Card-on-file (CoF) consists of a merchant storing a customer’s card details, with the customer’s consent, in order to re-use the details for future payments and to carry out faster checkouts. 

Card-on-file transactions

Card-on-file transactions are initiated by the cardholder and involve either the cardholder giving permission to a company to store their card information for future use, or an agreement between the cardholder and the merchant for the merchant to initiate payments using stored payment information. In the latter case, it is usually used for subscription billing. 

Subscription transactions

Subscription transactions take place on a regular basis, usually at predetermined intervals, as is the case, for example, with a streaming network that has a file of a customer’s card information and makes automatic monthly payments for using the service. In this way, the customer doesn’t need to manually renew their payment on a regular monthly basis, giving the merchant the possibility of storing their card details and thus making the payment without any additional procedure.