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Berrigan Motel
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I’m not sure how the accounts (active vs not paid) would integrate but have you checked out http://www.mailchimp.com (no affiliation)? A lot of the newsletters I receive use their system and they do have a free account option.

Paypal should be able to do recurring payments. Or speak to your bank, they will likely have a solution that may cost a little but will save you the headache of paypal users reversing their transactions on you.