Making sense of regular payments
There are two types of Regular Payments: Recurring and Instalment.
Both are automated payments, which are debited from your credit or debit card at predetermined intervals. It’s essentially an agreement between you and a company, which you preauthorise to bill your card account.
What is the difference between a Recurring Payment and an Instalment Payment?
A Recurring Payment is when a cardholder authorises a merchant to bill their account on a recurring basis (such as monthly or quarterly) for an ongoing service provided by that merchant. The amount of each payment may be the same or may fluctuate (eg You may ask your local gymnasium to charge your monthly gym membership fee to your credit card each month).
An Instalment Payment is a single purchase made upfront but is billed to you in subsequent multiple periods (eg You may have purchased a new television from your local appliance store and are being billed by the merchant in subsequent multiple periods).
Frequently Asked Questions
In December 2009, the payment card industry implemented initiatives which introduces consistency to facilitate account switching for scheme card accounts. The initiatives consist of industry customer relation’s protocols, consumer education and templates, provision of merchant information and best practice standards on dealing with regular payment arrangements for scheme card accounts.
This FAQ provides answers to common consumer questions regarding regular payments made from a scheme card account.
Q1 What is a scheme card?
The term “scheme card” include any Visa or MasterCard credit card or debit card issued by your financial institution and scheme charge card issued by American Express or Diners Club International.
Q2 What is a ‘regular payment Arrangement’?
Regular Payment Arrangements can be either a recurring payment or an instalment payment. A Regular Payment Arrangement is an agreement between you (the cardholder) and a merchant in which you authorise the merchant to bill your card account at regular intervals (eg monthly or quarterly) or at intervals agreed by you. The amount may differ or be the same for each transaction.
An Instalment Payment represents an agreement between (the cardholder) and a merchant in which you preauthorise the merchant to bill your card account with a fixed amount at predetermined intervals for a predetermined time.
You may ask your local gymnasium to charge your monthly gym membership fee to your credit card each month.
Instalment Payment: You may have purchased a new television from your local appliance store and are being billed by the merchant for a fixed amount in multiple periods until a defined date.
Q3 What are the benefits of Regular Payment Arrangements?
There are many benefits for cardholders who set up regular payments including:
Ensures timely payments to the merchant
Saves you time as the payment is processed automatically
Saves you money as you do not have to pay for cheques, money transfers or postage, nor will you be liable for late fees
Q4 What are my responsibilities with Regular Payment Arrangements?
Regular Payment Arrangements are an agreement between you (the cardholder) and the merchant. You should keep a record of all Regular Payment Arrangements you have established with merchants and store in a safe place. A template for recording your Regular Payment Arrangements is available from the Australian Payments Clearing Association website. Click here and use the template provided to record all your regular payments.
You are responsible for notifying the merchant when your account details change, including a change in card number and/or change of card expiry date. Either contact your merchant by phone, mail or internet and follow their instructions; or click here to generate a Change in Account Details letter to your merchant. We recommend you keep a copy or record of any Change In Account Details letter sent to your merchant and your earlier Regular Payment Arrangements. This correspondence will be required if your merchant does not comply with your request in a timely manner and you decide to dispute any incorrectly charged regular payments.
Q5 How do I cancel a Regular Payment Arrangement?
You must contact your merchant and request they cancel your Regular Payment Arrangements. Be aware that you may be required to provide alternative payment details for the goods and/or services being provided.
Note that closing your scheme card account does not automatically cancel your Regular Payment Arrangements on that scheme card account. You must contact the merchant to either cancel the Regular Payment Arrangement or provide replacement cards details for future payments.
Q6 What if my card number and/or expiry date changes?
If you have provided a merchant with your card number for a Regular Payment Arrangement and your card number and/or expiry date changes then you must contact the merchant to advise them of the new card details. Failure to advise the merchant of these changes could result in the cancel of goods and/or services (eg cancellation of your car insurance policy).
Your rights and remedies
If you believe you have been incorrectly charged a Regular Payment, and can provide your financial institution with a copy of the notification you sent to the merchant, you may be able to dispute the charges. Contact us for more information.