Lesson 11 of 13

Transaction types.

Channel, initiator, and credential: how to label every card payment, with an interactive classifier.

By Nagesh Koritala 7 min read Last verified: November 2026

Lesson 1: Improve the checkout
Lesson 2: The checkout flow
Lesson 3: Authorization
Lesson 4: Payment states
Lesson 5: Capture
Lesson 6: Clearing and settlement
Lesson 7: Cash capture
Lesson 8: Returns and refunds
Lesson 9: Disputes
Lesson 10: Tokens and stored credentials
Lesson 11: Transaction types (this lesson)
Lesson 12: Complete reference
Lesson 13: Payments compliance

All 16 pages in this guide

Every card payment you send carries labels that tell the issuer what kind of payment it is. Get them right and approvals go up, fees go down, and disputes are easier to win. Get them wrong and good payments get declined.

The labels answer three separate questions. Teams get confused when they mix them up, so learn them one at a time.

Question 1 · Channel

How did the card arrive?

Card present (tap, chip, swipe) · E-commerce (website) · In-app · MOTO (mail or phone order, keyed by staff).

Question 2 · Initiator

Who started it?

CIT: the customer is taking part right now. MIT: the merchant charges a stored card without the customer, under an agreement.

Question 3 · Credential

Is a saved card involved?

Not stored (one-time) · Initial (storing it now, with consent) · Subsequent (using a card stored earlier).

The answers combine. A phone order can be a CIT. A CIT can use a stored card (one-click checkout). An MIT always uses a stored card, and always traces back to an initial CIT where the customer agreed.

Classify a real transaction

Pick a situation. The panel shows how it should be labeled, and what your system must send.

Transaction classifier

The complete list

Card brands share the same core framework but name and split some types differently. The brand column notes where they diverge.

Type	Family	Amount	Timing	Example	Brand notes
Customer-initiated (CIT)
One-time purchase	CIT, not stored	Known	Now	Guest checkout	The default. No stored-credential indicator.
Initial storage	CIT, initial	Known	Now	“Save this card” at checkout, or the first payment of a subscription	Flag it as the first use and say what future use it enables. Authenticate here (3-D Secure where it applies). Keep the network transaction ID it returns.
Purchase with a saved card	CIT, subsequent	Known	Now	One-click checkout	Still a CIT because the customer is present. Flag it as using a stored credential.
Setting up a series	CIT, initial	Varies	Now	Signing up for a plan	Mastercard asks you to say which kind of series: credential on file, standing order, subscription, or installment.
Merchant-initiated: standing instructions (agreed in advance)
Recurring (scheduled)	MIT	Fixed or variable	Fixed schedule	Monthly membership, utility bill	Visa uses one “recurring” type. Mastercard splits it: subscription (fixed amount, fixed frequency) and standing order (variable amount, fixed frequency).
Installment	MIT	Known total, split	Fixed schedule, fixed count	Furniture paid in 4 parts	One purchase, a set number of payments. Not a loan from a third party; that would be BNPL.
Unscheduled card on file (UCOF)	MIT	Fixed or variable	No fixed schedule; at an agreed trigger	Auto top-up when balance is low, usage-based billing	Both brands. The trigger must be in the customer's agreement.
Merchant-initiated: industry practice (follow-ons to a purchase)
Incremental	MIT	Adds to an existing auth	During the service	Hotel stay extended	A Visa industry-practice type.
Reauthorization	MIT	Original or remaining amount	After the first auth expired	Back-ordered item ships late	A Visa type. For split shipments Mastercard uses partial shipment.
Partial shipment	MIT	Remaining amount	When later items ship	Second box of a split order	A Mastercard type.
Delayed (related) charge	MIT	New, related amount	After the main purchase	Minibar after hotel checkout, car rental damage	Both brands; Mastercard calls it related or delayed charge.
Resubmission	MIT	Same amount	After a decline	Recovering a fare for a transit ride already taken, after an insufficient-funds decline	Both brands. Visa limits it to goods or services already delivered; Mastercard's M208 is broader. Check how your gateway wants retried subscription renewals flagged.
No-show	MIT	Agreed penalty	After a missed booking	Hotel or appointment no-show	Both brands. Only if the policy was disclosed and accepted.
Channels (combine with the above)
Card present	Channel	Any		Tap, chip, swipe	Chip or device cryptogram; counterfeit liability rules apply.
E-commerce	Channel	Any		Website checkout	ECI value shows the 3-D Secure result.
In-app	Channel	Any		Mobile app, often with a wallet	Usually token and cryptogram.
MOTO	Channel	Any		Phone or mail order keyed by staff	Card not present and no 3-D Secure, so no fraud liability shift. The fraud and dispute risk stays with you.

Scheduled vs unscheduled, in one line. If you can put the next charge on a calendar when the customer signs up, it is scheduled (recurring or installment). If the charge depends on an event, it is unscheduled card on file.

Field names differ by gateway: “initiator,” “stored credential type,” “subsequent auth reason,” “recurring flag.” Mastercard also assigns each category its own code (C101 to C104, M101 to M104, M205 to M208; the full list is in lesson 12). Visa recurring charges may never be more than a year apart. Map each row above to your gateway's exact values before you build.

Sources for this guide

Card network rules change. Time limits, fees, and authorization windows here reflect published rules and provider documentation as of late 2026; confirm details with your processor before you build against them.

Sources

Your progress stays on this device.

Next: Lesson 12

Complete reference.

Authorization types, validity windows, statuses, codes, declines, disputes, and monitoring, brand by brand.

Start lesson 12 All lessons

Questions about payments? Email me. I read every note.