Payments glossary

The words processors
don't bother to explain.

Plain-English definitions for every term that matters to a multi-brand operator — from interchange to the MATCH list. Built for people running the business, not writing the policy.

131 terms defined

22 letter groups

100% plain-English

# 1 term

1099-K IRS form your processor files for every merchant hitting the volume threshold.

A 8 terms

Account updater Visa VAU / Mastercard ABU service that auto-refreshes stored card credentials on reissue. ACH return code Three-character reason code explaining why an ACH transaction bounced back. Acquirer The bank that holds your merchant account and settles funds to you. Address Verification Service (AVS) The "does this address match what the bank has?" check sent with every auth. Aggregated MID A single master MID that processes card volume for many underlying sub-merchants. American Express OptBlue Amex pricing bundled through your regular acquirer — not a direct Amex contract. AML / KYC Regulatory regimes requiring identity verification and transaction monitoring on payment accounts. Authorization reversal Cancel a prior auth and release the hold — better UX than letting the auth expire.

B 2 terms

Billing descriptor The text customers see on their card statement for your charge. BIN (Bank Identification Number) First 6-8 digits of a card number identifying the issuing bank and product type.

C 21 terms

Capture delay The window between auth and capture — too short or too long both hurt. Card brand assessment The network's cut on every transaction — small per txn, structural at scale, non-negotiable. Card brand registration Annual registration with Visa/MC required to operate in flagged high-risk merchant categories. Card network Visa, Mastercard, Amex, Discover — the rails that route every card transaction. Card on file (COF) Stored card credentials the merchant can re-charge with customer consent. Card Verification Value (CVV/CVC/CID) Printed 3-4 digit card code proving physical possession — can never be stored post-auth. Card-Not-Present Surcharge The e-commerce premium on top of card-present interchange, ~30–60 bps. Card-present vs card-not-present Physical-card transactions cost less and shift fraud liability; online transactions don't. Cash discount One posted card-inclusive price; cash customers get a discount — legal in all 50 states. Cash discount program Raise posted prices, discount for cash — legally sidesteps the 4% surcharge cap and state bans. Chargeback ratio Chargebacks ÷ transactions. Visa flags at 0.9%, Mastercard at 1%. Chargeback representment Contesting a chargeback with evidence. Wins vary by code + documentation. Chargeback threshold The dispute-ratio line that triggers fines, reserves, or termination. City/State Descriptor Field The 13-char field next to your descriptor — use it for a phone number, not a city. Clearing and settlement The two bank-to-bank phases that move real money after the card is approved. CNP (Card-not-present) Any charge where the physical card is not swiped — e-commerce, phone, MOTO. Compelling evidence The specific documents that win a chargeback dispute — defined by each network. Compelling Evidence 3.0 Visa's "show 2+ matching prior clean purchases" path to win fraud disputes. Credit card processing fees The full stack: interchange (85%) + network assessments (5%) + processor markup (10%). Cross-border interchange Elevated interchange when the cardholder's country differs from the merchant's acquirer country. CVV / CVC / CVN Verification The 3–4 digit code on the card that proves the buyer holds the plastic.

D 8 terms

Decline code reasons Issuer response codes telling you why an auth was refused and whether to retry. Dedicated MID A merchant identification number issued exclusively to one merchant, with direct acquirer funding. Discount rate The merchant's per-transaction percentage fee — in modern pricing, the markup above interchange. Dispute Notification Period The days you have to respond to a chargeback before it auto-loses. Dispute resolution The full flow of a chargeback from dispute to final network ruling. Dual pricing Two prices displayed per item — cash and card — legally distinct from surcharging. Durbin Amendment 2010 law capping regulated-debit interchange at ~$0.21 + 0.05% + $0.01 fraud adjustment. Dynamic descriptor Per-transaction variable descriptors — not just per-brand, per-charge.

E 4 terms

Effective rate Total fees ÷ total volume. The only processor number that tells the whole story. Effective rate — true cost Effective rate including every hidden line item — the one number processors don't want you to compute. EMV 3DS Card-not-present authentication protocol that shifts fraud liability to the issuer on authenticated charges. Excessive Chargeback Program (ECP) Mastercard's equivalent of VAMP — ladder of fines for merchants over chargeback thresholds.

