An initial stored credential transaction is the first transaction in which a merchant or its payment provider saves a cardholder's card details for future use, under card scheme rules on stored credentials. It may be a purchase or a zero-value authorization used only to verify the card. The merchant must obtain the cardholder's consent, explain how the credential will be used, and flag the authorisation as an initial stored credential transaction.
Later payments using the saved details are a subsequent stored credential transaction, started either by the cardholder or by the merchant. The initial transaction returns a network transaction identifier that the merchant includes in subsequent ones, linking them together. In Europe, the initial transaction normally requires strong customer authentication, which then allows later merchant-initiated transactions to proceed without it. Correct flagging improves approval rates and reduces disputes.