Continuous payment authorities (CPAs) explained

A continuous payment authority (CPA) is a type of payment method used by merchants to withdraw money from your credit or debit account on a recurring basis. You have to give permission for payment to be taken. CPAs are typically used by subscription services as well as gyms, membership websites and payday loan companies.

If you see a CPA on your bank statement, you might think it’s a direct debit, but as you’ll find out on this page, CPAs are actually different from direct debits. Read on to find out what continuous payment authorities are, how they work, why you may want to avoid them and how they may affect your credit and debit card transactions.

A continuous payment authority (CPA) is a type of recurring payment that allows a company to take money out of your account if you have given them your debit or credit card details. Streaming subscription services like Netflix and Amazon Prime tend to work in this way.

Setting up a CPA doesn’t just give a company permission to take one payment; you’re permitting them to take a payment from your account whenever they think you owe them money. This means the amount they can take may vary each time, such as in the case of payday loan repayments.

It’s important to understand that a continuous payment authority is not the same as a direct debit or standing order. A CPA contract is made directly with the company whereas a direct debit is set up between you and your bank.

A CPA doesn’t enable a company to fraudulently withdraw money from your account, and you’re still entitled to challenge a withdrawal if you think it’s incorrect. 

In basic terms, a continuous payment authority is an instruction you have given to a service provider which enables them to take a regular payment from your bank account or credit card.

You’ll recognise a CPA because a company, such as a subscription or membership service that you’ll typically pay for monthly, will ask for the long number on the front of your credit or debit card rather than your bank account details. This can be done over the phone, in an app, in person or online, and there’s often no written record of your permission to set a CPA up. Once you have provided your details, you’ve authorised a CPA, and the company you’ve set your CPA up with can take money from your account when they need to, as per your agreement with them.

Continuous payment authorities – otherwise known as recurring payments – are typically used to pay for goods and services such as:

• Gym memberships
• TV streaming subscriptions
• Payday loan repayments
• Magazine and website subscriptions
• Annual car insurance payments
• Transport for London Oyster card top-ups.

No, a continuous payment authority is different from a direct debit or standing order. Firstly, a CPA contract is made directly with the merchant. You’ll need to give them the long number on the front of your card, which effectively gives them permission to take money directly from your bank account. The recurring payment may be for the same amount each time or it could vary. This differs from direct debits and standing orders, which are set up with your bank. By instructing your bank to set up a direct debit or standing order, you’re agreeing to pay a fixed amount to a company on a set date. An organisation must inform you in writing before they can increase your direct debit payments.

Secondly, if you want to cancel a CPA you’ll need to contact your bank and/or merchant (more on this below). By contrast, you can easily cancel a direct debit or standing order yourself by simply logging into your online bank account or mobile banking app. 

Another point to remember is that unlike direct debit payments, CPAs aren’t automatically transferred over if you switch bank accounts. If you want a company to continue taking CPA payments, you’ll need to contact them yourself.

The main reason you may want to avoid CPA payments is because, unlike direct debit payments, they can be difficult to cancel. While many companies legitimately use CPAs, some don’t, and you may fall into a subscription trap. It’s always best to research the company before you sign up to anything and share your financial data.

A subscription trap is when you sign up for a subscription, typically through a special offer such as a free trial or a reduced price, and if you don’t cancel your subscription after a set time, you’re automatically transferred onto what can be an expensive subscription plan.

The graphs below, from the Citizens Advice Bureau, illustrate how it’s possible, how easy, and how costly it can be to fall into a subscription trap.

How it’s possible to fall into a subscription trap: you don’t read or understand the subscription’s T&Cs

How costly it can be to fall into a subscription trap

If you’d rather not enter into a continuous payment authority, ask the company whether they’d be willing to let you pay by direct debit or standing order instead.

To cancel a continuous payment authority and get a refund, you can either contact the company directly or ask your bank. The StepChange website has a free template letter you can use to cancel a CPA. Simply download and send it to the relevant organisation. Do bear in mind that cancelling a continuous payment authority won’t absolve you of your debts; you’ll still need to pay any money you owe.

Asking your bank to cancel a CPA will require them to take action immediately, but they will have to make sure you don’t have an outstanding balance with the company, you haven’t signed up to a fixed term contract, or the payment was unauthorised before they can give you a continuous payment authority refund. 

Under the FCA rules, your bank must cancel a continuous payment authority if you ask them to do so. However, if further payments are taken after you’ve requested a cancellation, you’re entitled to a full refund (including any interest). If problems persist, write to the complaints department in the first instance. If you’re not satisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.

If you’re thinking “if I cancel my debit card, can a company still take my money?”, unfortunately, the answer is “yes”. Cancelling your debit or credit card won’t necessarily stop your CPA payments. You can also still be charged if you have an expired card. It’s best to take an active approach in cancelling a continuous payment authority by contacting the company or your bank.

Continuous payment authorities can affect your credit or debit card transactions in a couple of different ways. Credit card CPAs will result in incurring more debt, and you might unexpectedly go over your credit limit if a payment is taken when you’re not expecting it. This in turn may negatively impact your credit score.

If you have CPAs set up on your debit card, they can be a nuisance especially if you are low on funds and an unplanned payment is taken from your account. They might even push you into your overdraft, meaning you could be charged interest.

Planning for unexpected payments will help keep your finances healthy, but it’s also important to grow your savings. At Raisin UK, you can apply for savings accounts from a range of partner banks in one place. Register for a Raisin UK Account to apply in a few clicks, view all your savings accounts in one place and easily fund accounts from different banks.