Recurring Billing or Recurring Transactions
If a cardholder agrees to pay recurring transactions, the merchant is authorized to charge the payment card at predetermined intervals (such as monthly, quarterly, or yearly) for an ongoing basis.
Some recurring transactions are classified as negative option billing. This means the customer agrees to automatically receive goods or services and, in exchange, automatically be billed. This process will continue until the customer cancels the agreement. Examples include memberships or subscriptions. These payment plans sometimes include a free trial or introductory offer.
Other types of recurring transactions happen with installment billing. Rather than pay the entire purchase amount with a single transaction, the cardholder is able to reimburse the merchant with smaller payments at predetermined intervals. Examples include a mortgage or other loan payment.
Also referred to as:
- Subscription billing