MIT (Merchant-Initiated Transaction)

A Merchant-Initiated Transaction (MIT) is a charge submitted by a merchant using stored payment credentials (card number, expiry, CVV) without the cardholder actively participating in the transaction at the time of the charge. Subscriptions, recurring billing, and "store my card for future use" follow-on charges are all MITs.

Visa and Mastercard have detailed rule frameworks for MITs, distinguishing them from Cardholder-Initiated Transactions (CITs). Under current Visa rules (Visa Core Rules, as updated in 2024-2025), a merchant must obtain explicit consent for stored-credential transactions and must use specific transaction indicators in the authorisation request to identify the transaction as an MIT.

Consumer dispute implications:

For credit cards: If a subscription continues charging after cancellation, the MIT using stored credentials is technically processed by the network. However, under Regulation Z 12 CFR 1026.13(a)(3), the continued charge constitutes a billing error ("goods or services not accepted or not delivered as agreed"). The consumer can file a billing-error claim within 60 days of the statement showing the charge, regardless of whether the transaction was technically authorised at the network level.

For debit cards: The same subscription charge is an MIT-type EFT from the checking account. Under Regulation E 12 CFR 1005.11, the consumer can dispute it if it was an unauthorised transfer. However, if the consumer originally authorised recurring billing and the merchant has a stored authorisation, the bank may determine the transfer was technically authorised. The Reg E path is less reliable for subscription disputes; revocation of pre-authorised EFT under 12 CFR 1005.10(c) requires notifying the bank 3 business days before the next scheduled transfer.

Practical strategy: To stop a recurring charge, notify both the merchant (in writing, keep a copy) and your bank simultaneously. On a credit card, this triggers the Reg Z dispute right if the charge continues. On a debit card, notify the bank at least 3 business days before the next charge date under Reg E 1005.10(c).