How PayPal Generates Subscription Payments for Agency Handy

When PayPal is used to handle subscription payments for Agency Handy, the backend process involves multiple steps, including subscription creation, payment authorization, recurring billing, and transaction processing. Here’s a detailed breakdown of how PayPal manages and records these payments:

---

1. Subscription Creation & Setup

• Agency Handy's backend integrates with PayPal Subscriptions API.

• When a user chooses a subscription plan, Agency Handy’s system sends a request to PayPal’s API to create a subscription agreement.

• PayPal generates a subscription ID and redirects the user to approve the agreement via PayPal.

---

2. Initial Payment Processing

• Upon user approval, PayPal processes the first subscription payment.

• It checks if the payment method (PayPal balance, bank account, credit/debit card) is valid.

• If successful, PayPal sends a webhook notification to Agency Handy’s backend, confirming the payment.

---

3. Recurring Payment Scheduling

• PayPal maintains a billing schedule based on the subscription terms (e.g., monthly or yearly).

• On each renewal date, PayPal automatically charges the user.

• If the payment fails (due to insufficient funds or expired cards), PayPal retries after a certain period.

---

4. Transaction Processing & Recording

Every payment goes through multiple steps:

(A) Authorization & Capture

• PayPal authorizes the payment before deducting the funds.

• After authorization, PayPal captures the amount and records it under the user’s PayPal transaction history.

• PayPal sends a payment confirmation webhook to Agency Handy.

(B) Payment Settlement

• PayPal transfers the payment to Agency’s PayPal account after deducting transaction fees.

• The net amount appears in Agency’s PayPal balance and is available for withdrawal to a linked bank account.

(C) Recording in PayPal Dashboard

Each transaction includes:

• Transaction ID: Unique identifier for tracking.

• Subscription ID: Links the payment to an active subscription.

• Timestamp & Status: Shows success, failure, or pending status.

• Fee Deduction: PayPal’s transaction fees are deducted before settlement.

---

5. Handling Subscription Cancellations & Failures

• If a user cancels their subscription, PayPal stops further billing.

• If payments fail after multiple retries, PayPal marks the subscription as suspended or canceled.

• Agency Handy’s backend receives webhooks about cancellations and updates its records.

---

6. Webhook & API Logs in Agency Handy’s Backend

• Agency Handy’s system listens to PayPal Webhooks to update user subscriptions.

• Common webhooks:

  • BILLING.SUBSCRIPTION.CREATED → When a new subscription starts.

  • PAYMENT.SALE.COMPLETED → When a recurring payment is successful.

  • BILLING.SUBSCRIPTION.CANCELLED → When a user cancels.

• All transactions are logged in Agency Handy’s database, ensuring accurate record-keeping.

---

Final Summary

1. Subscription is created → User approves via PayPal.

2. First payment is processed → PayPal authorizes and captures the amount.

3. Recurring billing occurs → PayPal automatically deducts payments at scheduled intervals.

4. Payments are recorded in PayPal & Agency Handy → Transaction details are stored for reference.

5. Cancellations & failures are managed → PayPal updates Agency Handy via webhooks.