CPA on an invoice typically stands for Continuous Payment Authority.
Understanding Continuous Payment Authority (CPA)
A Continuous Payment Authority (CPA) is a recurring payment method where a merchant is authorized to debit a customer's debit or credit card at regular intervals. The merchant sets up this arrangement directly, with the customer's "standing authority" (permission). This differs from a direct debit, which requires the customer to authorize each payment through their bank.
Key Aspects of CPA:
- Merchant-Initiated: The merchant, not the customer's bank, initiates the payment collection.
- Recurring Payments: CPAs are typically used for subscriptions, memberships, or other services requiring regular payments.
- Customer Authorization Required: The merchant must obtain the customer's permission (standing authority) before setting up a CPA. This is crucial.
- Debit or Credit Card Based: CPAs are set up using debit or credit card information.
How CPA Works:
- Customer Agrees: The customer agrees to allow the merchant to take regular payments from their card.
- Merchant Sets Up CPA: The merchant sets up the CPA using the customer's card details.
- Recurring Debits: The merchant automatically debits the customer's card according to the agreed-upon schedule (e.g., monthly, quarterly).
Important Considerations:
- Cancellation: Cancelling a CPA can sometimes be tricky. While the customer should contact the merchant to cancel, they can also contact their bank to cancel the authority.
- Potential for Abuse: Due to the merchant-initiated nature of CPAs, they have been criticized for potentially leading to unauthorized or unexpected charges. Customers should carefully review the terms and conditions before agreeing to a CPA.
In summary, CPA on an invoice signifies that the amount due is being collected through a Continuous Payment Authority, a form of recurring card payment set up by the merchant with the customer's consent.
