Billing Agreements

The Billing Agreement functionality enables customers to sign an agreement with the payment
system and eases the process of checkout because customers do not need to specify payment
information again and again. During the shopping cart checkout, the customer can simply
choose a billing agreement as a payment method and based on its number; the payment
system will charge the customer’s account. The store administrator can manage customer’s
billing agreements from both the Customer and Sales sections of the Admin menu.

Sales Management

The list of all billing agreements for all customers is available under Sales > Billing Agreements.
Here, the store administrator can filter the records by the customer or billing agreement
information including billing agreement reference ID, status, and creation date. A specific
record provides general information about the selected billing agreement and about all sales
orders that relate to it. The store administrator can view, cancel, or delete a customer’s billing
agreements in the Sales Management area. Billing agreements can be canceled or deleted by
clicking the corresponding buttons located in the upper right part of the Billing Agreement
page. An already canceled billing agreement can only be deleted by the store administrator.

Customer Management

Billing agreements created by a single customer can be seen on the Billing Agreements tab of
the customer account page in the Admin (Customers > Manage Customers). From here, the
store administrator can open a required billing agreement to view its general information and
sales orders relating to it, cancel a billing agreement, or delete it.

Customer Account Workflow

Customers can create billing agreements by signing in to their customer accounts, selecting the
billing agreement payment method, and initiating the Billing Agreement process. When a
billing agreement is created, it is submitted to the PayPal payment system and recorded in the
customer account, along with reference information. There is no limit to the number of billing
agreements a customer can create. The customer can also cancel some, or all of the billing
agreements on the Billing Agreement page of the customer account. The status of each billing
agreement is shown as either “Active” or “Canceled.” When a billing agreement is canceled, it
cannot be reactivated.
When checking out products from the shopping cart, a customer who has already entered into
a billing agreement with PayPal can choose the PayPal Billing Agreement payment method in
the Payment Information section of the checkout page, and select the billing agreement
reference ID from the list. When the customer places the order, the billing agreement reference
ID and sales order payment details are transferred to the PayPal payment system. After the
payment system confirms the payment, a sales order is created in Magento.

Sales Order Workflow

Customers who do not yet have a billing agreement with PayPal can choose PayPal Express
Checkout, and select “Sign a billing agreement” to streamline the process. They are then
redirected to the PayPal payment system where the billing agreement can be signed. After the
billing agreement is signed, the customer returns to the checkout page. where the order is
placed. A corresponding record appears in the billing agreements list.
Customers can also sign a billing agreement from the mini shopping cart or product page by
clicking the “Check out with PayPal” button. When making a purchase with PayPal Express
Checkout, the customer can choose to enter into a billing agreement PayPal. If the customer
cancels creating a billing agreement, the order is created through the normal PayPal payment
Customers with one or more billing agreements can still create a new billing agreement from
their customer account, but cannot enter into a new billing agreement through PayPal Express
When the customer signs a billing agreement during checkout, PayPal creates a payment
transaction through ayPal Express Checkout, and a billing agreement reference ID is sent to
the customer and to the store. The current order is not related to the billing agreement that is
signed. Related billing agreement order records are created the next time the customer chooses
to use the billing agreement as a payment method to place an order.

To enable billing agreements:

1. On the Admin menu, select System > Configuration.
2. In the panel on the left, under Sales, select Payment Methods.
3. Click the Configure button for one of the following PayPal solutions:

  • PayPal Express Checkout
  • PayPal Payments Advanced (includes Express Checkout)
  • PayPal Payments Pro (includes Express Checkout)

4. Scroll down to the PayPal Billing Agreement Settings section, and do the following:

a. Set Enabled to “Yes.”
a. Enter a Title to identify the PayPal Billing Agreement method during checkout.
b. If you offer multiple payment methods, enter a number in the Sort Order field to
determine the sequence in which Billing Agreement appears when listed with other
payment methods during checkout.
c. Set Payment Action to one of the following:
Authorization – Approves the purchase, but puts a hold on the funds. The
amount is not withdrawn until it is “captured” by the
Sale – The amount of the purchase is authorized and immediately
withdrawn from the customer’s account.
d. Set Payment Applicable From to one of the following:
All Allowed Countries – Accepts payment from the countries already specified in
your configuration.
Specific Countries – Accepts payments from only the countries you specify. Hold
the Ctrl key down and in the Payment Applicable From list,
click each country where you accept payment.
e. To record communications with the payment system in the log file, set Debug Mode to
The log file is stored on the server and is accessible only to developers. In accordance with PCI
Data Security Standards, credit card information is not recorded in the log file.
f. To enable SSL verification, set Enable SSL verification to “Yes.”
g. To display a summary of each line item in the customer’s order on your PayPal payments
page, set Transfer Cart Line Items to “Yes.”
h. To allow customers to initiate a billing agreement from the dashboard of their customer
account, set Allow in Billing Agreement Wizard to “Yes.”
5. When complete, click the Save Config button.

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