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A continuous payment authority, or CPA, is a type of recurring payment, similar to a direct debit, whereby you give permission for a company to take money from your account on a regular basis using your payment card details. The difference between a CPA and a direct debit is that a CPA gives the company you are paying permission to take payments whenever they want, and take payments from your card for different amounts, without consulting you beforehand.
Continuous payment authorities are favoured by many businesses, including gyms, internet service providers and payday loan providers. Customers often confuse the rights that they have with a CPA to those accorded to a direct debit or standing order.
This method of payment is set up by giving your debit or credit card details to the company you wish to make a regular payment to. This can be done over the phone, in person or online. Often there is no written record of the authority being set up.
The company itself may be unclear as to the method of payment being initiated, so if you are in any way uncertain, ask them to clarify whether payment will be taken by direct debit, standing order or continuous payment authority. If possible, get them to confirm this in writing.
These authorities don't have the same guarantees that a direct debit has regarding the date or the amount of the payment.
Keep a close eye on your bank statement to ensure that all payments match your expectations.
You can cancel a CPA either by telling the company, or by telling your bank.
If you tell your bank to stop the payment being taken, it has to do so. But you should tell them at least one full day before any payment is due to go out of your account. However, you should make sure that you inform the company taking the payment, particularly where you have a contract or credit agreement in place. If this is the case, you may still need to make any remaining payments.
If you switch your current account to a new provider using the Current Account Switching Service, your new account will be set up with all of the direct debits and standing orders that applied to your old account. But be aware that continuous payment authorities are not transferred over, so you may find that companies try to take payment from a card that you no longer have, meaning the payment fails. This can have a significant impact. For example, if an insurance premium does not get paid and you need to make a claim, the insurer may not pay out.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.