Merchant-initiated transactions are those that are triggered on renewals and one-time charges. According to SCA, most off-session payments that are Merchant Initiated Transactions will be treated as exemptions.
However, there is a minor possibility that some transactions are made to go through 3DS, invariably. In such cases, the transaction might fail, which will be overcome by the fallback mechanism.
The fallback mechanism triggers the dunning process and sends payment reminder emails with the payment failure reason and the Pay Now option to customers.
Read more about configuring SCA here