Are All Card Transactions the Same? Understanding Card-on-File vs. Unscheduled Card-on-File

Not all card transactions are alike, and two key types—Card-on-File (COF) and Unscheduled Card-on-File (UCOF)—serve different purposes. Both involve storing a customer’s card details but differ in when and how payments are initiated. Here’s a closer look at each and their use cases.

What is a Card-on-File (COF) Transaction?

A COF transaction occurs when a customer consents to having their card details stored for future use. It is customer-initiated at the time of purchase, often for convenience in repeat transactions.

Use Cases:

• E-commerce: Amazon’s “One-Click” checkout stores your card for future purchases.

• Subscriptions: Netflix automatically bills you monthly using stored card details.

What is an Unscheduled Card-on-File (UCOF) Transaction?

A UCOF transaction is merchant-initiated, using stored card details without the customer directly authorizing the charge each time. Unlike COF, UCOF payments are not set on a fixed schedule.

Use Cases:

• Utility Bills: Charges vary based on usage, and the card is billed when the amount is calculated.

• Failed Payments: Businesses retry a payment later if an initial attempt fails (e.g., insufficient funds).

Key Differences

Benefits

• COF speeds up checkout for repeat purchases and supports predictable subscription billing.

• UCOF provides flexibility for businesses to bill as needed, ideal for usage-based services and handling payment retries.

Security Considerations

Both COF and UCOF require compliance with PCI DSS for secure storage of card data, and may involve Strong Customer Authentication (SCA) under PSD2 regulations in Europe.

Conclusion

COF and UCOF transactions serve distinct purposes: COF is used for predictable, customer-initiated payments, while UCOF allows businesses to manage flexible billing schedules. Understanding these differences helps businesses optimize their payment processes and customer experience.