What is a Recurring Payment? Meaning, Types & How to Set Them Up

Recurring payments are a convenient way for Australian businesses to purchase things they need — and get paid by customers — on a regular basis. These payments, taken at regular intervals, reduce admin and make it easier to plan ahead and manage cash flow.

In this guide, we’ll answer what is a recurring payment in detail, looking at how they work, some of the benefits and challenges. In addition, there's a quick-start guide to setting up recurring payments with Wise Business to sort out your international finances.

What are recurring payments?

A recurring payment is a payment that continues at regular intervals, often monthly or annually, with funds sent to the same payee until the agreement is cancelled or ends. It’s different to a one-off payment where a single sum is sent with no future obligations.

The main benefit is that instead of manually entering card details and paying each time, a customer can simply authorise the business to charge them on an ongoing basis. This makes it much easier for payees — there are no missed payments or repeated checkouts.

For businesses, it delivers better customer experiences, creates steady revenue streams, and reduces the time spent chasing invoices.

Benefits of setting up recurring payments

Automated recurring billing streamlines the often-repetitive process of accepting and handling payments. Key benefits include:

• Predictable cash flow - regular, predictable income makes it easier to forecast and plan ahead.
• Less admin - fewer invoices and manual follow-ups cut down on the time wasted on low-value tasks.
• Improved customer retention - easier, frictionless payments deliver the experiences customers expect in 2026.
• Fewer missed payments - automation reduces the number of late or failed payments.
• Easy to scale - recurring payments are easier to manage when you have lots of customers.

Types of recurring payments

As you can see from a few of those examples, there are two main types of recurring payments: fixed and variable.

• Fixed - when exactly the same amount is paid during each billing cycle. Common in subscription services or insurance premiums, it provides a simple, predictable structure for both parties.
• Variable - when the amount paid changes based on usage or activity. For example, a payment processor may charge fees based on transaction volume, meaning the costs change each billing cycle.

Some businesses use a combination of both — a fixed base fee plus variable usage costs.

Recurring payments vs. subscriptions: What’s the difference?

Recurring payments and subscriptions are two terms that are often used interchangeably, for good reason: they are essentially part of the same process. However, there is a subtle difference.

• A recurring payment is the payment mechanism that charges a customer at set intervals.
• Subscription is the broader business model, providing ongoing access to a particular product or service.

So, a recurring payment sits within the subscription service. For example, an accounting software subscription gives you ongoing access, while the monthly fee taken from your business bank account is the recurring payment.

How do recurring payments work?

Recurring payments follow a simple, repeatable pattern and process that runs in the background once everything is set up. Here’s how it works:

1. Customer authorisation

The first step is obtaining the customer's authorisation. They will typically complete a standard checkout process with a credit or debit card and agree to the terms for ongoing charges.

As a business, you must be fully transparent about the services rendered and costs upfront, and how often they’ll be charged.

Example:

• A business signs up to a project management tool for $29 per month
• A marketing agency stores a client’s card details for a monthly retainer fee

2. Payment schedule is set

Armed with the customer’s consent and details, the business then sets up the recurring payment on the agreed time scale — e.g. weekly, monthly, quarterly, annually. This schedule is handled by an automated system, so payments are triggered at the right time without any manual input.

Example:

• A software provider bills customers monthly
• A consulting firm charges clients quarterly

3. Transaction is automatically processed

On the payment date, the payment is automatically processed using the details the customer provided. No further action is required from the customer as the system simply charges the agreed amount. Meanwhile, the payment provider communicates with the customer bank or card issuer to green-light the transaction.

If the payment fails for any reason (for example, due to a lack of funds or an expired card), most systems will try to take the payment again soon after, or notify the customer to update their details.

Example:

• A SaaS company charges clients monthly for access
• A cloud platforms bills based on usage, with variable amounts

4. Funds are transferred to the business

Once the payment is approved, the funds are transferred to the business bank account. This usually takes a day or two, depending on the provider and payment method. When it’s settled, the business gets confirmation, and the customer may also get a notification from their app.

