// GLOSSARY -- PAYMENTS & FINTECH

What is Subscription Payment?

1 min read Updated

A subscription payment is a recurring automated charge for ongoing access to a service — a payment model that requires specific smart contract patterns on blockchain since native pull payments don't exist.

WHY IT MATTERS

Subscriptions are a $275B+ market, but blockchain doesn't natively support them. Traditional subscriptions use pull payments (merchant charges your card). Crypto is push-based (you initiate each payment). This requires creative solutions.

Approaches include: approve-based pulls (approve a contract to spend tokens monthly), account abstraction with scheduled execution, and pre-funded escrow (deposit N months upfront, contract releases monthly).

Crypto subscriptions offer advantages: no involuntary charges, transparent billing, easy cancellation (revoke approval), and global access without currency conversion.

FREQUENTLY ASKED QUESTIONS

Can I build subscriptions on blockchain?
Yes, but it requires smart contract infrastructure: approval management, keeper networks (to trigger periodic payments), or account abstraction for scheduled execution. It's not native to the protocol.
How do users cancel?
Revoke the token approval. Unlike traditional subscriptions (where cancellation can be difficult), crypto subscriptions depend on an active approval you fully control.
What about failed payments?
If the user's balance is insufficient, the payment transaction reverts. The service should handle this gracefully: notification, grace period, and account suspension if unpaid.

FURTHER READING

Enforce policies on every tool call

Intercept is the open-source MCP proxy that enforces YAML policies on AI agent tool calls. No code changes needed.

npx -y @policylayer/intercept
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