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  2. PayPal Reference Transactions for Subscriptions FAQ

PayPal Reference Transactions for Subscriptions FAQ

WooCommerce Subscriptions comes with built-in support for PayPal Reference Transactions with PayPal Payments when Vaulting is enabled.

While previously Subscriptions defaulted to PayPal Standard, it is no longer the case. PayPal Standard will be hidden on newly installed Stores, and an alternative PayPal option should be used.

Reference Transactions is an added functionality that allows you to automatically receive subsequent payments of your PayPal customers without them having to approve the transaction. Reference Transactions are required to charge a customer with a Billing Agreement (including PayPal accounts stored in the Vault), without the customer being present on the site.

Reference Transactions is not a standard product and approval is subject to a fully underwritten application. This can include reviewing your business model and finances to determine your suitability.

This FAQ answers common questions about getting your PayPal account approved for Reference Transactions, and how PayPal Reference Transactions work with WooCommerce Subscriptions.

How do I get Reference Transactions Enabled with PayPal?

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To request that PayPal turn on Reference Transactions, call your local PayPal Support Help Center. Log into your PayPal account then find your dialing instructions here.

Tell PayPal that you are specifically calling so a PayPal Specialist can enable Reference Transactions on your account. They may try to help you set up recurring payments with a button — that is not what you want. They need to transfer you to a specialist who will ask you for your PayPal account information (email address), and then tell you that they filed a ticket, and you will hear back from PayPal via email on whether or not your account has been approved for Reference Transactions.

Will My Account Qualify for Reference Transactions?

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PayPal does have a set of requirements that need to be met before they enable support for Reference Transactions on your account.

Unfortunately, PayPal does not publish these requirements and based on anecdotes from customers, the requirements can be different for different businesses.

Some things that store owners have mentioned PayPal require are:

  • High personal credit (FICO) score for US-based PayPal Business accounts
  • Business plan
  • Average transaction price
  • Number of repeat customers
  • Number of Reference Transactions per customer
  • Revenue forecast and/or projected total revenue volume from Reference Transactions
  • Demonstrate a clear business rationale behind the request
  • Show the signup flow for customers in regards to Reference Transactions.
  • Proof that you will show clear terms and conditions for customers in regards to Reference Transactions and how to cancel once they sign up.
  • A written statement about why you need Reference Transactions and how you will use them for your business.

In terms of revenue forecasts, we have had reports that UK-based PayPal accounts may require a minimum forecast of £6,000 monthly or more revenue.

What if I don’t qualify for Reference Transactions?

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PayPal Payments can save a payment method in the PayPal Vault without Reference Transactions enabled. This allows customers to manually confirm renewal payments with a one-click payment once they are logged into their WordPress user account.


A new PayPal subscriptions API under development and will enable PayPal subscriptions with automatic renewal payments for every PayPal merchant. This will become available in PayPal Payments later this year. This functionality will work similar to old PayPal Standard subscriptions and come with more limitations compared to Reference Transactions, like fixed payment amounts or billing intervals.

Difference between PayPal Standard Subscriptions and Billing Agreements/Reference Transactions?

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PayPal Standard used an old method of implementing PayPal Subscriptions. The subscription is created at PayPal and mirrored to WooCommerce. The billing interval, amount, etc. is decided on PayPal’s platform and cannot be changed through the WooCommerce Subscriptions plugin.

Billing Agreements are flexible payment mandates allowing for future payments. PayPal Payments saves a payment method with Vaulting which creates a Billing Agreement. When Reference Transactions are enabled, the merchant can charge the customer through the vaulted payment method without the customer being present on the website.


Reference Transactions allow automatic renewal payments and the subscription to be entirely controlled in the WooCommerce Subscriptions plugin.

Will existing PayPal Standard Subscriptions use Reference Transactions?

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No. Existing PayPal Standard Subscriptions will continue to renew until they are canceled. Reference Transactions are only used for new subscriptions after the feature was enabled for the PayPal account. This means advanced subscription management features, such as recurring amount changes, are only possible on newly purchased subscriptions, not existing PayPal Subscriptions.

The only way to have existing PayPal Subscriptions changed to use PayPal Reference Transactions is to cancel  the existing subscription and have customers sign-up again with PayPal Payments by changing the payment method on their subscription(s).

Why are Billing Agreements not cancelled at PayPal when a subscription is cancelled in WooCommerce?

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When an old PayPal Standard Subscription is cancelled or suspended in your WooCommerce store, the status of the corresponding subscription at PayPal is also changed.

However, when a subscription created using PayPal Reference Transactions is cancelled or suspended in your WooCommerce store, the corresponding Billing Agreement at PayPal does not have its status changed. It remains active.

This is normal behaviour because Billing Agreements are fundamentally different to PayPal subscriptions.

A PayPal Standard Subscription needs to be suspended or cancelled because future payments would be processed on that subscription if it were to remain active. For a Billing Agreement, this is not the case. Once a subscription purchased using Reference Transactions has been cancelled in your WooCommerce store, no future payments are processed against that Billing Agreement because WooCommerce Subscriptions no longer request any payments.

The Billing Agreement is left active at PayPal because:

  • Billing Agreements are per store not per subscription. Meaning if your customer has purchased multiple different subscriptions with your store, the same Billing Agreement ID is shared between all of those subscriptions. If it were to be cancelled when one subscription is cancelled, all other subscriptions would be unable to continue.
  • Billing Agreements can be manually added to a manually created subscription or even used to undo the cancellation of a canceled subscription (impossible to do with PayPal Standard Subscriptions), but only if the Billing Agreement remains active in PayPal.

For these reasons, it is recommended that you do not cancel Billing Agreements manually at PayPal. If your customer chooses to cancel their Billing Agreement at PayPal, Subscriptions handles that and cancels all subscriptions in your store using that Billing Agreement. But to give you maximum flexibility in working with customers, it is recommended you do not cancel the Billing Agreement.

Is Guest Checkout Possible with PayPal Reference Transactions?

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No, PayPal provides no way for customers to check out without a PayPal account when using PayPal Reference Transactions. 

If you wish to allow your customers to check out without a PayPal account, the PayPal Card Processing can be used to save a debit/credit card. Alternatively, there are many other payment gateways that support automatic recurring payments. Stripe or Braintree are good options.

Can Billing Agreements be used across different PayPal plugins?

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No, Billing Agreements are currently not universally usable in between different PayPal plugins. 

PayPal Payments includes a migration layer for subscriptions created with the PayPal Checkout gateway plugin. These old subscriptions can be renewed by the new integration as long as the old Billing Agreement is active. For this duration, PayPal Payments will be unable to save the account in the PayPal Vault which can impact additional subscription purchases. More details can be found here.


To change an old subscription to PayPal Payments, the old Billing Agreement must first be canceled before the customer can save the payment method with a purchase. Once the payment method was saved, a subscription can be switched to the PayPal gateway with the saved payment method.

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