Understanding Reference Transactions for automatic billing with PayPal Express Checkout

In certain scenarios, apps might require automatic customer charges, such as for subscriptions or post-purchase offers. To facilitate this process, a billing agreement is established in PayPal between you and the customer. To activate billing agreements, you must obtain approval from PayPal for Reference Transactions, a feature that allows for automatic customer charges.

Obtaining reference transactions approval

When PayPal Express is active on your store, Shopify automatically requests Reference Transactions approval from PayPal on your behalf. This request is triggered when Shopify detects the use of an app that charges customers automatically. If you haven't yet been approved for Reference Transactions with PayPal and a customer places an order involving a subscription, then Shopify hides PayPal as a payment option during checkout. However, if you're using a post-purchase upsell app, then PayPal is still displayed as a payment option during checkout, even without Reference Transactions approval. At the same time, any post-purchase offers generated by the upsell app aren't displayed to the customer.

Checking approval status

Before Shopify can request approval for Reference Transactions from PayPal, you must complete the setup of your PayPal account. After the request is submitted on your behalf, you can verify your approval status for Reference Transactions by checking the status of your request on the Payments page of your Shopify admin.

PayPal communicates the approval status for Reference Transactions by email. In some cases, PayPal might reach out for additional information before granting approval. After you're approved, Shopify displays PayPal Express as a payment option on your store for orders involving automatic billing.

Handling denials and seeking assistance

If your PayPal account is denied approval for Reference Transactions, then PayPal might not notify you directly. To confirm the status of your request, you can check the Payments page of your Shopify admin. You can also reach out to your PayPal account manager or visit the PayPal contact page when logged into your PayPal account.

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