A stored credential is any primary account number or payment token a customer elects to save in a merchant’s vault for ease of use in future or recurring transactions. When you accept a transaction, your payment processor includes a Stored Credential field with that transaction, the value of which identifies the type of transaction in relation to the use (if any) of stored credentials. As such, you can use the Stored Credential field to segment your transactional data and hone in on trends in your payment processing, broken down by transaction type.

The Stored Credential field also serves a dual purpose of identifying the source of a transaction as either merchant-initiated or cardholder-initiated. Correctly specifying who initiated a transaction can improve transaction approval rates, cardholder experiences, and the visibility of transaction risk levels across all participants in the payment chain.

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Possible Stored Credential Values

When you connect your payment processors to Pagos and send us your payments data, we receive one of seven values in the Stored Credential field for each individual transaction:

• card-on-file - A transaction completed using credentials stored in the merchant’s vault.
• card-on-file-repeat - This is a dynamic, standing instruction—agreed upon between the merchant and cardholder—to charge a customer’s card for a set amount whenever their account balance drops below a certain dollar amount.
• card-on-file-vault - A transaction initiated by a customer, using stored card credentials they previously saved in your vault.
• installment - A single purchase of goods or services that is billed in payment installments, as agreed upon by the merchant and cardholder. For example, Buy Now Pay Later (BNPL) purchases are paid in installments.
• moto - A transaction initiated via a mail order or telephone order.
• one-time - A transaction where the merchant doesn’t store the customer’s payment information on file.
• pos - A transaction conducted using a point of sale.
• recurring - A transaction in a series of transactions made on a fixed, regular interval, as agreed upon by the merchant and cardholder. A subscription service consists of recurring payments.
• recurring-first - The first transaction in a recurring series. Merchants use this to help them identify their new customers.
• unknown - A value automatically assigned to any transactions the processor didn’t provide Stored Credential data for.

These values indicate the type of stored credential transaction you processed. Each value falls into one of three categories: Merchant-Initiated Transactions (MIT), Cardholder-Initiated Transactions (CIT), and uncategorized transactions.

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Merchant-Initiated Transactions

An MIT is a transaction that occurs without the cardholder’s active participation, where the merchant is the only party involved in creating the transaction. For a merchant to initiate this sort of transaction, the cardholder must have previously given them permission to vault their card details. As such, the first transaction in a string of merchant-initiated transactions is generally a customer-initiated transaction whereby the cardholder provides their payment details and agrees to terms and conditions that allow a merchant to store the payment details for future use.

The following stored credential transaction types are MITs:

• recurring
• installment
• card-on-file-repeat

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MIT Use Cases

The use cases for merchant-initiated transactions fit into two primary categories:

1. A single purchase that requires multiple transactions
2. A series of purchases, subscriptions, or installments

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Single Purchase Requiring Multiple Transactions

The following MIT use cases involve breaking up a single sale over more than one authorization or transaction. In each case, the merchant initiates every charge with the customer’s prior approval, but without their active participation.

• Partial Shipment - The merchant delivers a single order in multiple shipments.
• Incremental Authorizations - An eligible merchant has the flexibility to charge more than the initial authorization amount as conditions change.
• Delayed Card Sale - The merchant charges the cardholder for an additional amount after the original transaction and service date (e.g. damages for car rental or hotel).
• No Show Charge - By operating in an eligible industry specified in the Merchant Operating Regulations, the merchant charges the cardholder a fee (e.g. a hotel charges a fee if the cardholder doesn’t cancel a reservation within the disclosed terms).
• Re-submission of Card Sale - The merchant resubmits an authorization request after delivering goods or services to a cardholder, but receiving a declined authorization response for the sale (such as insufficient funds or daily limits exceeded).
• Re-authorization for MIT - The merchant re-processes the original authorization because they weren’t able to provide the purchased goods or services before the original authorization expired.

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Series of Purchases, Subscriptions, and Installments

When a customer allows a merchant to vault their payment details for a series of future payments such as recurring service changes, subscription dues, or payment installments, every transaction after the original will be considered merchant-initiated. Example use cases of this type include the following:

• Recurring Authorization - The merchant charges a cardholder for an ongoing subscription, membership, or the recurring shipment of goods.
• Merchant Installment Payment - The merchant submits multiple authorization requests over a period of time for a single purchase. In this scenario, the merchant offers the installment payments directly to the Cardholder and both parties agree on the installment time period.
• Third Party Installment Payment - A third party installment payment provider submits multiple authorization requests over a period of time for a single purchase at an underlying merchant. In this scenario, the third party installment provider offers the installment payments to the cardholder, and all parties (cardholder, merchant, and installment provider) agree on the installment time period.
• Issuer Installment Payment - A card-issuer offers eligible cardholders an installment payment at the time of purchase using an existing card account. In this scenario, the Issuer is offering the Cardholder the ability to pay in installments.
• Unscheduled Payment - A card sale for a fixed or variable amount, agreed upon by the merchant and cardholder, that doesn’t occur on a scheduled or regularly occurring transaction date (e.g. automatic refill of a balance on a pre-paid mobile phone subscription).

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Cardholder-Initiated Transactions

A CIT is a transaction in which the cardholder actively participates. For example, when a cardholder allows a merchant to store their payment credentials and then uses them to make purchases at undetermined intervals. There are a few types of CITs:

• one-time
• recurring-first
• card-on-file-vault

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Uncategorized Transactions

An uncategorized transaction is one that doesn’t include the identification of CIT or MIT. Examples include:

• card-on-file
• moto
• pos
• unknown