Recurring payments (also known as subscription payment) are made by consumers to merchants on a prearranged schedule. Unlike in-store purchases where cash or credit cards are used for one-time transactions, these payments are made remotely through the merchant’s payment processor. Recurring payments are the optimal chooses for consumers and merchants for products and services that require repeated purchases.
For cardholders, the process of establishing recurring payments is simple: cardholders select the recurring payment option when they make an initial purchase or card authorization on a merchant website. The cardholder then needs to accept the relevant terms and conditions of service and wait for authorization. Finally, the cardholder enters payment information, pays on a mutually agreed upon schedule, which may be yearly, monthly, weekly or even daily, depending on the business model, and ultimately confirms the payment amount. Recurring payments can have a due date or continue indefinitely. Cardholders typically receive an email or text message notification when the payment has been processed.
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