Glossary

0–9

3-D Secure (3DS)

An authentication protocol for online card payments that adds a verification step, such as a one-time code or biometric check, to reduce fraud.

A

Account Updater

An automated service run by card networks that refreshes stored customer credit and debit card details. Most often used by CNP merchants who process recurring payments to receive updated account numbers and/or expiration dates.

ACH (Automated Clearing House)

A U.S. electronic network that moves money between bank accounts in batches, used for payroll, direct deposit, bill payments and business-to-business transfers.

Acquirer (Acquiring Bank)

The financial institution that contracts with a merchant to accept card payments, processes those transactions and deposits the funds into the merchant's account.

Acquiring BIN

A BIN assigned by a card network (Visa, Mastercard, etc.) to an acquiring bank, identifying that acquirer as the party responsible for the merchants and transactions processed under it. ISOs and payment facilitators typically process under a sponsor bank's acquiring BIN.

Advice Code (Merchant Advice Code)

A code sent with a decline, most commonly by Mastercard, telling the merchant whether and how to retry, for example, update the card details, try again later, or do not try again. Following advice codes helps avoid excessive-retry fees.

Apple Pay

Apple's digital wallet that lets users pay in stores, in apps and online with an iPhone, Apple Watch, iPad or Mac. It replaces the card number with a device-specific token and authenticates with Face ID, Touch ID or a passcode.

Authorization

The step in which the card issuer approves or declines a transaction after confirming the card is valid and the account has sufficient funds or credit.

Authorization Hold

A temporary reservation of funds on a cardholder's account after authorization, released when the transaction settles or the hold expires.

AVS (Address Verification Service)

A fraud prevention tool that matches the billing address provided by the customer with the address on file at the card-issuing bank.

B

Basis Point

A unit of measure equal to 1/100^th of a percent (0.01%). Payment processors often use basis points to calculate processing fees, set compliance thresholds, and assess authorization metrics.

Batch Processing

Grouping many transactions together and submitting them for clearing and settlement at one time, typically at the end of a business day, rather than in real-time.

BIN (Bank Identification Number)

The first six to eight digits of a payment card number, identifying the issuing institution and card type. Also called the IIN (Issuer Identification Number).

BNPL (Buy Now, Pay Later)

A short-term financing option that lets a consumer split a purchase into installments, often interest-free if paid on schedule.

C

Card Network (Card Scheme, Card Association)

The organization that sets rules and operates the infrastructure connecting issuers and acquirers, such as Visa, Mastercard, American Express and Discover.

Card-Not-Present (CNP)

A transaction in which the card is not physically presented to the merchant, such as online, phone or mail-order purchases. Generally, carries higher fraud risk and fees.

Card-Present (CP)

A transaction in which the card is physically used at the point of sale by swipe, chip insertion or tap.

Cardholder

The person or business authorized to use a payment card issued in their name.

CDRN (Cardholder Dispute Resolution Network)

A Verifi (a Visa Solution) alert network that notifies merchants when a cardholder contacts a participating issuer to dispute a charge. The merchant has a short window (typically 72 hours) to issue a refund and stop the chargeback. Coverage includes cards from multiple card networks at participating issuers.

CE3 (Compelling Evidence 3.0)

A Visa framework that lets merchants fight fraud disputes (reason code 10.4) by showing that the same cardholder made at least two earlier, undisputed transactions that share key details with the disputed one, such as IP address, device ID, shipping address or account login. Meeting the criteria shifts liability back to the issuer.

Chargeback

A reversal of a card transaction initiated by the issuer, usually at the cardholder's request, after a dispute over fraud, non-delivery or billing errors.

Chargeback Reason Code

A code assigned by the card network that identifies why a chargeback was filed, such as fraud, goods not received or a processing error. Each network has its own codes (e.g., Visa 10.4 for card-absent fraud, Mastercard 4837 for no cardholder authorization), and the code determines what evidence the merchant needs to respond.

Clearing

The exchange of transaction details between acquirer and issuer to calculate the amounts each party owes before settlement.

Contactless Payment

A payment made by placing a card, phone or wearable near a terminal using near-field communication (NFC).

Cross-Border Fee

An additional fee charged when the card issuer and the merchant's acquirer are located in different countries.

CVV / CVC (Card Verification Value / Code)

The three- or four-digit security code printed on a card, used to help verify that the person paying has the physical card.

