Business Models
Card-on-File
Definition
Card-on-File storing customer payment credentials for future transactions without requiring re-entry. Essential for recurring billing, one-click checkout, and repeat purchases. Must use tokenization for PCI compliance. Card networks have specific rules including obtaining consent and identifying stored credential transactions. Network tokens improve approval rates for card-on-file.
Related Terms
Tokenization
Replacing sensitive card data with a non-sensitive token that can be stored safely. Tokens are useless if stolen - they can only be used by the merchant they were created for. Enables card-on-file functionality without storing actual card numbers. Reduces PCI scope significantly. Network tokens (from Visa/MC) offer additional benefits including automatic card updates.
Recurring Payments
Transactions that repeat automatically at set intervals using stored payment credentials. Includes subscription billing and installment plans. Requires proper cardholder consent and clear terms. SCA exemptions may apply for fixed-amount recurring in Europe. Card updater services essential to maintain payment continuity when cards are reissued.
Network Token
A token provisioned by the card network (Visa, Mastercard) rather than the PSP. Network tokens are updated automatically when cards are reissued, improving approval rates for stored cards. Also called scheme tokens. Offer better security and authorization rates than PSP tokens. Essential for subscription businesses to reduce involuntary churn.
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