Merchant-initiated transaction (MIT)

What is a merchant-initiated transaction?

A merchant-initiated transaction, or MIT, is a payment initiated by the merchant without the customer actively participating at the time of the transaction.

MITs usually use stored payment credentials, such as a saved card or payment token. The customer gives permission in advance, and the merchant uses those credentials later to charge the customer according to an agreed arrangement.

How merchant-initiated transactions work

A merchant-initiated transaction usually follows an earlier customer-initiated transaction or prior agreement. For example, a customer may enter their card details during sign-up, agree to recurring billing, or save a payment method for future charges. After that, the merchant can initiate eligible future payments without asking the customer to actively confirm each one.

Tokenization is often used in MIT flows to replace sensitive card details with secure payment tokens, allowing merchants to initiate future agreed payments without storing or handling the original card data.

MITs are commonly used for:

• subscription payments and recurring billing;
• installment payments;
• automatic top-ups;
• delayed charges;
• no-show fees;
• usage-based billing;
• account balance payments;
• card-on-file payments agreed in advance.

The exact rules depend on the payment method, card network, acquirer, issuer, region, and provider setup.