diff --git a/admin/internal/billing/events.go b/admin/internal/billing/events.go
index e5fa40c..d11e823 100644
--- a/admin/internal/billing/events.go
+++ b/admin/internal/billing/events.go
@@ -49,7 +49,3 @@ func decode[T any](ev Event) (T, error) {
 	}
 	return v, nil
 }
-
-// Transaction stubs replaced in task 4.
-func handleTransactionCompleted(ctx context.Context, ev Event) error { return nil }
-func handlePaymentFailed(ctx context.Context, ev Event) error        { return nil }
diff --git a/admin/internal/billing/transaction.go b/admin/internal/billing/transaction.go
new file mode 100644
index 0000000..754b531
--- /dev/null
+++ b/admin/internal/billing/transaction.go
@@ -0,0 +1,124 @@
+package billing
+
+import (
+	"context"
+	"fmt"
+
+	"github.com/mrhid6/vantage/admin/internal/catalogue"
+	"github.com/mrhid6/vantage/admin/internal/db"
+	"github.com/mrhid6/vantage/admin/internal/models"
+	"github.com/mrhid6/vantage/admin/internal/paddle"
+	"go.mongodb.org/mongo-driver/v2/bson"
+)
+
+type transactionData struct {
+	ID             string `json:"id"`
+	SubscriptionID string `json:"subscription_id"`
+	Origin         string `json:"origin"`
+	Items          []struct {
+		Price struct {
+			ID string `json:"id"`
+		} `json:"price"`
+		Quantity int `json:"quantity"`
+	} `json:"items"`
+}
+
+// handleTransactionCompleted issues the next term's licence on a renewal.
+//
+// A renewal is the one moment a scheduled REDUCTION takes effect: the customer's
+// desired (smaller) configuration becomes granted. Mid-term reductions never
+// shrink a live licence. On a first charge (origin not recurring) the
+// subscription.created/updated handler already issued, so this is a no-op to
+// avoid a double issue.
+func handleTransactionCompleted(ctx context.Context, ev Event) error {
+	d, err := decode[transactionData](ev)
+	if err != nil {
+		return err
+	}
+	if d.Origin != "subscription_recurring" {
+		return nil
+	}
+	if d.SubscriptionID == "" {
+		return fmt.Errorf("renewal transaction %s has no subscription_id", d.ID)
+	}
+
+	var sub models.Subscription
+	if err := db.Admin("subscriptions").FindOne(ctx,
+		bson.M{"paddle_subscription_id": d.SubscriptionID}).Decode(&sub); err != nil {
+		return fmt.Errorf("renewal for unknown subscription %s: %w", d.SubscriptionID, err)
+	}
+
+	var inst models.Instance
+	if err := db.Admin("admin_instances").FindOne(ctx,
+		bson.M{"instance_id": sub.InstanceID}).Decode(&inst); err != nil {
+		return fmt.Errorf("renewal names unknown instance %s: %w", sub.InstanceID, err)
+	}
+
+	// Prefer the transaction's own item list (authoritative for this period);
+	// fall back to the subscription's recorded items.
+	items := make([]catalogue.Item, 0, len(d.Items))
+	for _, it := range d.Items {
+		items = append(items, catalogue.Item{PriceID: it.Price.ID, Quantity: it.Quantity})
+	}
+	if len(items) == 0 {
+		for _, it := range sub.Items {
+			items = append(items, catalogue.Item{PriceID: it.PriceID, Quantity: it.Quantity})
+		}
+	}
+	match, err := catalogue.ResolveItems(ctx, paddle.Get().Env(), items)
+	if err != nil {
+		return fmt.Errorf("resolve renewal items for %s: %w", d.SubscriptionID, err)
+	}
+
+	// Collapse a scheduled reduction: desired becomes granted, and the pending
+	// marker is cleared, since a new term has begun. This is the only place a
+	// licence ever gets a smaller cap.
+	if err := promoteScheduledReduction(ctx, inst.InstanceID); err != nil {
+		return err
+	}
+
+	// Issue the next term. Renewal resets relink_count inside licensing.Issue.
+	if err := promoteAndIssue(ctx, &inst, match, models.ReasonRenewal); err != nil {
+		return err
+	}
+
+	// Clear lifecycle notices so the next term starts the sequence fresh (mirrors
+	// the self-serve renew path).
+	_, _ = db.Admin("admin_instances").UpdateOne(ctx,
+		bson.M{"instance_id": inst.InstanceID},
+		bson.M{"$unset": bson.M{"notices_sent": ""}})
+	return nil
+}
+
+// promoteScheduledReduction collapses a pending reduction into granted at
+// renewal and clears scheduled_change_at. A no-op when nothing is pending — the
+// match resolved from the renewal's items is authoritative either way, so this
+// only keeps the entitlement's own bookkeeping honest.
+func promoteScheduledReduction(ctx context.Context, instanceID string) error {
+	ent, err := models.GetEntitlement(ctx, instanceID)
+	if err != nil {
+		return nil // no entitlement to reconcile
+	}
+	if ent.ScheduledChangeAt == nil {
+		return nil
+	}
+	ent.Granted = ent.Desired
+	ent.ScheduledChangeAt = nil
+	return models.UpsertEntitlement(ctx, *ent)
+}
+
+// handlePaymentFailed records the failure for staff visibility. No licence
+// action — the licence runs to its (grace-padded) expiry and Paddle retries.
+func handlePaymentFailed(ctx context.Context, ev Event) error {
+	d, err := decode[transactionData](ev)
+	if err != nil {
+		return err
+	}
+	if d.SubscriptionID == "" {
+		return nil
+	}
+	_, err = db.Admin("subscriptions").UpdateOne(ctx,
+		bson.M{"paddle_subscription_id": d.SubscriptionID},
+		bson.M{"$set": bson.M{"status": models.SubPastDue}})
+	return err
+}