Recurring payments are changing – heres what you need to know

This new regulation will require businesses to submit recurring payment requests as either a subscription, or a card-on-file transaction.

Subscription and card-on-file are diifferent kinds of recurring payments. Subscription is a recurring payment made at an agreed interval (such as music or video streaming subscription) whereas card-on-file is a repeat payment made across one or more channels (i.e. online, mobile, or in store).

After an initial transaction, payment details are stored so subsequent payments can be made with a single click (or zero-click in the case of Uber). This type of payment typically makes use of tokenization.

Currently, both types go through as a recurring payment. But, to help issuers better evaluate the transactions, Visa will require payments to be submitted as one or the other.

This is likely to be good news for businesses. Issuers are more likely to authorize a transaction if they understand that it is underpinned by an agreement between the cardholder and the business. So you can expect overall authorization rates to increase.

Adyen, Europe’s largest recurring acquirer, has already updated its integration to comply. Adyen customers can expect little-to-no impact on their integrations to the platform.

For more information about recurring payments, and how they can help increase conversion rates build loyalty, check out Adyen’s Recurring Payments Guide.

Adyen powers global commerce for many companies in the world. Its solution supports a broad range of shopper journeys across online, mobile and in store, and its infrastructure connects businesses to all major card schemes and local payment methods.

For more information about Adyen, please check out a detailed profile of this company in our dedicated, industry-specific online company database.