Payment glossary

This glossary provides key terms from the payments industry, simplifying the complexities of payment processes for you.

Chargeback Period

The time a shopper has to start a chargeback.

The designated timeframe during which a cardholder can raise a dispute against a transaction and initiate a chargeback.

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Chargeback Code

A code that tells why someone started a chargeback.

A designated code provided by card networks that categorizes and details the reason for a chargeback initiation.

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Chargeback Analyst

An expert who checks if a chargeback claim is right.

A specialist proficient in evaluating the legitimacy and reasons behind chargeback claims, often working on behalf of merchants or financial institutions.

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Card Network

Companies like Visa and Mastercard that help with card payments.

Organizations responsible for facilitating and overseeing card transactions between merchants, acquirers, and issuers.

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The person who owns and uses a credit or debit card.

The authorized individual to whom a payment card has been issued and who is responsible for its transactions.

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BIN (Bank Identification Number)

The first few numbers on a card that tell you the bank.

The initial series of numbers on a credit or debit card that identifies the issuing institution.

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Getting a green light from the bank for a purchase.

The process by which a transaction is approved by the card-issuing bank, ensuring sufficient funds or credit availability.

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Address Verification Service (AVS)

Matching your address with the card's address.

A security feature that verifies the address provided by the cardholder matches the issuer's records.

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Confirming and collecting a payment.

The process of finalizing a preauthorized transaction, ensuring funds are transferred from the cardholder's account.

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The step where payment details are checked and adjusted before the final payment.

The process of matching, verifying, and reconciling payment instructions between the parties involved before settlement.

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Reserve Account

A special account where banks keep some of a merchant's money for security reasons.

An account maintained by the acquiring bank to hold funds as security against potential future liabilities, chargebacks, or disputes.

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Merchant Category Code (MCC)

A code that tells what type of business a merchant does.

A four-digit code assigned to a business to classify its primary services or products. Examples include 5411 for 'Grocery Stores' or 5812 for 'Eating Places.'

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Magnetic Stripe

The black line on the back of your card.

A strip of magnetic material on payment cards containing essential transaction data.

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Card Not Present (CNP)

Transactions where the card isn't physically shown, like online shopping.

Transactions in which the payment card is not physically presented to the merchant.

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Chargeback Ratio

The percentage of sales that become chargebacks.

The proportion of transactions disputed by customers compared to the total transaction volume.

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The middleman that checks and processes online payments.

A technology solution that transmits payment data from the merchant to the payment processor.

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Interchange Fee

Fee that stores pay to banks for card transactions.

A fee paid between banks for the acceptance of card-based transactions, often borne by the merchant.

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Secure Electronic Transaction (SET)

A system making online card payments safe.

A standard protocol ensuring security and confidentiality of payment card transactions over the internet.

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Rolling Reserve

Money set aside for potential future issues.

A portion of the merchant's funds held by the acquiring bank as a protective measure against unforeseen liabilities, chargebacks, or other risks.

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Excessive Chargebacks

When a business gets too many chargebacks.

A situation where a merchant faces a disproportionately high number of chargebacks relative to their transaction volume.

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Counterfeit Fraud

When a fake card is used for a purchase.

Fraudulent activity resulting from the use of a fabricated or cloned payment card.

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Merchant Descriptor

How a business's name appears on your statement.

The name or description of a merchant that appears on the cardholder's statement to identify transactions.

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Digital Goods

Things like eBooks or online courses.

Intangible items that are sold and delivered electronically, such as music downloads, e-tickets, or virtual goods.

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High-Risk Merchant

A business type that banks think might get many chargebacks.

A merchant categorized as high-risk due to the nature of their industry or their higher likelihood of facing chargebacks.

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Zero Liability Policy

A promise you won't pay for unauthorized use.

A policy ensuring cardholders are not held responsible for unauthorized transactions on their cards.

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Transaction Lifecycle

The journey of a sale from start to finish.

The entire process a transaction undergoes from initiation to final settlement.

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Acquiring Bank

The bank helping businesses accept card payments.

The financial institution that establishes an account for merchants to process their card transactions.

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Issuing Bank

The bank giving out credit or debit cards.

The bank or financial institution that provides debit or credit cards to consumers and is responsible for their transactions.

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Representment Rights

A business's right to challenge a chargeback.

The rights granted to merchants allowing them to dispute and challenge chargebacks initiated by cardholders.

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3D Secure

An extra step to make online card payments safe.

An authentication step for online card transactions to enhance security, requiring the cardholder to enter a password or use biometrics.

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Friendly Fraud

When a shopper wrongly starts a chargeback.

A situation where a legitimate transaction is disputed by the cardholder, often due to forgetfulness or misunderstanding.

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Card Verification Value (CVV)

The 3 or 4 digits on your card's back for safety.

A security code found on payment cards, used to authenticate online and over-the-phone transactions.

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Void Transaction

Canceling a sale before it's finalized.

A transaction that has been nullified or canceled before it has been settled or completed.

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Turning sensitive info into a safe code.

A security measure where sensitive data, like card numbers, are replaced with a unique and random string of characters.

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Finalizing a transaction's money movement.

The process where the transfer of funds between the merchant and the issuing bank is completed post-transaction.

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Retrieval Request

When the bank asks for details about a sale.

A request made by an issuer to a merchant for documentation concerning a transaction, often preceding a chargeback.

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When a business fights a chargeback.

The process by which a merchant disputes a chargeback, presenting evidence to prove the transaction's validity.

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A hold on funds before the purchase is finalized.

The process where a certain amount of money is reserved on a cardholder's account before the final transaction occurs.

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Money the bank keeps for a bit, just in case.

A portion of the merchant's revenue retained by the acquirer as a security against potential future chargebacks or disputes.

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Reason Code

Why the chargeback was started.

A specific code provided by card networks detailing the primary reason for the initiation of a chargeback.

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Before the final step in a chargeback fight.

The phase in a chargeback dispute before it reaches the final arbitration stage, offering one last chance for resolution between the parties.

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Payment Processor

A helper for businesses to accept card payments.

A company that handles the transaction process for merchants, facilitating the transfer of funds between buyers and sellers.

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Merchant Account

An account businesses use to get card payments.

A specialized bank account enabling businesses to accept and process credit and debit card payments.

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Merchant ID (MID)

A business's unique code for card payments.

A unique code assigned to a merchant by their payment processor or acquiring bank for identification purposes.

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The bank that gave you your credit or debit card.

The financial institution that issues payment cards and is responsible for reimbursing the merchant's bank during transactions.

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Fraud Screening

Checking transactions for suspicious activity.

A systematic procedure that evaluates transactions to detect potential unauthorized or fraudulent activity.

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Decline Code

A code saying why a card wasn't accepted.

A specific code provided by payment gateways or banks, indicating the reason a transaction was not approved.

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EMV (Europay Mastercard Visa)

A chip in your card for extra safety.

Global standard for card payments, using chip-based technology to authenticate and secure transactions.

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Compelling Evidence

Proof the business shows to fight a chargeback.

Documentary evidence provided by the merchant to dispute and contest a chargeback claim.

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Dispute Resolution

Sorting out issues between a shopper and business.

The process by which conflicts arising from transactions, especially chargebacks, are settled between cardholders and merchants.

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Credit Memo

A note showing you've been refunded or credited.

A document issued by the merchant indicating that a refund or credit was provided to the cardholder's account.

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Confirmation Number

A unique code for a specific purchase.

A unique identifier assigned to a particular transaction, often used to track or verify its authenticity.

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