Payments are the point in a digital product where everything that can go wrong often does - and where the consequences of failure are immediate and visible. A failed payment moment does not just cost a transaction. It costs trust, and in the worst case, a customer.
For a CTO or product manager responsible for a digital service with recurring payments - a streaming platform, a SaaS product, a content service - payment infrastructure is among the most consequential technical decisions you will make. Choose the right payment platform and build the right integration, and you save thousands of engineering hours and legal headaches over the years ahead. Choose wrong, and you pay in churn driven by payment failures, compliance debt, and an integration that cannot scale with you.
This article is a practical walkthrough of the decisions and challenges you face when building payment infrastructure for a digital service in the European market.
Stripe vs Klarna vs Adyen: What Fits Your Service?
There is no universal answer. The right choice depends on what your service sells, to whom, in which markets, and which payment methods your target audience expects.
Stripe
Stripe is the default choice for most digital services with global reach, and for good reason. The APIs are well-designed, the documentation is excellent, and Stripe Billing offers a complete framework for subscription management out of the box - including trials, proration, invoicing, and dunning. See Stripe's official documentation for current reference.
Stripe is a strong fit if:
- You need to move quickly with a working subscription solution.
- Your product serves a global audience and you need support for multiple currencies and payment methods.
- Your team is small and you want to spend minimal time on payment infrastructure.
Stripe is not free and charges a percentage fee per transaction. At high volume, fees become significant and negotiating enterprise pricing is possible.
Klarna
Klarna is a European player with a strong position particularly in the Nordic and German markets. Klarna's core strength is buy now, pay later (BNPL) and instalment payments - models that are popular in B2C contexts and can increase conversion for higher-priced one-time purchases.
Klarna works better as a complement to a primary payment platform than as a standalone solution. If your service sells annual subscriptions or premium packages and you want to offer instalment payments as an option, Klarna is a relevant choice. For low-value recurring monthly subscriptions, Klarna is not the obvious candidate.
Klarna's API is more robust and flexible than it once was, but requires more configuration work than Stripe for a complete subscription solution. See Klarna's official API documentation for current reference.
Adyen
Adyen targets enterprise and operators with complex needs: multi-market, multi-currency, sophisticated reporting requirements, and the need for deep integration with internal systems. Adyen requires a deeper technical commitment and has minimum volume requirements, but offers more control and better transaction costs at high volume.
If you are running an early-stage streaming platform, Adyen is probably too heavy. If you are processing millions of transactions per year across dozens of markets, Adyen's model starts to look attractive.
Practical recommendation: Start with Stripe. Add Klarna if your market and business model justify it. Evaluate Adyen when your volume makes it economically meaningful.
Subscription Billing: Patterns and Pitfalls
Subscription billing looks straightforward and is not. There are a number of patterns you need a considered answer to before you write the first line of code.
Proration: What happens when a user upgrades mid-cycle? You need to decide whether to credit the unused portion of the current period, charge the difference immediately, or wait until the next cycle. Stripe handles proration automatically if configured correctly, but it requires you to understand what it is actually doing.
Trials: Free trials with or without a credit card upfront? Both models have implications for conversion rate and churn. Trials without a card upfront bring in more users but convert at a lower rate. The opposite holds for the card-required model.
Pauses: Many modern subscription services offer the ability to pause a subscription. This reduces churn but increases billing system complexity. How do you handle pauses in relation to pricing, access, and billing cycles?
Price changes: When you change your pricing - what happens to existing subscribers? Grandfathering (locking existing customers to the old price), universal price change, or a phased transition? Each has implications for your billing system.
Handling Failed Payments: Dunning Logic
Failed payments are inevitable. Credit cards expire. Spending limits are hit. Banks block transactions by mistake. A well-considered dunning process can recover a meaningful share of these - industry data points to 10–30 percent of subscription churn being driven by payment failures rather than deliberate cancellations. This is often called "involuntary churn" and is largely recoverable.
An effective dunning process includes:
Automatic retries with smart timing: Retrying immediately on failure is rarely optimal. Card payments often fail for temporary reasons - retry after 24 hours, then 3 days, then a week is a common pattern. Stripe Billing includes smart retry logic based on aggregated data about when retries succeed.
Proactive communication: Send a reminder before the card expires, not after the payment has already failed. Many platforms skip this step.
Soft downgrade: Rather than immediately cutting access on a failed payment, give the user a grace period with limited access and clear communication about what needs to happen.
Account Updater: Card issuers automatically push updated card details through the Visa and Mastercard networks when a card is renewed. Stripe and Adyen support Account Updater and can automatically update card details without requiring user action.
PSD2 and SCA Compliance
Since PSD2 and the requirements for Strong Customer Authentication (SCA) came into effect in Europe, payment flows are more complex. SCA requires two-factor authentication for most electronic payments, which affects conversion if not handled correctly.
There are exemptions that are critical for subscription services:
MIT (Merchant Initiated Transactions): Recurring payments initiated by the merchant - without the customer actively present in the flow - are exempt from SCA provided the customer is correctly authenticated at the first payment and an explicit mandate is registered. This is a technical and legal requirement, not an option.
Low value: Transactions under 30 euros are exempt in most cases.
Transaction Risk Analysis: Card issuers and payment processors can apply TRA, which exempts transactions assessed as low risk.
In practice, PSD2 compliance means your first-purchase payment flow must support 3D Secure in a seamless way, and your recurring payments must be correctly flagged with MIT indicators. Stripe and Adyen handle most of this automatically if you use their APIs correctly, but it is not something you can overlook during implementation.
Webhooks and Real-Time Synchronisation
A payment integration is not complete without robust webhook infrastructure. Payment platforms communicate events - successful payments, failed payments, subscription changes, chargebacks - via webhooks, and your system must be able to receive and process these reliably.
Common mistakes in webhook handling:
No idempotency: Payment platforms typically guarantee "at least once" delivery, not "exactly once". The same webhook event can be delivered more than once. Your handler code must be idempotent - processing the same event twice must not produce duplicate side effects.
Synchronous database dependencies: If your webhook handler performs direct database operations in the synchronous call path and something fails, it is easy to end up in inconsistent states. Queue incoming webhooks and process them asynchronously.
No signature verification: Stripe and Adyen sign webhook requests with a secret key. Always verify the signature before processing an event - it is your protection against spoofed requests.
Poor observability: Without a system for logging and monitoring webhook events, debugging payment issues is extremely time-consuming. Implement detailed logging of all incoming events from day one.
A stable webhook architecture with queue consumers, idempotency keys, and solid logging is the foundation of a reliable payment integration.
Summary and Next Steps
A well-built payment integration is a strategic investment. The right platform, combined with the right patterns for subscriptions, dunning, and SCA compliance, reduces involuntary churn, simplifies legal handling, and gives you a stable foundation to grow on.
The decisions you make early - which platform, how you handle failed payments, what your webhook infrastructure looks like - are difficult to change later without significant rework. Invest in getting them right from the start.
Shapp has integrated payment platforms for digital services at various scales and across multiple markets. Visit our pages on API integrations and streaming to see how we work, or contact us to discuss your specific situation.