With Card-on_file. (CoF), your payment credentials (such as PAN or token) are stored with your consent by a merchant (or its agent), so that future transactions can be processed without you having to re-enter your card details.

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Benefits/functionality

➡️ Enables frictionless checkout

➡️ Supports merchant-initiated transactions (MIT) under prior consent

➡️ Enhances customer experience and retention

➡️ Improves authorization rates and reduces declines when correctly flagged, since networks can apply specific rules for stored credentials

➡️ Enables better lifecycle management of credentials (e.g., updating expired PANs, tokens) for smoother reuse

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Implementations

Consent and disclosure: The merchant must obtain Cardholder consent and disclose how those credentials will be used, the truncated card digits, expiry of consent, etc.

Initial transaction (CIT) vs subsequent use: The first transaction where credentials are stored is typically a Cardholder-Initiated Transaction (CIT). Subsequent uses (where the merchant uses the stored credential) are Merchant-Initiated Transactions (MIT).

Flagging/data fields: Networks require specific indicators in transaction data so that issuers understand the risk and context.

Tokenization and vaults: Typically, the stored credentials are not raw PANs in merchant systems, but tokens stored by tokenization providers.

Credential lifecycle and updates: Merchant or network must support updating credentials to keep the stored payment method valid.

Compliance with stored credentials frameworks: Networks have mandated frameworks specifying how CoF transactions must be handled.

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How major networks handle it

➡️ American Express supports storing credentials and merchant-initiated use; while publicly less granular than Visa/Mastercard, the same “stored credentials” concepts apply.

➡️ Discover supports stored credentials; merchants must comply with stored-credential rules for recurring/unscheduled transactions.

➡️ JCB provides support for card-on-file/credential-on-file transactions in its merchant guidelines (especially in Asia-Pacific).

➡️ Mastercard supports Card-on-File transactions under its established CIT/MIT data framework, requiring clear linkage between the initial consent and subsequent use.

➡️ Visa applies standardized data elements and indicators to identify Card-on-File transactions and ensure correct linkage to the original consented credential.

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Card-on-File is a critical capability in modern commerce for delivering smooth customer experiences However, because storing and re-using payment credentials introduces additional issuer risk, networks have put in place frameworks that require clearly flagged transactions, cardholder consent, and proper data handling.

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