Recurring and Installment Payment Processing Services

If merchants accept credit cards for the processing of recurring or installment payments, they need to be in compliance with all applicable rules applicable to each separate card transaction. A recurring or installment payment processing services plan constitutes an obligation, either of a variable or fixed amount, that is paid by a consumer with a series of payments over a given period of time.

Recurring Payment Processing Services Requirements

Merchants must be in compliance with all applicable requirements with regards to each amount debited to a card account in connection with a recurring or installment payment arrangement. If a retailer fails to comply with any one of these requirements, or if a cardholder initiates a dispute at any time over a particular card transaction installment of a recurring or installment payment plan for the items or services that the retailer has agreed to provide in connection with it, the issuer can, at its discretion, charge back the installment amount as well as any previous installments.

Recurring Authorization Approval

Retailers must receive a separate authorization approval from the issuer for each single installment charged to a card account in regards to a recurring or installment plan and the merchant must obtain this authorization prior to depositing the sales data with the acquirer. If the issuer authorizes a particular installment payment, that is not by any means a guarantee that any further installments will be either authorized or paid.

Cardholder Approval

The merchant must have the cardholder's approval for a recurring or installment payment. Be advised that a verbal cancellation is all that is needed from the consumer to put a stop to a recurring arrangement. The cardholder's approval, whether written or otherwise, must include all of the following details:

• Cardholder's name, address and account number.
• Amount of each individual installment, unless it varies.
• Timing or frequency of the installment payments.
• Duration of time over which the cardholder allows the merchant to charge installments to her card account.
• The card acceptor's merchant number with the processor.
• Card date of expiry.
• Installment amount.

Payment Processing Services Rules for Submission of Transaction Data

The transaction data that the retailer submits to the acquirer must comply with the processor's requirements. If the processing agreement is terminated, the merchant should not submit data for recurring or installment payments that are due after the cancellation's effective date. If a cardholder who entered into a recurring or installment agreement has its card account terminated, the merchant should not deposit sales data as well.