Reminder – how to optimize flows for recurring and subscription payments

In the UK and EEA, new card scheme mandates are coming into force that make it more important than ever to submit Merchant Initiated Transactions (MITs) correctly.

• From June 1, Mastercard will begin sending warning notices to merchants not sending the Trace ID (previous_payment_id) for subsequent recurring transactions. Eventually, they may begin to issue fines to non-compliant merchants. Sending the previous_payment_id is already mandated for Visa recurring transactions.

• From June 30, Mastercard will require merchants to retry soft-declined (response code 20154) transactions with 3D Secure. MITs are out of scope for this mandate, but if you’re submitting recurring payments as purchase, they may count towards your non-compliance rate.

As well as helping you comply with these mandates, flagging MITs can increase your acceptance rate for these transactions by letting the issuer know that an agreement is in place with your customer to use stored card details.

It also helps issuers to identify fraud and enhance their risk management, providing greater transparency of the transaction type, and reduces customer service costs associated with declined transactions.

Recommended actions

Here are our recommendations to optimize how you send Merchant Initiated Transactions to Checkout.com:

When submitting the first transaction to set up a subscription or recurring payment series

• Set the parameter payment_type to recurring, instead of regular. This will help the issuer identify the transaction as recurring, as well as recognizing subsequent payments using the same payment ID (more on this below)

For subsequent subscription and recurring transactions (MITs)

• Set the parameter payment_type to recurring as above, to help the issuer identify that this is a recurring payment.

• Set merchant_initiated to true, to help the issuer identify that you are initiating the transaction on the customer's behalf.

• Set the store_for_future_use field to true, to identify that you are making the payment with stored card details.

• Submit the previous_payment_id of the transaction used to set up the recurring series. Usually, this will be a Checkout.com payment_id (format pay_XXX) returned with the first transaction. Alternatively, if you made the first payment through another provider, you can use the scheme_id (format: 12345… or ABCDE…):

We strongly recommend using the payment_id associated with the original transaction used to set up the recurring payment series to increase authorization success, however you can use the payment_id of any transaction in the subscription.

Further reading

• Checkout.com documentation on submitting recurring payments with stored card details

• Mastercard will require trace IDs for Merchant Initiated Transactions‍