How a recurring payment works, by method
- Card: the details are stored at the first payment, and the merchant sends each later charge
- Direct debit: the payer signs a mandate, and the payee collects from the bank account
- Standing order: the payer instructs the bank to send a fixed amount on set dates
- Variable recurring payment: in UK open banking, a consent lets a provider initiate transfers within agreed limits
The methods differ in who starts each payment. A card charge and a direct debit are pulled by the payee, and a standing order is pushed by the payer's bank.
Consent, authentication and refunds
For cards, the payer agrees once and is authenticated at the first payment. Later charges are merchant-initiated transactions, and the entries on that term and on strong customer authentication set out how the rules treat them.
For direct debits in euro, PSD2 gives the payer an unconditional right to a refund, which can be requested for eight weeks from the date the funds were debited (Directive (EU) 2015/2366, Articles 76 and 77).
Why recurring payments matter to a payments product
Recurring payments are predictable revenue for the merchant and a steady source of failures for the provider: cards expire, accounts close, limits are reached. Tokens that follow a reissued card, and a retry process for the rest, decide how much is collected.
A cancelled agreement has to stop the charges. A charge taken after cancellation is a frequent ground for a card dispute or a direct debit refund.
Recurring payment, instalment or one-click payment?
- Instalment
- One purchase paid in a fixed number of parts. The series ends when the total is reached.
- One-click payment
- Uses stored credentials too, but the customer starts each payment.
Where a recurring payment shows up in a platform
Modules that do the work
- CheckoutA hosted checkout for cards, wallets, bank payments and crypto, routed to the best provider.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
- NotificationsEmail, SMS, push and in-app messages in your brand, through the providers you choose.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.