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I've seen a lot of payment gateways offer subscription payments: the user agrees to pay a recurrent fee at a fixed interval.

However, there are also services in which you pay a variable pay-as-you-go fee: Uber, Cabify, and of course Amazon Dash Button.

There is no user interaction to confirm payment whenever you use (or press) those services. How does this work? Can any merchant offer this service through a given payment gateway, or is it only offered for big merchants?

There seems to be also a country specific regulation in place. For example, Uber charges originate from Netherland:

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And Cabify charges come from Spain:

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I can't see why, since these services are not based in those countries.

So, can anybody explain to me how these agreements work? Is there any payment gateway that acts as intermediary on these transactions?

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  • Regarding Uber-Netherlands and Cabify-Spain bit: broadly speaking companies operating in the EU need (or at least find it easier) to have a base within the EU. Some will use that base for the rest of the world (e.g. Chile), some will have other bases elsewhere in the world.
    – TripeHound
    Oct 19, 2018 at 9:08

2 Answers 2

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In order to do that, merchants or payments-companies are using mechanism of tokens:
when a customer is registered to the service or during the first payment the customer is required to pass its payment method details (the card credentials). Then the company that supply the service store a token that hold the data of the card and then in additional use the payment is passed to the Visa or MasterCard using this token. In this was the customers don't need to provide the card data on any transaction.
For more information about this technology (token-management - card-on-file)
check Visa's article about it
or MasterCard's documents

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  • Yes, this one is the correct answer. It seems not every country actually allows for such a transaction to happen. Therefore in some of them there are workarounds. Recently in my country this was implemented and I'm integrating with its API for the first time. As you say, I must not keep any data in place except for the card institution token.
    – ffflabs
    Mar 12, 2019 at 13:27
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When a user signs up to such services they will at some stage enter their payment details be this a credit/debit card or the details for an online payment platform such as PayPal. The required details can then be stored by the company for future reference.

Online payment platforms have their own ways of working but in effect once an organisation has your card details they have free rain to do as they please. There is no limitation on them except the agreement made when you sign up, relevant legislation and any inherent limitation of that mechanism (e.g. those associated with a credit limit). Thus charging different amounts at different intervals is allowed.

Card companies have no mechanism for assessing whether a user did an interaction that meets some arbitrary threshold or not, all they can assess is the details presented to them about that transaction (card details, charge, recipient , etc) and behaviour patterns based on other transactions.

It's worth noting that most of these transactions will be limited or tied to specific criteria for example the button will only order on the registered amazon account and items will only be delivered to a specific address. Similarly Uber likely required you to order the ride from an authenticated personal device that you can implement a reasonable level of security on at your own discretion or has a minimum requirement set by them (e.g. logging in before use).

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  • That sounds reasonable. However, in Chile, when you make online payments, you are redirected to your bank's website, where you are asked to verify the transaction using an SMS, a native App or a card with coordinates. That's why I wondered if this depends on specific regulations. This means chilean companies that allow for online payments must go through this flow, or use foreign payment gateways, which in turn pay these companies through wire transfers whose fee make micro transactions unprofitable. So, I guess my question was biased by the way things work in Chile.
    – ffflabs
    Oct 24, 2018 at 13:31
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    Both Visa and Matercard use 3-D secure however this does require implementation by the vendor in the UK this is optional as is use of a CVV. 3-D secure can involve the use of an OTP or password
    – Steve Smith
    Oct 26, 2018 at 22:02

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