Subscription Billing 101: Continuous Payment Authority

Continuous payment authority facilitates repeat transactions which are instigated by the merchant, rather than the customer. Once continuous payment authority, or CPA, has been given by the cardholder, the other party to the transaction has the right to take payment as it when it deems it to be due.

Financial institutions facilitate various types of repeat payments, such as direct debits and standing orders. In the case of continuous payment authority, however, there has been a significant amount of dissatisfaction amongst consumers.

For companies using subscription billing, this poses a significant problem. Despite being perfectly legal, continuous payment authority can generate a lot of bad press. Although the customer’s dissatisfaction often arises because they misread the terms of their subscription agreement (or failed to read it at all), this doesn’t prevent them from making complaints or publicizing their feelings.

Despite this, gaining continuous payment authority is essential for businesses that facilitate recurring payments. Alternative forms of repeat payment, such as the direct debit, can be cancelled by the customer at any time. Even if it’s in contravention of the terms of your agreement, you will be forced to begin collections or take legal action in order to recoup the funds you’ve lost.

In contrast, continuous payment authority gives merchants the right to instigate a payment and bill the customer variable amounts. For companies that provide subscription services and up-sell addons, this form of recurring payment is ideal for their business model.

Gaining Continuous Payment Authority

Like all financial transactions, parties are expected to adhere to certain regulations when gaining continuous payment authority. For example, a business should not exercise its authority unless it has been explained to the customer that the authority would be used in this way. Similarly, payments must only be taken in accordance with the terms of the P2P or credit agreement.

Although continuous payment authority works well to facilitate subscription billing and recurring payments, companies must ensure they adhere to the relevant regulations before attempting to exercise their CPA.

As the regulations regarding repeat payments and CPA in particular are complex and lengthy, understanding and implementing them can be difficult. While major corporations may have the in-house staff to facilitate this, smaller businesses and enterprises often struggle to divert sufficient staff time and resources into examining the relevant regulations in detail.

Facilitating repeat payments with Continuous Payment Authority

As the benefits of subscription billing are so alluring for businesses, a significant number of companies are turning to specialist providers for recurring payment services. By outsourcing your subscription billing to an established service provider, you can minimize the number of resources you’re using to facilitate repeat payments.

In addition to this, businesses who choose to partner with subscription billing service providers have peace of mind that the complex financial and legal regulations which govern their transactions are fully complied with.

To learn more about the benefits of outsourcing your subscription billing and recurring payments, contact Billsby now at +1 (855) 934-0707.