CreativeMinds Glossary

A recurring transaction allows you to save a transaction along with the data so you do not have to repeat the process. The consumer authorizes the merchant to charge his or her credit or debit card a specified amount on a specific date of every month or year. It sets the transaction to repeat automatically. You can set a transaction to recur for various products and services over an indefinite or a specific period. The cardholder may also stop the charges by cancelling the plan or discontinuing the service.
An example of a recurring payment is the monthly fee for hosting an eCommerce website, where the website host charges the eCommerce business a monthly fee for hosting a website on their server.

On certain occasions, the merchant may charge the credit cardholder without the proper authorization. This is when the merchant may acquire a chargeback (consumer requests a refund from the credit card company). Merchants need to be careful not to process recurring transactions without proper authorization. This maybe costly to the merchant and may tarnish their reputation.

An eCommerce business that uses the Magento^® platform has the option to setup recurring transactions for products.