Payments glossary

A card-network authentication protocol that shifts fraud liability from the merchant to the issuer when a cardholder is verified.

A scheme service that automatically updates stored card numbers and expiry dates when an issuer reissues a card.

The licensed bank or financial institution that holds the merchant's MID and settles card transactions on the merchant's behalf.

An issuer service that compares the billing address submitted with a transaction against the cardholder's address on file.

Any non-card payment method, wallets, bank transfers, BNPL, vouchers, accepted at checkout.

The regulatory regime that obligates payment institutions to detect and report suspicious activity.

The first 6–8 digits of a card number, identifying the issuer, country, scheme, and product type.

A single flat rate (e.g. 2.9% + 30¢) charged on all card transactions regardless of underlying interchange.

An authorisation response refusing to fund a transaction, returned by the issuer with a reason code.

A PCI-DSS-compliant store of tokenised card credentials that lets a merchant charge a card again without holding the PAN.

The 3- or 4-digit code printed on a card, used to prove the cardholder physically holds the card.

A transaction initiated by the cardholder in real time, typically the first charge that establishes credential-on-file.

A forced reversal of a card payment initiated by the cardholder's issuing bank.

The merchant-facing payment surface, the form, hosted page, or SDK where the customer enters payment details.

A card transaction where the issuer country differs from the acquirer country, attracting higher interchange and scheme fees.

Any cardholder-initiated challenge to a transaction, covers retrieval requests, chargebacks, pre-arbitration, and arbitration.

The process of retrying failed subscription payments and notifying customers to update their card before churning them.

A chargeback filed by a real cardholder for a transaction they actually made, often because they don't recognise the descriptor or want a refund without contacting the merchant.

Currency conversion applied to a cross-currency transaction, by the merchant, acquirer, or cardholder's bank.

A terminal decline (e.g. lost/stolen, pickup card, invalid account) that must not be retried.

A merchant whose vertical, business model, or chargeback profile makes standard acquirers reluctant to board them.

The fee paid by the acquirer to the issuer on every card transaction, set by the schemes.

Transparent acquirer pricing model that passes interchange and scheme fees through at cost with a fixed processor markup on top.

The bank that issues a payment card to a cardholder and authorises or declines transactions on it.

Regulated identity-verification of the merchant (KYB) and, where relevant, the merchant's customers (KYC).

Four-digit ISO 18245 code used by card schemes to classify a merchant's business.

A unique identifier issued by an acquirer that ties transactions to a specific merchant account.

Funds held back by the acquirer (rolling, upfront, or capped) as security against chargeback and fraud risk.

A charge initiated by the merchant against a previously stored credential, without the cardholder present.

A scheme-issued token that replaces the PAN end-to-end and is automatically updated when the underlying card is reissued.

A technical layer that encrypts card data, forwards authorisation requests to an acquirer, and returns the result to the merchant.

A platform layer that lets a merchant connect to multiple acquirers, APMs, and risk tools through one integration and route transactions intelligently.

A vendor that provides payment-acceptance technology, gateway, vaulting, reporting, sometimes acquiring, under one contract.

The Payment Card Industry Data Security Standard, the scheme-mandated framework for handling cardholder data.

The EU's Payment Services Directive 2, which mandates SCA, opens banking APIs, and reshapes payment liability.

The merchant's response to a chargeback, with evidence that the original transaction was valid.

A pre-chargeback inquiry from the issuer asking the merchant for transaction details.

Rules that re-attempt a declined transaction across time windows, acquirers, or authentication levels to recover revenue.

A percentage of each transaction held by the acquirer for a fixed period (e.g. 10% for 180 days) to cover chargeback risk.

Fees charged by Visa and Mastercard (or another scheme) to acquirers and issuers on every transaction.

The transfer of funds from the acquirer to the merchant's bank account, net of fees and reserves.

Algorithmic selection of an acquirer or MID per transaction to maximise approval rate, minimise cost, or both.

A transient decline (e.g. insufficient funds, do-not-honour, generic) that can usually be recovered with retries.

The merchant name and contact info shown on the cardholder's statement.

PSD2 requirement that customer-initiated electronic payments in the EEA and UK be authenticated with two of: knowledge, possession, inherence.

Replacing sensitive card data with a non-sensitive surrogate value that can be stored and reused without PCI scope.