What is a Continuous Payment Authority (CPA)?
Continuous payment authorities are used to pay bills and subscriptions, but how are they different from standing orders and direct debits, and how can you cancel them? Our guide explains more…
Key takeaways
CPA is a type of permission you grant to a company, allowing them to take funds from your debit or credit card on a recurring basis
You have the right to cancel a CPA at any time. This can be done with the company that’s taking payments or your own bank, either over the phone, by email, or in a bank branch
Be sure that you understand details such as the payment amount, schedule, and specific terms upfront to avoid surprises
CPA is different from a direct debit or standing order because it’s typically linked to the long card number not your bank account
CPAs go by various names such as recurring payments, recurring transactions, or regular card payments
Continuous Payment Authority (CPA) has become a common method for companies to collect payments from customers. Essentially, CPA is a type of permission that you grant to a company, allowing them to take funds from your debit or credit card on a recurring basis.
This arrangement can simplify the payment process for regular transactions, making it a popular choice for both businesses and consumers.
What’s the difference between a CPA and a direct debit or standing order?
Unlike direct debits or standing orders, which are set up through your bank, CPAs are agreements made directly with the merchant.
This means that the company has your card details and can charge the agreed amount as required. It's a subtle but important distinction, as the control mechanism and the party initiating the payment differ from other methods.
A monthly gym subscription is often an example of a CPA. If you replace your card, the gym would no longer be able to take payment until you update your new card details with them.
Contrast this with a regular council tax payment, for example, that might be set up on direct debit from your bank account.
CPA | Standing Order | Direct Debit | |
|---|---|---|---|
Set-up | You enter a contract directly with the merchant, giving them permission to take money through your debit or credit card by providing them with the long number on the front of your card. Amounts may vary, for example, in the case of payday loan repayments. | An agreement with your bank to pay a fixed amount to an individual or company at regular intervals. | A contract called a ‘direct debit mandate’ where you make an agreement with your bank to make fixed payments on agreed dates. If the merchant wants to increase payments, it must inform you in writing first. |
Cancellation | Cancel with your bank or the company taking the payment. You can still get a refund if money is taken without your permission, but it must be sought from the company in the first instance. | Can be cancelled through your banking app or by contacting your bank. | Can be cancelled through your banking app or by contacting your bank. If a payment is taken in error, the Direct Debit Guarantee means your bank provides a full refund – and you won’t have to rely on the company to repay you. |
How do I set up a CPA?
Setting up a CPA is straightforward. You can do it online, in person, or over the phone by providing your card details to the merchant. Once authorised, the company can begin to take payments according to the agreed schedule and amount.
Make sure you understand the payment terms, including how much and when you will pay. In theory, a CPA gives a company permission to take funds whenever it believes you owe it.
However, reputable companies will make your commitment clear and should stick to an agreed timeframe for payments, ie. monthly on a set date.
How do I cancel a CPA?
As a consumer, you have the legal right to cancel a CPA at any time. The fastest way should be by contacting the company receiving the payments, who must comply with your request. Alternatively, you can ask your bank to stop the payments.
This right ensures that you are not locked into payments indefinitely. You can cancel a CPA over the phone, by email, or in a bank branch.
However, it’s worth noting that cancelling a CPA does not absolve you of any debt. If you still owe the company money, you should get in touch with them to settle or it could affect your credit rating.
What else are CPAs called?
CPAs go by various names, which can sometimes cause confusion. They are also known as recurring payments, recurring transactions, or regular card payments. Regardless of the terminology, the concept remains the same: they are ongoing payments that you've authorised a company to take from your card.
What type of payments do CPAs cover?
CPAs are widely used for various services, such as:
Annual car insurance payments
Mobile and TV streaming services
Gym memberships
Subscription services
Payday loan repayments
Debt collection agencies
These are just a few examples where CPAs streamline the payment process for recurring charges.
What are the risks of setting up a CPA or recurring payment?
While CPAs offer convenience, they come with their own set of risks:
Unexpected payments if not monitored closely
Unawareness of payments continuing after free trials
Non-transferability when you switch cards
Difficulty in cancelling the CPA
Potential issues with obtaining refunds for unauthorised payments
Will my CPAs be carried over when I switch bank accounts?
No, CPAs do not automatically transfer to your new account when you switch bank accounts.
It's your responsibility to contact the company and update your payment details to ensure continued service and avoid missed payments.
Personal Finance Expert
Our expert says...
“CPAs can be convenient and save you a lot of time when paying for services. But they can also be quickly forgotten. A free or low cost trial is a prime example of where a larger CPA amount kicks in once the trial period has ended, which might leave you paying for a subscription you didn’t realise you had. Also, remember that
– unlike a direct debit – if you get a new debit or credit card, you’ll need to contact the selling company to update your recurring payment details or the payments will stop.”
Other useful guides
For more information on related topics, check out these useful guides:
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