D

Decline

A response from the issuer refusing authorization of a transaction (can also be triggered by your payment processor or card network), for reasons such as insufficient funds, suspected fraud or an expired card.

Digital Wallet

An app or service that stores payment credentials and enables payments from a device, such as Apple Pay, Google Pay or PayPal.

Discount Rate (Merchant Discount Rate)

The total percentage of each transaction a merchant pays to accept card payments, covering interchange, network and processor fees.

Dispute

A cardholder's formal challenge of a charge, which may lead to a chargeback if not resolved.

E

EMV

The global chip-card standard (named for Europay, Mastercard and Visa) that uses an embedded microchip to create a unique code for each transaction, reducing counterfeit fraud.

Encryption

Converting payment data into coded form so it can be read only by authorized parties.

Escrow

An arrangement in which a neutral third party holds funds until agreed conditions between buyer and seller are met.

Ethoca Alert

A notification from Ethoca, a Mastercard-owned company, sent to a merchant when a cardholder's issuer confirms fraud or a dispute on a transaction. The merchant can refund or stop the order before it becomes a chargeback. Alerts cover transactions across multiple card networks.

F

FedNow

The Federal Reserve's instant payment service, enabling banks in the U.S. to transfer funds between accounts in real time, around the clock.

Funding Time

The time between a transaction and when the merchant receives the money in their bank account.

G

Gateway (Payment Gateway)

Technology that securely transmits payment information from a merchant's website or terminal to the processor and returns the approval or decline.

GMAP (Global Merchant Audit Program)

A Mastercard monitoring program, taking effect April 1, 2027, that combines fraud reports and non-fraud chargebacks into one ratio and, for the first time, applies the same measure to acquirer portfolios as well as individual merchants. It replaces Mastercard's earlier chargeback and fraud merchant programs.

Google Pay

Google's digital wallet for paying in stores with an Android phone or watch and online through Chrome and Android apps. It uses tokenization so the actual card number is not shared with the merchant.

H

Hard Decline

A decline response received during an authorization, where the response code definition (potentially along with an advice code) indicates the merchant should not reattempt the authorization. Often response code descriptions such as closed account, pickup card, or invalid transaction meet this criterion.

I

Inform (Verifi)

A Verifi (a Visa Solution) program that allows merchants to enroll and receive Visa fraud notices (TC40) from in order to calculate VAMP ratios.

Incremental Authorization

A payment operation that increases the amount of an existing, uncaptured card authorization instead of creating a separate transaction.

Interchange Fee

A fee paid by the merchant's acquirer to the cardholder's issuer for each card transaction. Rates are set by the card networks and vary by card type and transaction method.

Interchange-Plus Pricing

A pricing model in which the merchant pays the actual interchange fee plus a fixed markup from the processor, offering more transparency than flat-rate pricing.

Invoice

A document sent by a seller to a buyer listing goods or services provided, amounts owed and payment terms.

Issuer (Issuing Bank)

The financial institution that provides a payment card to the cardholder and approves or declines transactions on that account.

K

KYC (Know Your Customer)

Regulatory procedures used by financial institutions to verify the identity of customers and assess risk.

M

Merchant

A business that accepts payments in exchange for goods or services.

Merchant Account

A type of bank account that allows a business to accept card payments; funds are held there before being transferred to the business's operating account.

Merchant Category Code (MCC)

A four-digit code assigned to a merchant that classifies the type of business, used to determine interchange rates and reporting.

MID (Merchant Identification Number)

A unique numerical code assigned to a business by its payment processor to identify it during transaction routing

Mobile Payment

Any payment made using a mobile device, including in-app purchases, digital wallets and peer-to-peer transfers.

MOTO (Mail Order, Telephone Order)

A CNP payment transactions where a customer provides their credit or debit card details remotely to a merchant via the phone, email, fax or mail.

N

NACHA (National Automated Clearinghouse Association)

Governing body for the ACH Network. They also develop rules and standards that must be met by those who process payments on the ACH Network.

Net 30 / Net 60

Invoice payment terms requiring the full amount to be paid within 30 or 60 days of the invoice date.

Network Token

A form of tokenization used directly by the major card networks like Visa and Mastercard to replace the primary account number during a transaction.

NFC (Near-Field Communication)

Short-range wireless technology that enables contactless payments between a device and a payment terminal.

P

P2P (Peer-to-Peer) Payment

A transfer of money directly between individuals using an app or service such as Venmo, Zelle or Cash App.

