A recurring transaction (or continuous payment authority) is when a customer gives their credit or debit card details to you (the merchant) and authorises a series of payments which can then be taken from their account. The payments can either be for regular or irregular amounts and frequencies. At the time of authorisation, recurring transactions do not require the customer to provide any further consent.
Usually, recurring transactions are plans that have been set up for an indefinite period of time. You’ll often find that businesses offering memberships, subscriptions and payment plans will set up recurring transaction plans.
There are a number of things that you as the merchant must do to help prevent any chargebacks as well as other fraud prevention actions that may diminish the value of your business in the eyes of a credit or debit card company. There are a number of ways you can optimise recurring payments; this includes:
• Ensuring you offer the correct payment methods for your market
• Offering a variety of payment options – monthly through to annual
• Allowing recurring and subscription payments using common local payment methods – Bacs in the UK or SEPA in Europe
• Acknowledging how much each payment method will cost you. Think about incentivising customers to use more affordable payment methods
• Collecting relevant and correct customer details and use bank verification so payments are valid
• Ensuring you receive a notification if any payments are cancelled or fail
• Contacting and notify customers immediately if you can no longer provide the goods or services. This will help minimise chargebacks or customer service calls