Business Models
MIT (Merchant Initiated Transaction)
Definition
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).
Related Terms
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.
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.
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.
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