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.