What are Recurring Transactions?

Recurring transactions have become second nature to how we pay and get paid. Whether it’s your customer renewing a cloud subscription or automatically paying their electricity bill, these payments now happen quietly in the background — no nudges, no friction.

India’s payment ecosystem is shifting fast. With UPI at the forefront and mobile-first behavior driving habits, we’re seeing a surge in payment automation  from UPI AutoPay and card tokenization to e-Mandates built for scale. Businesses across sectors are adapting: SaaS companies, D2C brands, digital lenders, all leaning on recurring infrastructure to secure predictable revenue and deliver seamless customer experiences.

It’s not just about convenience anymore, it’s about building systems that work without pause. And if your business depends on regular payments, it’s worth asking: are you using recurring transactions to their full potential?

Let’s break down what recurring transactions really are, and why they are becoming a core layer of modern business infrastructure.

What Are Recurring Transactions?

Recurring transactions are payments that are automatically debited from a customer’s account at predefined intervals; monthly, annually, or based on usage. Once the customer consents and authenticates the initial payment, future debits happen without the need for manual intervention. 

Recurring transactions are commonly seen in SaaS subscriptions, OTT platforms, loan EMIs, insurance premiums, utility bills, and increasingly, even in Buy Now Pay Later (BNPL) repayments.

Recurring transactions offer two essential benefits:

For Business	For Customer
Reliability of cash flow	Seamless payment experience

Ways Businesses Can Set up Recurring Transactions

Recurring payments might feel effortless to the end user, but behind that simplicity is a tightly governed infrastructure shaped by RBI guidelines and real-time mandate systems.

• E-Mandates:

E-Mandates are digital authorizations that allow businesses to automatically debit a customer’s bank account, card, or UPI-linked wallet on a scheduled basis — after the customer provides one-time consent through a secure, RBI-compliant process.

Once set up, payments are triggered on schedule without any manual action, unless the customer cancels or modifies the mandate.

As per RBI guidelines:

• Transactions up to ₹15,000 don’t require repeated authentication.
• From December 2023, this limit was increased to ₹1,00,000 for:
  • Mutual fund SIPs
  • Insurance premiums
  • Credit card bill payments

Mandates must be backed by pre-debit notifications (sent at least 24 hours in advance) to keep customers informed and in control. For businesses, e-Mandates offer high success rates, fewer drop-offs, and cleaner recurring payment flows.

• Standing Instructions (SI):

Standing Instructions are a legacy but widely used mechanism, especially via debit or credit cards. When a customer provides consent, the bank facilitates scheduled payments directly from the card. Common use cases include SIPs, insurance, and subscriptions.

For cards, recurring payments up to ₹15,000 per transaction can be executed without repeated customer authentication after initial setup.

Banks allow users to view, edit, or cancel SIs via their mobile or internet banking, providing customer control and compliance with RBI mandates. AFA is required at the time of setting the SI; post that, auto-debits proceed until paused or revoked.

• UPI AutoPay:

Introduced by NPCI in 2020, UPI AutoPay has transformed low-friction recurring payments. Using any UPI app (PhonePe, Paytm, Google Pay), customers can approve recurring payments for services like OTT, utility bills, EMIs, or ed-tech subscriptions with a single authentication.

Key highlights:

• Mandates can be daily, weekly, monthly, or customized (on-demand).
• The default limit is ₹15,000 per transaction.
• Set-up happens via UPI apps, with clear mandate management options for users.

It’s especially cost-effective, fast to deploy, and ideal for micro-transactions in a mobile-first economy.

How do Recurring Transactions Work?

Let’s say your fintech platform helps users invest in mutual funds. A user sets up a Systematic Investment Plan (SIP) of ₹8,000/month into a mutual fund.

