Credits are a versatile tool in modern billing systems, serving diverse purposes for both B2B and B2C companies. SaaS companies often use promotional credits to entice new sign-ups and encourage customers to explore their services. Cloud providers might offer credits as a way to compensate for service interruptions and maintain customer goodwill. AI companies frequently adopt a prepaid credits model, requiring customers to purchase credits to access their products.

With the rise of usage-based billing as a primary way in which AI services are priced, the strategic importance of credits is only growing. That’s why we’ve recently incorporated a new credits feature into Stripe Billing, enabling businesses to offer their customers both promotional and paid credits with a high degree of flexibility and control. These new features make it easy for you to implement usage-based billing credit drawdowns for your products and services.

Credit-based models are a strong fit for businesses with high costs of goods sold (COGS), such as AI companies, where each usage event carries a substantial fixed cost and credits provide important up-front cash flow. Credits also help mitigate fraud risk, which is especially important for businesses building AI models or businesses building atop those models. In both cases, costs can grow linearly with usage, meaning that even minor fraudulent activities can significantly impact profitability. Faced with these risks, up-front payment becomes a key safeguard.

Stripe’s new credits feature for usage-based billing is designed to address these needs, offering businesses the tools to implement flexible, accurate usage-based credit systems.

Flexible and accurate credits management

The new credits feature allows businesses to offer both promotional and paid credits with enhanced control and transparency. Businesses can now set both start and end dates for credits, enabling time-bound promotions. For example, you could offer a promotional credit valid for the next 30 days to encourage quick adoption of your service.

These credits interact intelligently with your existing billing cycles. If a credit becomes effective after the current cycle, it won’t apply to the current invoice—giving you control over when credits are used. This detailed control extends to expiration of credits as well, allowing you to create credits that align with your business strategy and customer needs.

Transparency is a key aspect of this new feature. Every transaction with credits is recorded in an immutable ledger, accessible through the credit balance transactions API. This means you can track every credit granted, used, or expired with confidence in the data’s integrity. This system simplifies credit-related tasks for businesses, facilitating the management of internal accounting needs. For instance, you can easily determine which invoices a specific credit grant was applied to. Having an immutable record also helps businesses respond to customer inquiries about credits more effectively. When a customer asks, “When do my credits expire?,” you can provide an accurate answer based on the ledger.

How the credits system works

At the heart of our credits feature is a robust ledger system that tracks every credit-related action, from granting credits to using them on invoices. The system ensures reliability and precision through:

• Unchangeable records: Ledger transactions can’t be altered or deleted, ensuring a complete history.
• Smart timing: Each transaction has an “effective time,” allowing precise tracking of when transactions with credits happened.
• All-or-nothing transactions: Related transactions (such as the same credit grant applying to multiple line items on an invoice) either all succeed or all fail, preventing inconsistencies.
• Coordination across services: The ledger system works seamlessly with other internal Stripe services using a “two-phase commit” method.

When preparing an invoice, our system applies relevant credits automatically and the credit balance transactions API instantly reflects any usage of credits. If issues arise when applying credits to an invoice, the system can safely reverse the application of the credits. To protect accuracy, we briefly lock credits during application to an invoice. Businesses attempting to modify credits during this time receive a message to try again shortly. This machinery ensures Stripe’s credits system is powerful, flexible, and consistent—providing a smooth experience for our users.

More features to come

These new capabilities with credits unlock an entirely new pricing model, improving customer relationships while maintaining financial clarity and control. We have several additional exciting features we’ll be releasing soon, including support for nonmonetary credits, more control over funding credits, and real-time updates of available credits.

To learn more and get started using our credits feature, read our docs or get in touch with an expert from our team.

To learn more about whether usage-based pricing is the best choice for your business, read our comprehensive guide.