Payment Facilitator (PayFac)

A company that onboards and processes payments for many sub-merchants under its own master merchant account, simplifying setup for small businesses.

Payment Processor

A company that handles transaction data between the merchant, the acquirer and the card networks, managing authorization and settlement.

Payment Terms

The conditions under which a seller expects payment, including due date, accepted methods, discounts for early payment and late fees.

PCI DSS (Payment Card Industry Data Security Standard)

A set of security requirements that any organization storing, processing or transmitting cardholder data must follow.

Point of Sale (POS)

The place and system where a customer completes a purchase, including terminals, card readers and checkout software.

Pre-Authorization

An authorization for an estimated amount before the final charge is known, common at hotels, car rentals and fuel pumps.

R

RDR (Rapid Dispute Resolution)

A Verifi (a Visa Solution) pre-dispute service that automatically resolves Visa disputes using rules the merchant sets in advance (for example, auto-refund any dispute under a set amount). A resolved case is refunded instead of becoming a chargeback and does not count toward the merchant's dispute ratio.

Real-Time Payments (RTP)

Payment systems that clear and settle transfers within seconds, at any time, such as the RTP network and FedNow in the U.S.

Reconciliation

Matching payment records, such as sales, deposits and fees, against bank statements to confirm accuracy.

Recurring Payment

An automatic charge made on a regular schedule with the customer's authorization, such as a subscription or membership fee.

Refund

Returning money to a customer for a returned product or cancelled service, initiated by the merchant.

Remittance

A payment sent to another party, often used for money sent by individuals across borders or for payment details accompanying a business payment.

Representment (Chargeback Reversal)

A merchant’s evidence-based rebuttal to fight a chargeback.

Reserve

Funds held back by a payment processor or acquirer from a merchant's settlements to cover potential chargebacks or refunds.

Response Code

A code the issuer returns with an authorization to indicate the result, such as 00 (approved), 05 (do not honor), 51 (insufficient funds) or 54 (expired card). Merchants use response codes to understand declines and decide next steps.

Retail ISO

An Independent Sales Organization that resells a payment processor's or bank's merchant services, usually without taking on liability for merchant losses. The sponsor bank or payment processor underwrites the merchants and bears the risk, so the retail ISO earns a smaller share of residuals.

Retrieval Request

A preliminary step to a chargeback where an issuing bank asks a merchant for documentation or proof regarding a disputed transaction. Most commonly used by Discover and American Express.

S

Settlement

The transfer of funds from the issuer through the network to the acquirer and finally into the merchant's account.

SMMP (Scam Merchant Monitoring Program)

A Mastercard program, fully enforced from July 2026, that identifies merchants suspected of operating scams. Rather than relying only on ratios, it looks at behavioral signals such as sudden drops in approval rates, scam-related fraud reports and chargebacks from multiple issuers, and high refund-plus-chargeback rates for new merchants.

Soft Decline

A decline response received during an authorization, where the response code definition (potentially along with an advice code) indicates the merchant is ok to reattempt the authorization at another time. Often response code descriptions such as insufficient funds or retry later meet this criterion.

SWIFT

A global messaging network banks use to send secure instructions for international wire transfers.

T

Tokenization

Replacing sensitive card data with a unique, non-sensitive substitute (a token) so the real card number is never stored or transmitted.

Transaction Fee

A charge applied to each payment, often a fixed amount, a percentage or a combination of both.

U

Underwriting

The risk-assessment process that payment processors and acquirers use to evaluate a business before allowing it to accept electronic card payments.

V

VAMP (Visa Acquirer Monitoring Program)

Visa's risk program, launched in 2025, that replaced the Visa Dispute Monitoring Program (VDMP) and Visa Fraud Monitoring Program (VFMP). It measures merchants and acquirers on a single ratio of reported fraud (TC40) plus disputes (TC15) divided by settled card-not-present transactions. Merchants and acquirers above the thresholds face fees and remediation requirements.

Void

Cancelling an approved authorization before settling it, so no funds move.

W

Wholesale ISO

An Independent Sales Organization that takes on financial liability for its merchants' losses (such as chargebacks and fraud) and usually handles its own underwriting and pricing. In exchange for that risk, it earns a larger share of processing revenue (residuals).

Wire Transfer

An electronic transfer of funds from one bank to another, typically fast and final once completed, used for large or time-sensitive payments.