Continuous payment authorities
If you use subscription services like Netflix or Amazon Prime, it’s likely you have continuous payment authorities set up. CPAs allow companies to take payments from your debit or credit card on a recurring basis.
In our guide, we look at how CPAs work, how they differ from other payment methods, and how to stop a continuous payment authority.
If you use subscription services like Netflix or Amazon Prime, it’s likely you have continuous payment authorities set up. CPAs allow companies to take payments from your debit or credit card on a recurring basis.
In our guide, we look at how CPAs work, how they differ from other payment methods, and how to stop a continuous payment authority.
What is a continuous payment authority?
A continuous payment authority is a type of recurring payment that uses your debit card or credit card details to make regular card payments.
Continuous payment authorities are typically used for regular transactions like subscriptions, gym memberships and insurance policies. They can also be used for short-term loan repayments.
When you set up a continuous payment authority, you’re effectively giving a company permission to take regular payments from your debit or credit card. CPAs are a convenient way of simplifying recurring transactions for both businesses and consumers.
When are CPAs used?
CPAs are commonly used to make recurring payments for services like:
- Online subscriptions
- Streaming services like Netflix and Amazon Prime
- Subscription services
- Gym membership
- Mobile and TV services
- Annual car insurance payments
- Debt collection agencies
- Payday loans.
Continuous payment authority rules
Under the Financial Conduct Authority (FCA) rules, a merchant must have the consumer’s permission to take card payments as and when they are due. This permission is known as ‘standing authority’.
In the past, firms were allowed to make multiple attempts to take a payment if the first try failed. They could also take partial payments instead of one full payment. This meant they could take funds from an account at any time, even if it left those struggling financially with no money for essentials such as food and rent.
As a result, the FCA introduced a new set of rules to protect consumers. Firms can now only make two same-day attempts to take a CPA payment. And they can no longer take partial payments. The CPA payment must be for the full amount owed.
Continuous payment authorities and your rights
You the consumer have the right to cancel a continuous payment authority at any time. You should tell the company taking the CPA payments that you’ve stopped permission and wish to cancel the agreement.
If they refuse, you have the right to cancel continuous payment authorities directly with your bank or card provider. Under FCA rules, they must stop payments as soon as you ask.
You also have the right to claim a continuous payment authority refund. This could happen if the bank fails to cancel the CPA in time and the payment goes ahead.
Just be aware that you’ll still be responsible for paying any money you owe.
How to cancel a continuous payment authority
It should be pretty straightforward to cancel a continuous payment authority.
- Contact the company taking the CPA payments and tell them you want to cancel.
- If they refuse, ask your bank or card provider to cancel the CPA – they must stop payments when you ask.
- Check your next bank statement to ensure the CPA has been cancelled as requested.
If CPA payments continue after you’ve asked for them to be stopped, they’ll be considered ‘unauthorised transactions’. Your bank or card provider must give you a continuous payment refund and any relating charges immediately.
Be aware that cancelling a CPA doesn’t cancel any existing debt you have with the company. If you still owe them money, you’ll need to contact them to settle the outstanding balance.
Did you know?According to FCA findings, some card providers refused to cancel CPAs set up for payday loans because they were incorrectly named as ‘guaranteed payments’. The FCA stipulates that if a CPA is called a ‘guaranteed payment’, ‘recurring payment’ or ‘recurring transaction’, it’s still considered to be a continuous payment authority. This means that you have the right to cancel such payments directly through your card provider. |
CPAs vs direct debit and standing orders
You may be asking “are CPAs the same as direct debits or standing orders?” The answer is no. In fact, there are a few notable differences.
With continuous payment authorities:
- The CPA contract is made directly with the company taking the payments.
- The company will ask for the long number across the front of your card. This will give them permission to take money directly from your bank account.
- The recurring payment could be the same or it could vary each time.
- To cancel a CPA, you’ll need to contact the company or your bank directly.
- If you switch banks, your continuous payment authorities aren’t automatically transferred over to your new account. You would have to organise this yourself.
With direct debits or standing orders:
- An agreement is set up directly with your bank.
- You’ll agree to pay a fixed amount on a set date.
- A company must let you know in writing if they want to change the payment amount.
- You can easily cancel a direct debt or standing order yourself, via your online bank account or mobile banking app.
- If you switch to a bank that’s signed up to the current account switch guarantee, your direct debits and standing orders are automatically transferred to your new account.
Frequently asked questions
What happens to a continuous payment authority on an expired card?
If the card you use to set up a CPA expires, you’ll no longer be able to use it for payments. This is because the details the company has will be out of date. You’ll need to contact the company with your new card details and set up a new continuous payment authority.
Can a bank take money from your account to pay for a credit card?
Yes, a bank can take money from your account to pay a credit card debt. This is known as ‘right of set off’. However, it’s rare for a bank to use this right.
The bank can’t use right of set off if you’ve already earmarked funds in your account for essential living costs or priority bills.
How can I block someone from taking money from my bank account?
A bank or building society must stop CPA payments when you ask.
If someone such as a current or former partner is taking money from your bank account without your consent, it’s economic abuse. Economic abuse is a legally recognised form of domestic violence.
If you’re experiencing economic abuse, you should contact your bank. They have a duty to support you. They may help you by blocking the abuser from accessing your bank or credit card account. They may also help you set up a new account in your name only.
Further support is available from the Financial Support Line at Surviving Economic Abuse and the National Domestic Abuse Helpline at Refuge.
How long can you be legally chased for debt in the UK?
For most debts, you can be legally chased for up to six years.
If your home is repossessed because of mortgage debt, you may still owe money on the mortgage. In this case, you’ll be legally liable for up to 12 years on the remaining amount and six years on the interest.
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