Recurring Card Payments: What Are CIT and MIT?

Recurring card payments let a business charge a customer's saved card on a schedule, for subscriptions, memberships, insurance premiums or instalments, without the customer being present for each charge. To make this safe and traceable, the card schemes divide transactions into two classes: customer-initiated transactions (CIT), where the cardholder actively takes part, and merchant-initiated transactions (MIT), where the merchant charges a stored card under a prior agreement.

Getting the CIT/MIT framework right matters. Correctly flagged transactions are approved more often, comply with Visa and Mastercard rules, and stand up better if a customer disputes a charge.

What Is a Customer-Initiated Transaction (CIT)?

A CIT is any transaction where the cardholder actively participates at the time of payment, for example:

• Paying at an online checkout
• Tapping a card at a terminal
• Paying through a payment link
• The initial sign-up payment for a subscription, even a R0 or small card-verification charge

Because the customer is present, a CIT can be authenticated with 3D Secure. The first payment in any recurring relationship must be a CIT, and it is where the customer's agreement to future charges is established.

What Is a Merchant-Initiated Transaction (MIT)?

An MIT is a transaction the merchant submits later using stored credentials, without the customer being present, based on the agreement made during the initial CIT. Common MIT types include:

• Recurring – fixed, scheduled charges such as a monthly subscription.
• Instalment – a fixed number of scheduled payments for a single purchase.
• Unscheduled card-on-file – charges triggered by an event rather than a schedule, such as an automatic top-up when a prepaid balance runs low.
• Operational MITs – amounts such as a no-show fee or delayed charge permitted under the original agreement.

MITs cannot be 3D Secure authenticated (nobody is there to approve a prompt), so the schemes require them to reference the original authenticated transaction, proving the chain of consent back to the initial CIT.

CIT vs MIT at a Glance

What Does a Valid Recurring Setup Look Like?

1. Clear consent – during sign-up, the customer agrees to the amount (or how it is calculated), the frequency and the cancellation terms. Keep this evidence.
2. Authenticated first payment – the initial CIT is processed with 3D Secure, and the card is tokenised for storage. See What Is 3D Secure? and Card Tokenisation and Network Tokens.
3. Correctly flagged MITs – each subsequent charge is submitted as the correct MIT type, referencing the initial transaction.
4. Easy cancellation – scheme rules and good practice require that cancelling is straightforward; hard-to-cancel subscriptions drive chargebacks.

Why Do Recurring Card Payments Fail, and What Helps?

Stored-card charges fail for the usual reasons, most commonly insufficient funds on debit cards and expired or reissued cards. Practical mitigations:

• Retry soft declines on a sensible schedule, for example aligned to common South African salary dates. See Dunning and Payment Recovery.
• Keep credentials fresh with network tokens and account updater services, so reissued cards keep working. See Backup Cards and Account Updaters.
• Collect a backup card where the business model justifies it.
• Notify customers before billing, especially after a price change, which reduces disputes and involuntary churn.

For a broader treatment of subscription billing strategy, see Recurring Card Payments in the Billing section.

Related Topics

• Card payments hub
• Why Do Card Payments Get Declined?
• Recurring Card Payments (Billing)
• Card Chargebacks