Business Models
CIT (Customer Initiated Transaction)
Definition
CIT (Customer Initiated Transaction) a transaction initiated by the cardholder at the time of purchase, with the cardholder actively present (physically or online). The initial enrollment for recurring payments is a CIT even though subsequent charges are MITs. SCA typically applies to CITs in Europe. Proper classification affects authorization rates and compliance.
Related Terms
MIT (Merchant Initiated Transaction)
A transaction initiated by the merchant using stored credentials without cardholder involvement at the time of transaction. Includes subscription renewals, auto-replenishment, and delayed charges. Requires prior cardholder consent and proper flagging in the authorization request. MITs may be exempt from SCA in Europe. Distinct from CIT (customer-initiated transactions).
SCA (Strong Customer Authentication)
A European regulatory requirement under PSD2 mandating two-factor authentication for electronic payments. Authentication must use two of: knowledge (PIN/password), possession (phone/card), or inherence (biometrics). Applies to EEA and UK transactions. Various exemptions exist: low-value transactions, trusted beneficiaries, transaction risk analysis, and recurring payments. 3DS2 is the primary implementation method.
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.
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