Here is a simplified flow of recurring transactions:

1. Set Up the Recurring Transaction
   You define the transaction details — amount, frequency (daily, weekly, monthly), start date, and optionally an end date. This can be done in your payment platform, accounting software, or subscription billing tool.
2. Store Customer Payment Info
   Customer payment details (like credit card or bank account info) are securely stored, usually via a PCI-compliant payment gateway like Cashfree.
3. Generate and Schedule the Invoice
   An invoice or transaction is automatically generated at the scheduled interval. Most systems will clone a base template of the original transaction.
4. Attempt the Charge Automatically
   On the set date, the system automatically attempts to charge the customer using the stored payment information.
5. Send Confirmation or Receipt
   Once payment is successful, a receipt or confirmation email is sent to the customer.
6. Handle Failures or Retries
   If the payment fails, the system typically retries after a set interval (e.g., 3 days later). Some platforms allow you to configure the retry logic.
7. Record the Transaction in Your System
   Whether successful or not, the transaction is logged in your system for reporting and reconciliation purposes.
8. Notify or Alert
   If a payment fails multiple times, both the business and customer are notified to take action — like updating payment info.
9. Pause or Cancel if Needed
   The customer (or you) can cancel, pause, or update the recurring transaction at any time, depending on your policy and system setup.

Now that we’ve covered how you can set up recurring transactions for your business, let’s understand why you should.

Our next section  will cover the benefits of recurring transactions

Benefits of Recurring Transactions for Businesses

Recurring transactions change the dynamics of how revenue is earned, not just how it’s collected. Instead of starting every month at zero, subscription businesses operate on a compounding model, where each billing cycle builds on the last. This shift unlocks a more stable operating process and a better customer experience across the board.

Following is a breakdown of what recurring transactions unlock when done right:

• Revenue Visibility

When billing cycles are automated, businesses gain clearer visibility into incoming cash flow. This predictability strengthens financial planning, improves forecasting accuracy, and allows teams to budget with greater confidence, especially across longer sales or product development cycles.

• Better Customer Retention

Recurring billing removes friction that typically leads to drop-offs. By automating renewals and eliminating manual payment steps, businesses reduce passive churn and ensure that access to services or subscriptions remains uninterrupted. In fact, a study by Bain & Company found that increasing customer retention rates by 5% can boost profits by 25% to 95%.

• Reduced Administrative Overhead

Businesses adopting automated billing have experienced up to a 90% reduction in operational hours spent on billing tasks. Automating payments reduces the workload around invoicing, payment tracking, and failed transaction recovery. Finance and operations teams spend less time on billing-related overheads and more time on analysis, customer insights, and strategy execution.

• Seamless Experience for Users

90% of consumers expect a seamless omnichannel payment experience, highlighting the importance of integrated and user-friendly billing systems. This proves that customers expect seamless access; not reminders to re-enter card details every billing cycle. Recurring transactions deliver on that expectation with a one-time setup that powers ongoing, uninterrupted access across billing periods.

• Conversion-Driven Pricing Flexibility

Recurring billing gives you pricing flexibility with monthly plans, freemium upgrades, usage-based models, instead of upfront full-cost pricing. This improves conversion rates and allows customers to grow into higher-value plans over time.

• Aligned Demand Planning

For businesses dealing with inventory or fulfillment, recurring revenue signals predictable demand. This supports smarter procurement, reduced inventory risk, and more efficient logistics, especially in physical subscription models.

While these benefits are all well and good, you might face certain challenges when implementing recurring transaction. Let’s understand them in detail.

Challenges Faced by Businesses for Recurring Transactions

Recurring billing is often seen as the engine behind predictable revenue, but for many businesses, keeping that engine running smoothly is a constant challenge. From failed payments to evolving compliance, there’s more complexity under the hood than most realize. 

Let’s take a look at the key issues subscription businesses deal with on the ground:

• Payment Failures Create Revenue Instability

One of the most common and costly challenges is failed transactions. Cards expire, users change banks, funds run low, or technical errors trigger declines. Since these payments are automated, businesses often only realize something’s wrong when the revenue doesn’t show up. In fact, subscription businesses lose approximately 9% of their revenue due to failed payments.