Example:

• A digital agency receives monthly retainers without invoicing
• A software company collects payments from global customers

5. Cycle repeats

After the first successful payments, everything is in place for future payments to be taken automatically based on the schedule agreed at the start. This continues indefinitely until the customer either cancels the payment or the subscription expires (if it was for a limited period, like 12 months).

Example:

• A client stays on a monthly retainer long term
• A business upgrades to a higher pricing tier, increasing the recurring charge.

How to set up recurring payments?

Setting up recurring payments is a useful way for your business to keep on top of all its regular expenses, especially when working with multiple global tools and suppliers.

With a Wise Business account, you can make recurring payments and then track them with ease via the mobile app or website.

Recurring payments through Wise are typically set up using a Wise debit card, which you can get for you and your team members. Here’s how it works.

1. Create a Wise Business account
Start by setting up your Wise Business account and adding funds in the currency you need - AUD, NZD, USD, etc.

2. Use your Wise card for a subscription or service
Enter your Wise card details when signing up for a product or service with recurring charges (e.g., software or platforms). Once the payment is set up with the provider, it becomes a recurring card payment automatically.

3. Payments are charged automatically
On each billing date, the provider charges your Wise card based on the agreed schedule. You won’t have to do anything manually, as everything has been sorted up front.

4. Track and manage your recurring payments
To keep tabs on all your recurring payments, you can use the Wise mobile app.

• Go to Payments → Recurring card payments to see all your active subscriptions and past recurring transactions.

You can also add transactions to this list manually, so they’re easier to track, by heading to your transactions and toggling them as a ‘recurring payment’¹. This might be useful if you want better visibility of all your ongoing, regular expenses.

Challenges of international recurring payments

Recurring payments might work smoothly when you’re just paying in AUD, but when you start to cross borders with multiple currencies, things get more complex.

• Hidden fees- traditional providers are likely to add markups to exchange rates or charge additional processing fees.
• Unfavourable exchange rates - currency conversions may fluctuate and spike over time, increasing costs.
• Managing multiple currencies - if you don’t have a multi-currency account, there will be more admin when handling payments in different currencies.
• Unwieldy expenses - it can be harder to track and manage recurring international expenses, as payments often cover a range of platforms and billing systems.
• Payment struggles - the FX swings and limited visibility of overseas expenses can make it difficult to monitor ongoing costs and reconcile payments accurately.

Wise Business: A smarter way to handle recurring payments

Setting up recurring payments for cross-border tools and suppliers can often feel disorganized when dealing with different platforms and currencies.

Wise Business helps solve this challenge by streamlining the setup process using your Wise debit card. After funding your account in your required currencies, you simply enter your card details with your chosen providers to automate the billing cycle.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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Recurring payment meaning FAQs

1. How to stop recurring payments on a credit card
To stop a recurring payment on a credit or debit card, you usually need to cancel it directly with the service provider or the business. It’s likely to be in a similar section on the app or site where you first authorised the payment.

2. How to stop recurring payments with Wise Business
To stop a recurring payment with Wise, you should cancel the payment with the merchant or service provider. Wise doesn’t control third-party merchant billing, so it’s best to sort out with the provider first. If that doesn’t work, you can block a merchant within Recurring card payments settings, by following a few short steps¹.

3. What's the difference between a direct debit and a recurring payment?
A direct debit is taken from your bank account using a BSB and account number, while a recurring payment is taken from a debit or credit card. Both are ‘debited’ automatically from your bank account, but they use different payment methods.

4. Are recurring payments safe?
Yes, recurring payments are safe when they’re set up with trusted providers. However, always make sure to use trusted payment processors and to keep an eye on transactions to be sure.

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Source:

1. Wise - What are recurring Wise card payments?