Recurring Billing Transaction
A Recurring Billing Transaction is a card transaction processed at predetermined intervals for a product or service provided over a period of time. An example could be a monthly subscription service like a gym membership or a streaming service.
The payment provider — such as a credit card company or bank — will authorize the transaction at each interval and transfer the funds from the customer’s account to the merchant’s account.
It’s essential for merchants to maintain a secure and compliant payment environment to protect customer data during these transactions. They must also notify customers before each transaction and provide an option to cancel the service.
Additionally, merchants must carefully manage situations where a transaction fails, for example, due to insufficient funds or an expired credit card. In such cases, the merchant may need to contact the customer to update their payment information and may also impose penalties or suspend the service until the payment is received.