What makes it worse is that many failures could be prevented with better retry logic, pre-debit notifications, and customer prompts to update payment details. But in practice, too many systems rely on outdated billing flows that let revenue slip through the cracks.

• Fraud and Chargebacks Add Risk

Recurring payments, especially those without active user involvement, are vulnerable to card-not-present fraud and disputes. Fraudulent signups with stolen cards, or customers claiming not to recognize charges, can lead to chargebacks, hurting revenue and merchant reputation with payment providers. Merchants lose about $3.60 for every $1 lost to chargebacks, considering fees and lost merchandise.

To reduce exposure, businesses need strong fraud prevention measures like tokenized storage, secure authentication during onboarding, and clear billing descriptors. Without these, the cost of fraud extends far beyond the disputed amount.

• Global Regulations Aren’t in Sync

What’s compliant in one country might cause payment declines in another. Europe’s PSD2, India’s recurring card mandate, and U.S. FTC rules around cancellations all differ, and they are evolving fast. Businesses must stay informed and adapt to these evolving regulations to avoid service disruptions and legal risks.​

Subscription businesses working across borders must juggle authentication rules, data storage laws, and consumer opt-in policies. Without localized payment logic and real-time updates, service disruptions and legal risks are a constant threat.

• Limited Payment Options Restrict Growth

Not every customer pays with a card, especially in markets like India, where UPI, wallets, and bank debits dominate. In fact, UPI transactions account for 80% of all digital payments in India, highlighting the importance of supporting diverse payment methods. Sticking to a single method limits reach and increases drop-offs at checkout. 

Solutions like Cashfree’s Recurring Payment help businesses support multiple recurring payment options, including UPI AutoPay, card mandates, and net banking, all under one platform. But offering variety requires infrastructure to manage retries, compliance, and settlement across channels.

In the next section, let’s uncover the regulations that govern the recurring transactions in India

RBI Regulations Shaping Recurring Transactions in India

Recurring payments in India don’t run on convenience alone, they run on compliance. With consumer protection at the center, the Reserve Bank of India has introduced a series of regulatory measures that directly shape how businesses handle recurring billing.

Here is a breakdown of the key requirements every recurring payment system must comply with:

• Mandate Setup Requires AFA: To initiate a recurring payment, businesses must first obtain customer approval through Additional Factor Authentication (AFA), usually done via OTP, biometric, or UPI PIN. This is a one-time setup process, after which future payments can be processed automatically, as long as they stay within the allowed limits.

• Limits on Recurring Payments: The RBI allows recurring payments to go through without repeat authentication, as long as each transaction stays within ₹15,000. For anything above that, customers must re-authorize each charge.

That said, from December 2023, the threshold was increased to ₹1,00,000 — but only for select use cases like mutual fund SIPs, insurance premiums, and credit card payments. This update aims to streamline high-value transactions in core financial services.

• Pre-debit Notifications Are Mandatory: Before every auto-debit, businesses must send a pre-debit notification to the customer, at least 24 hours in advance. This alert must mention:
  • Merchant name
  • Transaction amount
  • Opt-out or pause options

This ensures transparency and gives customers a window to cancel if needed.

• Full Control Over Mandates: Customers must be able to view, pause, modify, or cancel mandates at any time via their bank’s mobile app, internet banking, or UPI interface. This is non-negotiable, and non-compliance can lead to transaction rejections.

• Raw Card Data Cannot Be Stored: Starting 1st October 2022, merchants and aggregators are prohibited from storing raw card details such as card number, CVV, or expiry date. Instead, they must use card tokenization, where a secure, randomly generated token replaces the actual card information.

These tokens are unique to each merchant and can be safely used for recurring billing. This move enhances data security, aligns with global best practices, and reduces the risk of card data misuse.

What to Look for in a Payment Provider That Enables Recurring Transactions

If you’re building a business that runs on repeat payments, choosing the right payment partner is critical. You need more than just the ability to charge cards. You need flexibility, compliance, and reliability baked into the system. Here’s what to look for when evaluating a provider for recurring transactions.

