A recurring transaction is a type of payment that the cardholder agrees to perform for goods & services the merchant sells. The merchants charge a certain amount of money from the customer’s account on the pre-arranged schedule. So, the clients give permission to the seller to make the fixed amount deduction from their accounts on a monthly or yearly bases. But the frequency may vary.
This transaction type is typical for businesses that work on the subscription-based model. For instance, e-learning, dating, gift platforms will use recurring billing. It’s pretty convenient, as the customers fill in the card’s data once and then receives the goods/serves, for example, monthly. Nevertheless, they do not need to enter the card’s details over and over again.
Despite the convenience, the merchants may face chargebacks. They appear because of the client’s misunderstanding. He/she may not fully understand the conditions or do not notice that the store will charge his/her card monthly.
Hence, to avoid chargebacks, merchants need to clearly state they work with the recurring transactions and the terms of the payments. It’s vital to have the required fields the customers have to fill in to give their permission to make automatic deductions. Moreover, the sellers should ensure they have no hidden fees or whatsoever, as this can also be a trigger.