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What is Credential on File?

Updated

Table of Contents 

  1. Overview
  2. What is Credential on File?
  3. When Should Credential on File be Used?
  4. Customer Initiated vs Merchant Initiated Transactions
  5. Initial transaction
  6. What Does the Credential on File Transaction Flow Look Like?
  7. Integrating Credential on File

Overview

In the realm of electronic transactions, Credential on File (CoF) plays a pivotal role, allowing merchants to securely store and charge a cardholder's information at a later date. This article delves into the intricacies of CoF, exploring its definition, use cases, and the distinct types of CoF transactions.

What is Credential on File? 

Credential on File, often referred to as Card-on-File, entails a cardholder granting a merchant permission to store and subsequently charge their card for future transactions. This authorization, facilitated through processes like tokenization, can be initiated by either the cardholder or the merchant.

When Should Credential on File be Used? 

The use of Credential on File becomes imperative when a merchant intends to store payment information or utilize stored data for processing payments. Employing CoF variables signals to the processor that the merchant has obtained the customer's consent to execute payments on their behalf. It is particularly useful in scenarios where providing the CVV with each transaction is impractical or undesirable.

Customer Initiated vs Merchant Initiated Transactions

Distinguishing between Customer Initiated Transactions (CIT) and Merchant Initiated Transactions (MIT) is crucial in CoF scenarios:

  • Customer Initiated Transaction (CIT): Occurs when the customer actively engages in the checkout process, whether in-store or online.
  • Merchant Initiated Transaction (MIT): Takes place when the customer has granted permission for their card to be charged without active engagement. An MIT follows a prior CIT to initiate the CoF process.

Initial Transaction

Commencing the Credential on File process necessitates an initial transaction, typically a Customer Initiated transaction. This initial step is vital for storing the customer's payment information for future use. The transaction reference obtained from this initial transaction is critical for subsequent transactions.

Subsequent Transactions

After the initial transaction, a merchant can conduct subsequent transactions using the stored CoF information. The merchant must provide the transaction reference from the original transaction and specify whether it's a Customer Initiated or Merchant Initiated transaction.

What Does the Credential on File Transaction Flow Look Like? 

A typical Credential on File transaction unfolds in the following sequence:

  1. Initial Transaction:
    • Customer initiates a transaction.
    • Merchant stores payment information in the Customer Vault.
    • Transaction reference from the initial Customer Initiated transaction is stored.
  2. Subsequent Transactions:
    • Merchant charges the customer's payment information for future transactions.
    • Possible scenarios include recurring transactions, installment payments, or unscheduled transactions

Integrating Credential on File

For tips on integrating Credential on File, please review the information in the following articles: