Recurring Card Payments: Types & Terms

Continuous Payment Authority (CPA) is a type of recurring payment plan that involves customers authorising merchants to take payments from their credit or debit cards on a regular basis. CPA is often used for subscriptions and other services charging recurring payments.

When setting up a CPA, customers are asked to provide their card details and billing information, which will then be stored by the merchant. This allows them to charge the card at predetermined intervals without needing to ask for the customer’s permission each time. Additionally, CPA can also be set up with limits, such as how much can be charged in one go or over a certain period of time.

It’s important to note that CPAs are different from direct debits as they are not linked directly to a customer’s bank account. So, unlike standing orders, CPAs do not require any additional authentication each time a payment is taken.

What happens if you switch banks?

If you switch banks while having an active CPA agreement in place, you may need to re-enter your card details with the merchant. This is because when you switch banks, your existing card number will be cancelled and a new one issued. Your bank may not inform the merchant of the change, so it’s important to contact them and provide your new card details.

How can you cancel a CPA?

If you no longer wish to use CPA for automatic payments, you can simply cancel this by contacting the merchant directly. Customers need to be aware that some merchants may require written confirmation of cancellation, which means you will have to send a letter or email. However, most CPAs can be cancelled online these days. If a merchant doesn't cancel the CPA on time, you can cancel the payment by contacting your bank directly.

Direct debits are a type of bank-to-bank payment, allowing merchants to take money from a customer’s current or savings account on pre-determined dates. Unlike CPA agreements, direct debits require customers to give explicit permission for the merchant to access their bank accounts and charge them for goods or services.

When you set up a direct debit, you grant the merchant permission to withdraw funds from your account on specific dates. Customers can also choose to set up their own direct debit payments by giving instructions to their bank. This could be used to pay bills or loan repayments as they become due.

One of the biggest advantages of using direct debits is that customers can be sure that payments will be made on time without having to remember when they need to make them. Additionally, it eliminates any risk of late payments, additional charges and penalty fees associated with missed payments. It also reduces paperwork since customers don't need to issue cheques or go through other cumbersome manual processes.

What happens to your direct debit if you switch bank accounts?

If you switch banks, make sure to inform your merchant about the new bank account details. The merchant will then need to update their records so that payments can be taken from the new bank account you set up. Sometimes, your old bank may inform all businesses that you have a direct debit setup with the new details for your account. It is important to contact any other companies that you pay via direct debit to make sure they also have the updated information, so payments can be processed correctly.

How can you cancel a direct debit?

The best way to cancel a direct debit is to contact your bank directly. Most banks provide online services where customers can access their banking accounts and manage existing payments, as well as set up new ones. Some online-only banks will even remind you of direct debits you might have forgotten about. Alternatively, you can also call them or visit a branch in person to inform them of the cancellation.

Standing orders are a type of recurring payment that allows customers to set up regular automatic payments from their bank account to another bank account. Unlike direct debits, the merchant does not have access to a customer's bank account and cannot withdraw funds automatically.

Customers can use standing orders to make payments for various bills such as rent, loan repayments, insurance, and more. They are also used by small businesses when they need to pay suppliers or employees on the same date each month. The amount of money transferred is agreed upon in advance and customers can choose whether they want the payments to be made weekly, monthly, or annually.

For customers wanting to use the Standing Order payment option, they must complete a form and submit it to their bank. The bank will then apply the order to the customer's account, and process payments accordingly. This is in contrast to direct debits which often require you to give the merchant explicit permission to access your bank account once you fill out an online form.

What happens to your standing orders if you switch banks?

If you decide to switch banks, most of your existing standing orders will remain unaffected as long as the bank moves your accounts to the new bank. Most UK banks offer to do this automatically, but it is important to check with the new bank that all standing orders have been transferred successfully.

How can you cancel a standing order?

To cancel a standing order, you will need to contact your bank directly. The process of cancelling is usually done online or by calling or visiting the bank in person.

The most important step is to contact the merchant directly. Explain what happened and clearly state when they will stop taking payments from you. Be sure to keep a record of the conversation for future reference in case of any misunderstandings.

In some cases, it would be best to contact your bank directly. Many banks have a dedicated team to handle queries or disputes related to recurring payments and they are often able to investigate the matter quickly.

Even in the worst-case scenario where your attempts to cancel the payment fail, you should evaluate the response and situation to determine if a refund is possible.

In some cases, businesses may be willing to provide partial refunds or discounts on future payments due to extenuating circumstances. It is also worth noting that depending on how long the payment has been running, there may be ways of reclaiming money from old payments as well. If you were charged for a service after you asked your merchant to cancel, the Financial Ombudsman Service provides legal grounds for you to get a refund.

If you're not satisfied with the outcome of your negotiations, you can file a complaint with the Financial Ombudsman Service. This is an independent body that helps settle disputes between customers and financial services providers.

The Financial Ombudsman Service will assess your case based on the evidence provided and decide whether a refund is justified. Before a decision is reached, the merchant will be given an opportunity to respond.

If the decision is made in your favour, the merchant will be obligated to provide you with a refund or compensation. Keep in mind that it can take several weeks or even months for the Ombudsman Service to reach a decision, so make sure to plan ahead if you need to reclaim money urgently.

If you are still not happy with the outcome and need to take further action, then it may be worthwhile using a specialist debt recovery service. This is usually a last resort as it can be expensive and may end up costing you more in legal fees than the amount of money reclaimed.

Though it can be daunting to challenge a large corporation, remember that you have the law on your side. Make sure to gather evidence and consult with an experienced lawyer before proceeding down this route.