You may choose to use your credit or debit card to make future payments for goods or services. This is called a continuous payment authority (CPA), also known as recurring transactions or installment payments.
CPAs can be set up online, in person or over the phone. To give a retailer a CPA on your card account, you provide your debit or credit card details, rather than your bank details, which would normally be used to set up a direct debit.
A CPA gives the retailer a mandate to take payments from your account on dates of their choosing, and for different amounts, without seeking authorisation from you again.
A CPA could be:
- For a one-off amount to be paid in the future, for example, if you have taken out a loan
- For a regular payment, usually of a fixed amount, such as a monthly subscription for a magazine or online streaming services like films or music. This is sometimes also called a recurring transaction or installment payment
- For a less frequent but also regular payment, such as an annual renewal of car insurance.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 set out how retailers should act in setting up a CPA and during the course of a CPA.
Setting up a continuous payment authority
When you set up a CPA, you enter into a contract with the retailer. The retailer must make this clear to you and you must explicitly agree to it. A retailer cannot assume you agree through the use of opt-out provisions or by a default pre-ticked box.
For example, if you are offered a free trial after which payments will be taken, you should be clearly asked to agree to these future payments before the money is taken. If this has not happened the contract could be considered unenforceable and you could be entitled to a refund.
The retailer must make clear the following details about the CPA:
- The main features of the goods, services or digital content
- The total price (or how this will be calculated)
- All delivery charges or any other costs (or state that they are payable)
- The monthly, or billing period, costs of open-ended contracts or subscriptions
- Whether the contract is of a fixed duration or if it is to be extended automatically, the conditions under which it can be terminated
- The minimum duration under the contract.
Once you have agreed to the CPA, the retailer should send you details of the contract and the future payments that it will take from your card account.
When you are setting up a CPA it is important to make sure you are provided with details of how much the payments are and when they will be taken.
Changes during a continuous payment authority
The retailer should only make changes to the CPA, such as the amount or timing of payments, with your clear consent. It is good practice for the retailer to provide you with either a brief statement each time a payment is taken or a summary annual statement.
If a CPA is being renewed for an additional fixed period this should be treated as setting up a new CPA and the process above should apply.
If your card expires during the course of your CPA, you should check with the retailer whether your new carddetails have been automatically updated with them, as this will not always be the case.
If you switch bank account your CPA will not be transferred across to your new card, so you will need to contact the retailer with your updated details.
Cancelling a continuous payment authority
If you want to cancel a CPA, you can do this by contacting either the retailer or your credit or debit card issuer. In most cases, you should be able to cancel it by asking the retailer. This should be straightforward and they should respond quickly.
There should not be a fee or penalty for cancelling a CPA. However, you may still need to make any remaining payments even if you have cancelled the CPA.
You also have the right to cancel a CPA directly with your card issuer without going to the retailer first. In order to stop the next payment going out, you will need to cancel it at least a working day before the money is due to be taken from your account.
It will always be helpful to let the retailer know that you are cancelling an existing arrangement with them, particularly where you have a contract or credit agreement in place.
Any related payments taken from your account after you have cancelled the CPA are considered to be unauthorised transactions.
Card issuers must refund these payments and any related charges on your card account. The Financial Conduct Authority (FCA) has guidance on how your card issuer should handle your request to cancel a CPA.
If you have cancelled a CPA directly with your card issuer and then decide to renew your CPA with the same retailer, you should contact your card issuer first, as it is likely they will otherwise decline the payment.