F 4 terms

Flat-rate pricing One published rate for every card — simple, predictable, and expensive at scale. Force post (force capture) Manual capture of a charge without a prior auth — legit fallback, abuse risk, monitored. Form 1099 The IRS information-return family — 1099-K reports your card volume. Friendly fraud When a real customer disputes a real transaction they actually made.

G 1 term

Gateway fee Fee for the gateway layer that tokenizes and routes transactions — separate from processor fees.

H 4 terms

Hard descriptor The fixed, acquirer-registered portion of a billing descriptor — the parent merchant's DBA. High-risk merchant Merchant in a vertical with elevated chargeback, fraud, or regulatory risk. High-risk merchant account A processing account underwritten for high-chargeback or high-scrutiny industries. High-risk payment gateway A gateway wired to acquirers that will underwrite high-risk categories — and stay connected.

I 6 terms

Incremental authorization Additive auth that grows an existing hold without voiding it — hotels, rides, bar tabs. Interchange The issuer's cut of every card transaction, set by Visa + Mastercard. Interchange Optimization Passing extra data + hitting network rules so Visa/MC bill you a cheaper interchange tier. Interchange-plus Transparent pricing: raw interchange cost + fixed processor margin. Issuer Bank Arbitration The last-stop binding ruling from Visa/MC on a contested dispute, $250+ to file. Issuer decline code explained The issuer's reason for saying no — some retriable, some terminal. Know which is which.

K 2 terms

KYB (Know Your Business) Entity-level verification: does this business legally exist and operate as claimed? KYC (Know Your Customer) Identity verification for individual principals of a merchant account.

L 2 terms

Level 2 / Level 3 processing Enhanced transaction data (tax, line-items, customer ref) that drops B2B interchange by 50–150 bps. Level 3 Processing Fields Line-item-level auth data that unlocks the cheapest B2B interchange rates.

M 9 terms

Mastercard ECM Mastercard's dispute monitoring — thresholds at 1.5%, 3.0%, 5.0%. MATCH list Mastercard's 5-year terminated merchant registry — acquirers check it before approving. MCC 4-digit code that categorizes your business for Visa/Mastercard. Affects fees + policy. MCC code The 4-digit ISO 18245 code describing what a merchant sells — drives interchange and compliance. Merchant account Bank account for receiving card payments. Requires underwriting approval. Merchant category group The broader bucket your MCC sits in — often the real driver of your pricing and monitoring. Merchant discount rate (MDR) Old-school industry name for your percentage fee — still appears in contracts and global filings. Merchant statement Your processor's monthly fee breakdown — the document you need to calculate effective rate. MID / MCC Change Any change to your merchant ID or category code — both require re-underwriting.

N 4 terms

Network assessments Flat fees card networks charge per transaction, on top of interchange. Network tokenization Card-number replacement managed by Visa VTS / Mastercard MDES — portable, auto-updated, lower interchange. Network-branded prepaid Prepaid Visa/MC/Amex cards — loaded balance, separate interchange, higher chargeback risk. No-charge refund (zero-value refund) A $0 refund transaction that cancels or unwinds without returning money.

O 1 term

Offshore merchant account Non-US acquirer for merchants who can't get domestic approval — expensive, FX-exposed, fallback option.

P 17 terms

Parent merchant account One merchant account that multiple sub-brands route into — with per-brand descriptors. Partial authorization Issuer approves a smaller amount than requested — split-tender fallback or cancel. Payment facilitator (PayFac) An entity that holds a master merchant account and onboards sub-merchants beneath it. Payment gateway The software pipe that carries payment data from checkout to processor. Payment gateway vs payment processor Gateway = software that takes card data. Processor = entity that moves money. Stripe merges them; most others split. Payment processor The company that runs the technical processing of your card transactions. Payout schedule How often your acquirer deposits settled funds to your bank. PCI SAQ A-EP PCI SAQ for e-commerce sites that influence but don't store card data — iframes, redirects. PCI scope Every system, process, or person that touches card data — the PCI audit perimeter. PCI-DSS Security standard for handling card data. Scope matters more than the label. PIN block Encrypted format for transmitting cardholder PINs — never visible to merchant or acquirer. PIN debit vs signature debit PIN debit: cheaper, faster, card-present only. Signature debit: credit-card rails with a signature. Pre-arbitration The "re-dispute" round after a merchant wins representment. Processor aggregator A single master merchant account that houses thousands of sub-merchants — fast signup, shared fate. Processor markup The acquirer's margin on top of pass-through cost — the only negotiable number on your statement. Pull payments Recipient-initiated transfer — merchant pulls funds from payer with prior authorization. Push payments Sender-initiated transfer: money is pushed out rather than pulled — wires, RTP, FedNow, Visa Direct.

