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After you consume recorded events and meter usage, PayPal converts this metered data into charges, generates invoices, and bills your customer. PayPal follows a payment priority system that decides how to capture payments.

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Billing process

  • Usage recording: You send usage events to PayPal as they happen or in batches.
  • Data aggregation: PayPal stores and aggregates these events according to your metrics.
  • Charge calculation: Based on the subscription’s billing cycle, PayPal uses the aggregated usage data to calculate charges.
  • Payment capture: PayPal follows a payment priority system to capture payment.

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Payment priority system

PayPal follows a specific order when collecting payment from customers. This priority system ensures customers get the benefit of available credits before charging their payment methods. Payment processing order
  1. Credit notes: PayPal first applies any available credit notes with AVAILABLE status. These represent refunds or adjustments you’ve issued to customers for disputes or billing corrections.
  2. Billing credits: PayPal then checks for billing credits in the customer’s wallet. When charging from billing credits, if there are multiple invoices for a customer, PayPal applies the billing credits to the invoice whose status moves to FINALIZED first. If there are available credits, PayPal uses the billing credits to charge customers based on the wallet’s applicability scope (see Offer billing credits):
    • Sufficient credits: If the wallet has enough credits to cover the full invoice, PayPal deducts the entire amount from the billing credits.
    • Partial credits: If the wallet has insufficient credits, PayPal uses all available billing credits first, then charges the remaining amount to the payment method.
    • No credits: If the wallet is empty, PayPal skips billing credits and charges the full amount to the payment method.
  3. Payment method: PayPal charges the customer’s payment method for any remaining amount after applying credits, or for the full invoice amount if no credits are available.

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Billing calculation example

Consider a customer with a $100 invoice who has both credit notes and billing credits available: 
Invoice subtotal: $100
Credit notes applied: -$50 (from previous refunds)
Billing credits applied: -$25 (from customer's wallet)
Final amount due: $25 (charged to the customer's payment method)
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