Supports All Major Payment Methods

Your customers will have different preferences. Some use credit cards, others prefer UPI, and some rely on bank accounts. A solid provider should support credit and debit card mandates, UPI AutoPay, and e-Mandates through net banking. This ensures you don’t lose conversions just because your system doesn’t offer someone’s preferred way to pay.

Seamless Authentication and Mandate Setup

In India, recurring transactions are tightly regulated. Look for a provider that handles one-time authentication securely and in line with RBI rules. For example, card mandates should come with auto-processing after initial approval, and UPI AutoPay should be easy to trigger from any UPI app. All of this should happen without you having to build custom flows.

Flexible Billing Model Support

Not every business runs on a flat monthly fee. You might need to bill variable amounts, usage-based totals, or offer top-ups. Your payment system should let you customize billing logic, support dynamic amounts, and offer retry attempts in case of failed payments. Bonus points if they give you easy APIs to plug it into your backend.

Built-In Compliance Features
Regulations change fast. A good provider helps you stay compliant automatically. This means sending pre-debit notifications to customers, giving them options to pause or revoke mandates, and tokenizing all sensitive payment data to avoid risk. For lenders or EMI-based models, it’s useful if the provider supports non-revocable mandates too.

Real Use Cases, Not Just Subscriptions

 Recurring payments aren’t just for SaaS or media platforms. The provider should have proven success across industries like ed-tech, NBFCs, insurance, D2C, and utility payments. That shows they’re versatile and stable enough to handle different billing complexities and user behaviors.

What to Avoid

 Don’t pick a system that only supports one payment method or requires heavy integration work. Avoid setups that lack retry logic or don’t alert users before debits. If the system can’t handle regulatory changes or doesn’t scale well with your business model, it’ll hold you back.

Recurring transactions power everything from subscriptions to EMIs. The right provider takes care of the complexity so you can focus on growing your business, not chasing payments.

Your Next Steps in Building Recurring Infrastructure

Recurring transactions are now a core layer of how businesses operate — from subscription billing to loan repayments. But getting them right means aligning payment systems with regulatory requirements, supporting multiple mandate types, and ensuring every auto-debit is secure, compliant, and low-friction.

Platforms like Cashfree already support this shift with full-stack solutions across UPI AutoPay, card-based mandates, and e-Mandates — all pre-aligned with RBI norms. If your business depends on predictable revenue, now’s the time to streamline how you bill, how you notify, and how you retain.

Explore how Cashfree can help you build and scale your recurring stack — get started now.

FAQs:

1. What qualifies as a recurring transaction?

A recurring transaction is a payment that occurs at fixed or flexible intervals after a one-time customer authorization. Businesses use it for subscriptions, EMIs, utility billing, and premium collections.

2. How does Cashfree support recurring transactions?

Cashfree offers recurring payments through UPI AutoPay, credit/debit card mandates, and e-Mandates via net banking. It handles mandate setup, compliance, notifications, and retry logic through API-first infrastructure.

3. What are the RBI rules businesses must follow?

What are the RBI rules businesses must follow for recurring transactions?

Businesses must follow RBI’s recurring payment framework, which includes:

• Use Additional Factor Authentication (AFA) during the initial mandate setup
• Send pre-debit notifications at least 24 hours before every charge
• Transactions up to ₹15,000 can proceed without AFA for each cycle
• Allow customers to pause, modify, or cancel mandates anytime via banking channels
• Do not store card details — use tokenization to secure recurring card transactions

These rules apply across UPI AutoPay, card mandates, and e-Mandates.

4. Can I collect variable billing amounts with recurring setups?

Yes. Platforms like Cashfree allow businesses to set up dynamic recurring billing — ideal for use cases like utility billing, usage-based pricing, or flexible repayment schedules.

5. What happens if a recurring transaction fails?

If a transaction fails due to insufficient funds, card expiry, or gateway issues, systems like Cashfree automatically trigger retries and notify the customer, reducing involuntary churn.