Generic Information

Tokanisation brings you the option to use a cardholder's details without saving the card. Most common usecases are the Payment of Memberships (a.k.a. Recurring Payments) or the use in a CheckOut to smoothen the payment flow. Using tokenised card details is also called 'Card on File (CoF)'.

Who initiates the transaction?

It is important to know who initiates the transaction. If the Merchant is initiating the transaction, it is a Merchant Initiated Transaction (MIT). The user is not involved in the process, so no 3Dsecure verification can be done. For example to pay the monthly membership fee for a SaaS product. But also a MOTO transaction is Merchant initiated and can be performed with CoF details.

If the Cardholder initiates the transaction it's a Customer CIT transaction, for instance in an eCOM purchase. In that case the CoF payment is used for a seamless checkout, but if the issuer is declining the transaction because of signs of fraud there can be a step-up to 3DSecure.

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Membership transaction by Tokenisation (MIT)

If you signup the payee for a membership and initiate a monthly charge on the card, the amounts you charge must be in line with the transaction of the initial payment. You can also give a discount the first period. But the recurring transaction shall not differ too much

Liability on tokenised transactions

If you use CoF details to perform a transaction and the initial transaction is flagged properly, the liability for chargebacks due to fraud lies with the issuer. Our experience is that fraud with a tokenised card is very rare and easy to dispute, but if your fraud rate rises and chargebacks are getting above threshold you should definitely investigate the root cause or add the 3Dsecure layer on higher risk transactions.

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Tokenisation for Smooth Checkout

If you use a token to smoothen the checkout, the first transaction has no relation with the next transactions, there is also no logic in the moment of charge and the amount of the transaction.