooks is the standard way to achieve this, but you need a robust queueing and retry mechanism to handle webhook failures.
- Abstract your billing logic: Don’t scatter calls to your payment gateway throughout your codebase. Confine them to a dedicated service or module. This makes it easier to manage, test, and even switch providers later.
- Use a webhook-driven architecture: Don’t rely on the success of an API call to update subscription state. Treat webhooks from your payment gateway as the source of truth for billing events.
- Log everything: Maintain detailed logs for every significant billing action—subscription created, invoice paid, payment failed. When a customer disputes a charge, these logs are invaluable.
- Build for testability: Create a sandbox environment that connects to your payment gateway’s test mode. This allows you to simulate different billing scenarios, including successful payments, failed payments, and card disputes, without moving real money.
Building, maintaining, and scaling a billing infrastructure from scratch is a significant engineering effort. It requires dedicated resources and specialized knowledge to get right.
Kinde’s billing capabilities are designed to abstract away this complexity, providing a ready-made, scalable billing infrastructure that integrates directly with your user authentication and management flows. It handles many of the challenges discussed here out of the box.
With Kinde, you can:
- Connect directly to Stripe: Leverage Stripe’s powerful payment processing while managing your plans and subscribers within the Kinde environment.
- Build and manage plans: Create various pricing models—including tiered and usage-based—without writing custom code for plan management.
- Automate subscription lifecycles: Kinde manages the logic for upgrades, downgrades, cancellations, and prorations.
- Enable customer self-service: Kinde provides components for users to manage their own subscriptions and payment details, reducing your support load.
By using Kinde, your development team can focus on building your core product features instead of reinventing the complexity of a billing system.
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