R 11 terms

Reason code 4853 Mastercard "Cardholder Dispute" chargeback reason — goods/services not as described, sub not canceled, etc. Recurring mandate Customer's stored authorization permitting recurring debits on a schedule. Regulation E CFPB rule giving consumers 60 days to dispute unauthorized electronic fund transfers. Regulation Z TILA/CFPB rule governing credit-card disclosures and billing-error dispute rights. Representment Evidence Package The document pack you submit to fight a chargeback. Reserve Funds your acquirer holds from payouts as a chargeback insurance policy. Reserve Hold Release Schedule The calendar on which your held reserve money actually gets released back to you. Retrieval Fee The fee you pay every time a cardholder asks the bank for a copy of your receipt. Retrieval request Issuer's request for transaction documentation — prevents cardholder inquiries escalating to chargebacks. Rolling reserve Acquirer holds X% of every settlement for N months before release. Rolling settlement Acquirer holds back X% of each day's deposits and releases T+180 — standard high-risk tool.

S 13 terms

Same-day ACH ACH transfers that settle same business day in three daily windows, capped at $1M/txn. SAQ-A vs SAQ-D PCI self-assessments: SAQ-A = hosted checkout only; SAQ-D = you touch card data (heavier audit). SCA (Strong Customer Authentication) EU-mandated two-factor cardholder authentication for most electronic payments. Settlement The actual money movement from acquirer to merchant bank, usually T+1 or T+2. Soft Decline vs Hard Decline Soft declines = retry. Hard declines = stop forever. Soft descriptor The variable portion of a billing descriptor that names the sub-brand. Soft descriptor configuration The operational process of registering and rotating sub-brand soft descriptors with the acquirer. Split Funding (Sub-Merchant) One card charge, multiple bank accounts, split automatically by the processor. Statement Billing Descriptor The name your customer sees on their bank statement after they buy from you. Sub-merchant A merchant operating under a master account — the PayFac / parent model. Sub-merchant account The identity an operator holds beneath a master merchant account, not a full MID of its own. Surcharge program Adding a disclosed fee to credit-card transactions to recover processing costs — rules-heavy. Surcharge program compliance The rulebook you must follow to legally pass card fees to customers — registration, signage, receipts, state law.

T 5 terms

T+1 settlement Next-business-day settlement from transaction to bank. T+2 settlement Charge Monday, money Wednesday. Standard US card settlement timing. Tiered pricing Processor buckets every transaction into qualified/mid/non-qualified tiers at their discretion. TMF Older name for the MATCH list — same 5-year terminated-merchant registry. Tokenization Replacing card data with tokens. How merchants minimize PCI scope.

U 2 terms

Underwriting The acquirer's risk review before approving your merchant account. Upfront reserve A lump-sum security deposit posted before processing begins.

V 4 terms

VAMP (Visa Acquirer Monitoring Program) Visa's 2025 combined monitoring program for fraud + disputes + data quality. Velocity check Fraud rule that declines repeat attempts from the same card/email/IP in a time window. Visa Integrity Fee Visa's per-transaction fine for skipping data fields on CNP charges. Visa VAMP Visa's chargeback monitoring. 0.9% ratio = flagged, 1.8% = excessive.

Z 2 terms

Zero-dollar authorization A $0 auth request that verifies the card is valid without reserving funds. Zero-fee processing Marketing term for fully passing card fees to customers via surcharge or cash discount.

The words processorsdon't bother to explain.

Twice-monthly. No fluff.

The words processors
don't bother to explain.