Subscriptions
Merchant-initiated transaction
Also: MIT
A charge initiated by the merchant against a previously stored credential, without the cardholder present.
A merchant-initiated transaction (MIT) occurs when a merchant processes a payment using previously stored card credentials without the cardholder participating in the specific checkout event. To comply with European PSD2 mandates and global scheme rules from Visa and Mastercard, every MIT must be preceded by a cardholder-initiated transaction (CIT). During this initial CIT, the cardholder provides explicit consent for future charges and completes Strong Customer Authentication (SCA), often through 3D Secure. The merchant then receives a unique network transaction identifier which must be included in the metadata of all subsequent MITs to prove a mandate exists. These transactions are typically categorised into specific use cases such as recurring subscriptions, unscheduled top-ups, or delayed charges. Correct flagging is essential for settlement as issuers use these codes to apply SCA exemptions; misplaced or mislabelled MITs often trigger soft declines or higher interchange fees due to increased perceived risk.
Frequently asked
How does an MIT differ from a card-on-file transaction?
While both involve stored credentials, a card-on-file transaction is a CIT where the customer is present and actively triggers the payment. An MIT is specifically initiated by the merchant according to a pre-defined agreement, meaning the customer is absent during the individual charge event.
Why do MITs require a reference to a previous transaction ID?
Schemes and issuers require the original transaction ID (trace ID) to link the MIT back to the initial SCA-authenticated session. This audit trail verifies that the customer authorised the merchant to store the credentials and allows the issuer to process the payment under the appropriate regulatory exemptions.
Related terms
A transaction initiated by the cardholder in real time, typically the first charge that establishes credential-on-file.
PSD2 requirement that customer-initiated electronic payments in the EEA and UK be authenticated with two of: knowledge, possession, inherence.
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