Glossary
Merchant-initiated transaction (MIT)
A merchant-initiated transaction, MIT, is a card payment the merchant charges without the cardholder being present, under an agreement established at a first, authenticated payment: a subscription renewal, an instalment, a top-up when a balance runs low, a charge for a no-show. The schemes require it to carry an indicator and a reference to the first transaction, and it is exempt from strong customer authentication because the cardholder authenticated the agreement, not each charge.
Customer-initiated and merchant-initiated
A customer-initiated transaction, CIT, happens with the payer on the checkout: they enter or choose a card and authenticate. The agreement for later charges is set then: the amount or its range, the schedule or the trigger. Every later charge is an MIT with the stored credential, flagged as recurring, instalment or unscheduled, and linked to the first by a transaction identifier the scheme returned.
Why the flags matter
Issuers approve correctly flagged MITs more often and apply the authentication exemption; a later charge sent as if the payer were present gets challenged or declined. The flags also decide the liability for disputes and the rules on retries after a decline.
On the platform
Tranzify stores the card as a token with the first transaction’s reference, sets the MIT indicators the schemes require when a merchant charges the token, applies the exemptions and routes the charge to an acquirer that holds the token, with a cascade to another that has seen the card.
Updated: 2026-11-08