Continuous Payment Authority

Many businesses use Continuous Payment Authorities (also known as recurring payments) to allow customers to repay money over time, or to pay for subscription memberships. Some people confuse them for direct debits, but there are some key differences that you should be aware of.

In this guide, we explain what recurring payments are, how they work, and what alternatives are available. 

What is a Continuous Payment Authority?

A continuous payment authority is a form of recurring payment which involves giving a company permission to take money from your debit or credit card on a regular basis.

Unlike a direct debit (which permits a company to take payment from your account on set dates), a CPA allows businesses to take payment whenever they feel they are owed money without the need to consult the payor.

Continuous payment authorities are used by a variety of businesses and are a common feature in agreements with gyms, internet service providers, subscription websites, and short-term lenders.

How do continuous payment authorities work?

CPAs are set up when a person provides a company with their credit or debit card to a business they wish to make regular payments to. This might be done online, in person, or over the phone.

The company can then hold those details on file and take payment whenever they feel they are owed money.

How to cancel a continuous payment authority?

Unfortunately, CPAs have earned a bad reputation over the years. Some companies don’t provide the right information to customers when setting them up, and this can lead to some people agreeing to recurring payments without fully understanding what they’ve signed up to.

There are several ways to cancel a CPA, namely:

Cancelling the original agreement with the company you’re paying

To begin with, you can contact the company with a CPA and request that they stop taking payments. The majority of reputable companies will accept this and act on it, but they may refuse if you’re partway through a contract (such as an annual gym membership). Cancelling in such circumstances could leave you in breach of contract unless you can find another way to pay.

Asking your bank to cancel the CPA

If the company fails to cancel recurring payments, you can ask your bank to do so for you. You should generally tell them at least one full day before a scheduled payment.

When asking your bank to cancel a CPA, it is good practice to inform the company concerned. You may need to make alternative payment arrangements if you are still obliged to make any payments under a contract or credit agreement.

Can I cancel a CPA by changing or cancelling my debit card?

Yes – but it may be better to contact the company or your bank and ask to cancel. Continuous payment authorities are linked to cards and so if you change debit or credit card, the company won’t be able to take money from your account unless you provide them with the updated details.

If I switch my bank account with the payment authority move over?

CPAs are linked to credit and debit cards, not bank accounts. This means that if you switch bank account (and therefore get a new card), companies will no longer be able to take recurring payments by way of CPA.

The Current Account Switch Service that launched in 2013 can help you to swap banking providers, and using the service will move Direct Debit instructions between banks. Recurring payments are not carried over, so you may need to make alternative payment arrangements with any companies you need to continue paying.

Are banks required by law to cancel a CPA if asked to?

You have a legal right to cancel a continuous payment authority. The UK’s Financial Conduct Authority (FCA) has made it clear that banks must cancel CPAs if asked to do so.

Can I get a refund if my bank didn't cancel my payment authority?

The FCA has even gone as far as to say that banks should refund payments taken in error following a requested cancellation. This means that banks and card providers that fail to cancel a CPA when asked must refund any subsequent charges.

You can claim money back for any recurring payments you attempted to cancel after November 2009. This includes if the bank or card provider told you that they couldn’t cancel the CPA.

Who to complain to about issues with CPA?

Complaints about CPAs can be made directly to the company involved, or to your bank or card provider.

You can complain also complain to the Financial Ombudsman if you still do not feel that your bank has acted fairly.

Are there any alternatives to a continous payment authority?

Some businesses only accept payment via payment authority, but there are alternative options available in most cases. These include:

Switch to Direct Debit

Many companies accept Direct Debits, enabling them to take recurring payments but only on agreed dates. Direct Debits are generally easy to cancel, and come with additional protections including bank refunds if payments are made in error.

Pay Manually

Some companies may be willing to accept manual payments, whereby you use bank transfers to pay them when money is owed. It may also be possible to set up a standing order that instructs your bank to pay a specified amount of money on a regular basis.

Use a Prepaid Card

Prepaid cards work in the same way as a credit or debit card – but they aren’t linked to your bank. This means that you can load them with a certain amount of money, and a company cannot continue to take payments once that amount has been used up.

Not all companies accept prepaid cards for recurring payments, but they can help you to control your spending and limit third-party access to your money.

Pay Upfront

While not all businesses will accept an outright payment for goods, services, or subscriptions, an upfront payment could help you to avoid the need for a CPA.

Recurring payments can be helpful for people who can’t afford to pay upfront, but if you really want to avoid a Continuous Payment Authority you could use a credit card, borrow money from friends or family, or even take out a short-term personal loan.

The important thing is to ensure that you only borrow or spend an amount that is affordable to you.