What is ‘Recurring payments’
Recurring payments is when a merchant automatically charges a cardholder for specified goods or services on a prearranged schedule. Recurring payments requires the merchant to get the cardholder’s permission one time up front for recurring charges, then continues with scheduled charges until the cardholder withdraws permission.
Any good or service that a customer purchases repeatedly and regularly might be a good candidate for Recurring payments. Examples include cable bills, cell phone bills, gym membership fees, utility bills and magazine subscriptions.
Recurring payments offers the benefit of convenience
Instead of having to repeatedly provide credit card information for a routine charge, the cardholder can authorize the merchant to keep the card details on file and charge the card each time the merchant delivers agreed upon goods or services. For example, a consumer could set up an order with an online pet store to have three bags of dog food delivered every three months. Authorizing Recurring payments would let this purchase happen automatically on a regular schedule.