Processing Recurring Payments on American Express Cards

Recurring payment plans exist when multiple transactions are processed at predetermined intervals, as a result of an agreement for the purchase of products or services that are provided over time. A cardholder authorizes a merchant to charge his or her payment card on a regular basis (usually monthly, but it can be at other intervals) for a period of time, however the interval between any two consecutive transactions cannot exceed one year. The transaction amount can be fixed or it can vary.

Recurring payment plans are closely related to installment agreements, with an important distinction. Recurring plans differ from installment agreements in that with recurring transactions cardholders pay for products and services that are received over time, while an installment transaction represents a single purchase, with payments occurring on a schedule agreed by the cardholder and the merchant.

Before initiating the first payment of a recurring plan involving an American Express card and in addition to complying with all regular requirements for processing a card payment, merchants are required to:

• Obtain the cardholder’s consent for the merchant to bill his or her card account before submitting the first recurring billing charge, and
• Notify cardholders that they can cancel the plan at any time.

When obtaining the cardholder’s consent, the merchant is required to disclose to him or her that it may be receiving updated account information from the issuer. Merchants should retain evidence of the cardholder’s consent for twenty-four months from the date the last recurring charge is processed.

You should process the first transaction in the same way as any other card-not-present transaction. Additionally, include the recurring plan details in the first payment’s receipt. Prior to submitting each subsequent payment, a merchant is required to:

• Obtain authorization and
• Complete a charge record with the words “Signature on File,” if applicable, on the signature line and the appropriate electronic descriptor on the charge data.

If a merchant’s Card Acceptance Agreement with American Express is terminated for any reason, the merchant is required to notify all AmEx cardholders with whom it has recurring payment arrangements that it no longer accepts American Express cards. Additionally, the cancellation of an American Express card account constitutes an immediate cancellation of the cardholder’s agreement to participate in the recurring payment plan.

Merchants are required to discontinue a recurring payment plan immediately upon a cardholder’s request and to provide cancellation numbers to them. If a card account is cancelled, it is the merchant’s responsibility to arrange an alternative form of payment with the cardholder. American Express requires (and there is absolutely no reason to object) that the merchant allows the bank to create a hyperlink from AmEx’ website to the merchant’s website (including its home page, payment page or its automatic / recurring billing page) and list the merchant’s customer service contact information.

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