What is a Recurring Transaction?

This refers to a payment arrangement where charges are automatically applied to a cardholder’s account at regular, predetermined intervals for ongoing services or goods, such as memberships or subscriptions.

How Does a Recurring Transaction Work?

1. Setup and Agreement: A cardholder agrees to a recurring transaction when purchasing a subscription or membership. This agreement specifies the frequency (e.g., monthly, quarterly) and amount of each payment.
2. Automatic Billing: The merchant sets up the recurring transaction to automatically charge the cardholder’s account at the agreed intervals. Payments are processed without the cardholder needing to take any action each billing cycle.
3. Duration and Termination: The recurring charges continue until the cardholder either cancels the subscription or reaches the end of the agreed payment period. For instance, a monthly subscription will incur charges every month until canceled, while a one-time purchase with a payment plan will continue until the full amount is paid.

Key Aspects of Recurring Transaction

• Convenience: Automates payment processes for both merchants and customers, ensuring continuous service or product access without manual intervention each billing cycle.
• Revenue Predictability: Helps businesses predict and manage cash flow more effectively due to the predictable nature of recurring payments.
• Customer Retention: Encourages long-term engagement by providing ongoing access to services or products.

Recurring transactions streamline the payment process for ongoing services, offering convenience for customers and consistent revenue for businesses.