| 3-D Secure (3DS) |
Authentication protocol for online card payments requiring additional customer verification (e.g., app approval or SMS code). Mandated under PSD2 for Strong Customer Authentication. |
| Acquirer / Acquiring Bank |
The financial institution or PSP that processes card transactions for a merchant and settles funds to the merchant's account. |
| Acquiring Contract |
The commercial agreement between a merchant and an acquirer defining pricing, settlement terms, and responsibilities. |
| Address Verification Service (AVS) |
Fraud-prevention check comparing the billing address entered with the issuer's records. |
| Authorization |
The real-time request to the issuer asking whether funds are available and the transaction is legitimate. |
| Authorization Rate |
The percentage of attempted transactions that receive an "Approved" response. |
| Batch / Settlement Batch |
A group of captured transactions processed together for clearing and payout. |
| BIN (Bank Identification Number) |
First 6–8 digits of a card number identifying the issuing bank, card type, and region. |
| Blended Pricing |
A single fixed rate that combines interchange, scheme, and acquirer fees — simple but less transparent. |
| Card-Not-Present (CNP) |
Any payment where the card isn't physically present (e-commerce, mail order, phone order). |
| Card-Present (CP) |
In-person transaction where a card is tapped, inserted, or swiped at a POS terminal. |
| Chargeback |
A reversal initiated by the cardholder's bank due to dispute or suspected fraud. |
| Click to Pay |
Unified checkout solution from Visa, Mastercard, and others replacing older wallets like Masterpass. |
| Clearing |
The stage after capture when acquirers and issuers exchange transaction data and prepare for settlement. |
| Communication Error |
Technical failure where messages between gateway, acquirer, or issuer time out or get corrupted. |
| Cross-Border Fee |
Extra charge applied when cardholder and merchant are in different regions or currencies. |
| Customer-Initiated Transaction (CIT) |
A payment actively started by the customer — e.g., checkout purchase, card tap. |
| Merchant-Initiated Transaction (MIT) |
A payment started by the merchant using stored credentials, often for subscriptions or no-show fees. |
| DCC (Dynamic Currency Conversion) |
Service offering cardholders the option to pay in their home currency at the point of sale (usually with markup). |
| Decline |
A rejected authorization request. Classified as hard (permanent) or soft (temporary). |
| Disagio |
The acquirer's commission deducted from the merchant's payout; common term in German-speaking markets. |
| Dispute |
The broader process of resolving a chargeback between issuer, acquirer, and merchant. |
| E-Commerce (ECOM) |
Online environment for card-not-present transactions. |
| EMV |
Chip-based card standard (Europay, Mastercard, Visa) enabling secure authentication at POS. |
| EP2 |
European POS protocol (originating in Switzerland) standardizing terminal-acquirer communication. |
| Fallback |
When a chip or contactless transaction fails and the terminal switches to magstripe or manual entry. |
| Fraud Filter / Risk Engine |
Automated system using rules or AI to detect and block fraudulent activity. |
| Gateway / Payment Service Provider (PSP) |
Technology that routes transactions between the merchant, acquirer, and card networks. |
| Hard Decline |
Permanent refusal from the issuer; retrying won't succeed. |
| IC++ (Interchange Plus Plus) |
Transparent pricing model showing each cost component: interchange + scheme + acquirer margin. |
| Interchange Fee |
Fee paid by the acquirer to the issuer per transaction; compensates for risk and handling. |
| Issuer / Issuing Bank |
The bank that issued the customer's card and authorizes or declines transactions. |
| ISO 8583 |
Legacy messaging standard defining the structure of card transaction data worldwide. |
| ISO 20022 |
Modern, XML-based financial messaging standard replacing ISO 8583 in many banking systems. |
| KYC (Know Your Customer) |
Regulatory process to verify identities and prevent money-laundering. |
| MCC (Merchant Category Code) |
Four-digit code classifying the merchant's business type; influences fees and risk. |
| Merchant Portal |
Web interface where merchants view, search, and manage their payments and payouts. |
| Network Tokenization |
Replacement of the actual card number with a network-issued token that updates automatically on reissue. |
| NFC (Near Field Communication) |
Short-range wireless technology enabling contactless payments. |
| PAN (Primary Account Number) |
The long card number printed or embossed on payment cards. |
| PCI DSS |
Security standard governing how card data must be stored, processed, and transmitted. |
| POS (Point of Sale) |
The place or device where a card-present payment occurs. |
| Protocol |
A defined technical language that systems use to communicate (e.g., ISO 8583, EP2). |
| PSD2 (Payment Services Directive 2) |
EU regulation mandating open banking, Strong Customer Authentication, and transparency. |
| Payout / Settlement |
Transfer of cleared funds from the acquirer to the merchant's bank account. |
| Reconciliation |
Process of matching expected transactions with actual payouts to ensure all funds are accounted for. |
| Refund |
Returning funds to a customer after a completed sale. |
| Reserve / Rolling Reserve |
Portion of funds temporarily held by the acquirer to cover future chargebacks or risk. |
| Risk Profile |
Assessment of a merchant's potential exposure to fraud, chargebacks, or insolvency. |
| Routing |
Decision logic determining which acquirer or network a transaction is sent through. |
| Scheme / Card Network |
Organizations like Visa, Mastercard, or Amex operating global card infrastructure. |
| SCA (Strong Customer Authentication) |
Two-factor authentication required under PSD2 for most electronic payments. |
| Soft Decline |
Temporary refusal that may succeed on retry (e.g., network timeout or authentication failure). |
| Sub-Merchant |
Individual merchant operating under a master merchant's PSP account (common in marketplaces). |
| T+1, T+2, T+3 |
Settlement timing shorthand: funds paid one, two, or three business days after transaction day. |
| Terminal ID (TID) |
Unique identifier for a POS terminal used in acquirer reporting. |
| Tokenization |
Process of replacing sensitive card data with a surrogate token for security. |
| Transaction Lifecycle |
The full journey of a payment — authorization → capture → clearing → settlement → payout. |
| Void |
Cancelling a transaction before it's captured, preventing settlement. |
