Tagada
Subscriptions4 min readUpdated October 15, 2026

What Is a Customer-Initiated Transaction (CIT)?

Customer-initiated transaction (CIT) explained: CIT vs MIT table, when SCA applies, how the first CIT stores a card, and the Visa rules behind each.

Nick Bonnassies, CMO at Tagada · checked against 4 sources

Article summary

TL;DR

A customer-initiated transaction (CIT) is a card payment the cardholder starts and takes part in, like paying at checkout or clicking "buy" with a saved card. Its opposite is a merchant-initiated transaction (MIT), which the merchant charges later on a stored card without the customer present, such as a subscription renewal.

  • A CIT is started by the cardholder. An MIT is started by the merchant on a stored card, under an earlier agreement.
  • The first payment that saves a card is a CIT. It sets up every MIT that follows.
  • In Europe, a CIT needs strong customer authentication unless an exemption applies. MITs are out of scope, but setting up the mandate is not.
  • Visa treats them differently: a card-absent CIT authorization is valid for 10 days, an MIT for 5 (Visa Core Rules, April 2026).
Want to go further? AskChatGPTClaudePerplexityGrok
On this page

A customer-initiated transaction is any card payment where the customer is there and acts. Card networks sort every card payment into this group or its opposite, the merchant-initiated transaction, and apply different rules to each.

What is a customer-initiated transaction?

Stripe sums up the split: an MIT is a transaction "you initiate without direct participation of your customer, based on a prior agreement," and CITs "include all other transaction types, including any transaction where the cardholder is available to participate in the payment flow."3Stripe Docs, Customer-Initiated Transactions (CIT) and Merchant-Initiated Transactions (MIT) (read October 14, 2026) Visa's rules use the name Cardholder-initiated Transaction.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026

Common CITs:

  • A one-time checkout purchase.
  • The first payment of a subscription, when the customer saves the card.
  • A returning customer clicking "buy" with a card on file.

A saved card can be used in both. What matters is who starts the payment, not where the card details come from.

CIT vs MIT

Customer-initiated (CIT)Merchant-initiated (MIT)
Who starts itThe cardholderThe merchant, under an earlier agreement
Customer presentPresent in the payment flowNot present
SCA in EuropeRequired unless exempt2EBA Single Rulebook Q&A 2018_4031, payee-initiated card payments (read October 14, 2026)Out of scope2EBA Single Rulebook Q&A 2018_4031, payee-initiated card payments (read October 14, 2026)
ExamplesCheckout, first subscription payment, one-click with a saved cardRecurring payments, installments, unscheduled top-ups
Visa authorization validity (card-absent)10 calendar days5 calendar days
Visa dispute 13.2 (canceled recurring)Invalid for a CITCan apply to a recurring MIT

The validity periods come from Visa table 5-12 (section 5.7.3.5), which lists installment, recurring, advance payment and unscheduled credential-on-file transactions as MITs. The dispute row comes from section 11.10.3.3.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026

On SCA, the European Banking Authority says payments started by the payee only, "provided that those transactions do not need to be preceded by a specific action of the payer," are not subject to SCA. But "the setting up of such a mandate is subject to strong customer authentication."2EBA Single Rulebook Q&A 2018_4031, payee-initiated card payments (read October 14, 2026) Exemptions for CITs are covered in strong customer authentication.

Inside Tagada

Build the funnel once, route every customer to the right offer

Checkout, upsells and subscriptions on one flow, with conditions per country, order or customer.

Start free

How the first CIT sets up later MITs

Visa's stored credential rules (section 5.8.11.1, tables 5-20 and 5-22) turn the first CIT into the base for every later charge:1Visa Core Rules and Visa Product and Service Rules, April 18, 2026

  1. The customer gives express consent to terms that say how the stored card will be used, the amount and the timing, shown apart from the general terms.
  2. The merchant authorizes the amount due, or sends a zero-dollar authorization if nothing is due, with the recurring, installment or unscheduled indicator.
  3. If that first request is declined, "the Merchant must not store the credential."
  4. In Europe, the customer completes SCA on this first payment, since it sets up the mandate.
  5. Later charges go out as MITs, with POS Entry Mode 10 and the same indicator.

Based on Visa Core Rules (April 2026), the EBA Q&A 2018_4031 and Stripe's API docs.

In Stripe, step 2 is a PaymentIntent with setup_future_usage=off_session, for a card your customer "may or may not be present" to use. Each renewal then sets off_session=true: the customer "isn't in your checkout flow during this payment attempt and can't authenticate."4Stripe API reference, Create a PaymentIntent (read October 14, 2026)

What it changes for a merchant

For how to save cards at checkout, see our guide to saved payment methods.

How Tagada helps

First payments and renewals, handled

Tagada runs subscriptions with trials, billing cycles, dunning, and automatic retries and recoveries. TagadaPay includes native 3DS2 for the payments your customers start. Tagada follows Visa and Mastercard rules and the laws that apply to payments.

Start free

Updated on October 15, 2026

Nick Bonnassies

CMO at Tagada

CMO at Tagada. Before Tagada, Nick built direct-to-consumer brands that generated over $115M in sales, raised over $25M in crowdfunding and sold two of them. He also works as a fractional CMO on marketing operations and AI systems.

Frequently asked questions

What does CIT mean in payments?

CIT stands for customer-initiated transaction, also called cardholder-initiated transaction, Visa's term. It's a card payment the cardholder starts and takes part in, such as a checkout purchase. The opposite is MIT, a merchant-initiated transaction charged on a stored card without the customer present.

Is the first payment of a subscription a CIT?

Yes. The customer is at checkout, agrees to the terms and enters the card. That first payment, or a $0 account verification if nothing is due, is what lets the merchant store the card. The renewals that follow are MITs.

Is paying with a saved card a CIT or an MIT?

A CIT, if the customer clicks to pay. Using a stored card doesn't make it merchant-initiated. Visa requires the merchant to validate the cardholder's identity first, for example with a login and password. It's an MIT only when the merchant charges without the customer taking part.

Do merchant-initiated transactions need SCA?

No. The European Banking Authority says payments started by the payee alone, under a mandate, are not subject to strong customer authentication. Setting up that mandate is, so the customer authenticates once on the first CIT. The bank can still decline an MIT.

Sources

Checked October 15, 2026
  1. Visa Core Rules and Visa Product and Service Rules, April 18, 2026
  2. EBA Single Rulebook Q&A 2018_4031, payee-initiated card payments (read October 14, 2026)
  3. Stripe Docs, Customer-Initiated Transactions (CIT) and Merchant-Initiated Transactions (MIT) (read October 14, 2026)
  4. Stripe API reference, Create a PaymentIntent (read October 14, 2026)

Tagada

Subscriptions that bill on cards saved the right way

Funnels, one-click upsells, subscription billing and payment routing, on one customer record.

Start freeSee pricing
  1. 01Create your free account
  2. 02Connect your store or build a checkout
  3. 03Launch funnels, upsells and subscriptions