Making regular payments

Cardholders are increasingly using their cards to pay for goods and services where regular payments are needed, such as an annual subscription to a health club or monthly payments to an internet service provider.

There are different ways you can make and manage regular payments, such as by Direct Debit or standing order, but when you authorise a retailer or organisation to claim regular payments from your credit or debit card it is called a recurring transaction or continuous payment authority. There are important differences between recurring transactions, Direct Debits and standing orders:

A recurring transaction is a regular payment you arrange, which authorises organisations to take payments from your credit card account, or in the case of debit cards, your current account. A recurring transaction is an agreement between you and a specified organisation, NOT between you and your card company or bank; so if you wish to alter or cancel it, it is best done through that organisation. The card issuer cannot cancel the agreement, so you are advised to keep a record of agreements and contact details in case of future queries with the organisation. If you close a credit card account this does not automatically cancel the recurring transactions on that account. Your credit card company is obliged to honour your agreement with the organisation with which you have made the agreement. To stop this from happening, when closing a credit card account or changing your card you must contact all the organisations that take recurring transactions from your credit card and either cancel the agreement or move the payments to another account. Where it can be shown that you did not authorise a transaction or have advised a retailer to cancel a recurring transaction but payments still continue, your card company should refund you.

A Direct Debit is like permission that you give to your bank or building society to make regular payments from your current account at the request of, and to the account of a specified organisation. This type of payment is subject to the Direct Debit Guarantee which includes a refund guarantee. A Direct Debit can be cancelled at any time by customers informing their bank or building society, usually in writing, to stop the arrangement. It is advisable to inform the supplier as well, but this is not obligatory, as the bank or building society will also do it.

A standing order is an instruction you give to your bank or building society to make payments from a current account, usually on a regular basis, to a specified bank account. in the UK. If you wish to change the amount or date of the arrangement, you need to give your bank or building society a new standing order instruction, not forgetting to cancel the earlier instruction at the same time.

If you would like more information about Direct Debits, standing orders and other types of automated payments please go to www.payyourway.org.uk