Cardholder initiated transactions (CIT)

Cardholder initiated transactions (CIT) are payments initiated and authorized by a cardholder by entering card details or using stored credential and payment details - transactions where a cardholder takes an active part.

    Examples of such transactions: 

Merchant initiated transactions (MIT)

    Merchant initiated transactions (MIT) are payments undertaken by businesses with a mandate from a cardholder. 

    Examples of such transactions: 

  • Recurrent subscription payment;
  • Payment initiated on "delivered goods" trigger, meaning you charge your customer after the customer receives the goods or service. 

To classify a payment as a MIT, you must have prior consent (mandate) from the cardholders to the merchant to store payment credentials for future use without their active engagement.

CIT/MIT and chargebacks


Let's take a closer look at the difference between Cardholder-Initiated Transactions (CIT) and Merchant-Initiated Transactions (MIT) through the lens of chargeback.

When a customer raises a dispute for a CIT as fraudulent, the primary responsibility lies with the card-issuing bank. Since the transaction was initiated by the cardholder, it has undergone the bank issuer's security checks. If the transaction turns out to be fraudulent due to the card being stolen or compromised, the bank is held responsible for the risk.

On the other hand, when a customer raises a dispute for an MIT as fraudulent, the responsibility falls mainly on the merchant. Since the merchant initiates this type of transaction, they are held responsible for any dispute of a fraudulent transaction, whether it is a one-time or a recurring transaction.

It is important to note that chargebacks can have significant consequences for merchants. A high chargeback rate can lead to a merchant account being terminated or frozen, which can have a negative impact on their business. Therefore, it is important for merchants to take measures to prevent fraudulent transactions and disputes, such as implementing fraud detection tools and ensuring that transactions are properly authorized.

In conclusion, understanding the difference between CIT and MIT and their respective liability for chargebacks is essential for merchants. By taking appropriate measures to prevent fraudulent transactions and disputes, merchants can minimize their risk and ensure the success of their business.

In case of disputes for undelivered good/services, or when a customer received goods/services which fell short from advertised/promised - it does not matter CIT or MIT payment. The responsibility lies with the merchant