Everything you need to know about card-on-file

Card-on-file (CoF) is a method of storing credit or debit card information for future use. This allows customers to make quick and easy purchases without having to enter their card details every time. This method is commonly used for recurring payments, such as subscription services or online marketplaces.

The difference between card-on-file and tokenization is that card-on-file stores the actual card information, while tokenization replaces the card information with a unique token. Tokenization is a more secure method of storing payment information as it reduces the risk of data breaches.

How does card-on-file work?

The process typically involves the customer providing their card information during an initial transaction and then permitting that information to be stored for future use.

1. Initial Transaction: During the initial transaction, the customer provides card information, such as the card number, expiration date, and CVV code. This information is then passed through the card network (Visa, Mastercard, etc.) for authorization and then securely stored by the merchant or payment service provider.
2. Tokenization: To secure the card information, it is often tokenized, which replaces the sensitive card data with a unique token. The token is then used to reference the card information in future transactions rather than using the actual card data.
3. Subsequent Transactions: For subsequent transactions, the customer’s stored card information is retrieved and used to complete the payment. In some cases, the customer may be prompted to provide additional information, such as a billing address or CVV code, to ensure the security of the transaction.
4. Authorization: In each transaction, the card information is sent to the card network for authorization. The card network verifies that the card is valid and that the funds are available before approving the transaction.
5. Security: Card-on-file transactions are subject to strict security regulations, such as Payment Card Industry Data Security Standards (PCI DSS), to ensure that card information is protected from fraud and unauthorized access.

Overall, card-on-file can be a convenient and efficient way for customers to make purchases and for merchants to manage recurring payments. However, proper security measures must be in place to protect sensitive card information.

What are the common use cases for card-on-file transactions?

1. Subscription services: Card-on-file transactions are often used for recurring payments, such as monthly subscriptions for streaming services, software, or magazines. This allows customers to set up a recurring payment and not have to worry about manually renewing their subscription every month.
2. E-commerce: Online retailers often use card-on-file transactions to make it easier for customers to check out. This eliminates the need for customers to enter their card information multiple times when making multiple purchases from the same website.
3. Mobile payments: Card-on-file transactions can be used for mobile payments such as in-app purchases or mobile wallet payments. This allows customers to make quick and easy payments without having to enter their card information every time.
4. Recurrent bill payments: Some utility companies, insurance providers, and other service providers allow customers to set up automatic payments using a card-on-file. This eliminates the need for customers to remember to pay their bills every month and reduces the risk of late payments.
5. Customized Experience: Card-on-file transactions can be used by businesses to offer personalized and customized experiences to customers. For instance, a customer can save multiple cards on file and use them at different times for different purposes.

Overall, card-on-file transactions are a useful tool for businesses and customers alike. They increase the convenience of payments for customers and can help businesses improve their customer retention and sales.

How does Removing card-on-file work?

Removing a card-on-file typically involves accessing the account or profile associated with the card, navigating to the payment or billing information, and finding the option to delete or remove the card. This process can vary depending on the specific platform or service being used. It is important to check if there is any recurring payment associated with the card before removing it. And if so, you may need to cancel or update those payments before removing the card.

Find out more about the card-on-file option at TrustPay by contacting our team directly at sales@trustpay.eu.