Payments Glossary

Acquirer

The acquirer is the regulated bank behind your merchant account. Here is what it does, what risk it carries and why its rules bind you.

Billing descriptor

The billing descriptor is the line on your customer's card statement. Vague descriptors are one of the cheapest chargeback problems to fix.

Cross border acquiring

Cross border acquiring is processing through an acquirer outside your customer's market. When it works, what it costs and where the limits are.

E-money institution (EMI)

A licensed non-bank that issues electronic money and holds client funds. Knowing whether your provider is an EMI tells you who really controls your account.

High risk merchant account

What a high risk merchant account is, why acquirers classify businesses as high risk, and what it means for fees, reserves and monitoring.

Holdback

Holdback is the umbrella term for any merchant funds an acquirer withholds, from rolling reserves to fixed and capped reserves.

Interchange

Interchange is the fee that flows from your acquirer to the cardholder's bank on every card sale, and the base layer of your processing cost.

Merchant category code (MCC)

The four digit MCC your acquirer assigns decides your fees, your monitoring programs and your registration costs. Miscoding is not a shortcut.

Merchant of record

The merchant of record is the entity legally selling to the cardholder, carrying the liability, taxes and card network relationship.

MID

The MID is the merchant identification number behind your processing account. Why merchants have several and why load balancing has limits.

Payment facilitator (PayFac)

PayFacs like Stripe onboard you in minutes as a sub merchant. That speed is exactly why they can shut you down just as fast.

Payment service provider (PSP)

What a PSP is, how it differs from an acquirer, and why the difference decides who can actually fix your processing problem.

Payout

The transfer of settled funds from your provider to your bank account. Payout timing and holds are a cash flow lever, not an afterthought.

Rolling reserve

A rolling reserve holds back a slice of every settlement for months. What it is, why acquirers demand it and how merchants get it reduced.

Settlement

Settlement is when card sales actually become money in your account. Timing, delays and holds explained for high risk merchants.

BRAM

BRAM is Mastercard's program against illegal and brand damaging transactions. Adult and CBD merchants live under its content rules.

EFM

EFM is Mastercard's Excessive Fraud Merchant program, the fraud twin of ECP. What puts a merchant in it and what it costs.

Excessive chargeback program (ECP)

Mastercard's ECP puts merchants with high dispute ratios into remediation tiers with escalating fines. Here is how the tiers work.

MATCH list

The MATCH list is Mastercard's database of terminated merchants. What gets you listed, what it blocks and how removal actually works.

SMMP

SMMP is Mastercard's Scam Merchant Monitoring Program, live July 24, 2026: one combined threshold, a 72 hour investigation, immediate shutdown.

VAMP

VAMP is Visa's consolidated acquirer monitoring program covering fraud and disputes. Here is how it works and who feels it first.

Arbitration

Arbitration is the card network's final ruling on a dispute after representment fails. Slow, fee bearing and rarely worth it.

CE3.0 (Compelling Evidence 3.0)

The Visa 2023 evidence standard that fights friendly fraud by proving a prior undisputed history with the same cardholder.

Chargeback

A chargeback is a forced reversal of a card payment through the issuing bank. Here is how the process works and what it costs merchants.

Chargeback alerts

Chargeback alerts let merchants refund a dispute before it is filed, keeping it off the ratio. How Ethoca, Verifi and RDR work.

Chargeback ratio

The chargeback ratio is the number card networks judge you by. How Visa and Mastercard calculate it differently, and where the thresholds sit.

Chargeback reason codes

Every chargeback carries a reason code that decides what evidence can win. How Visa and Mastercard code disputes and why the code matters.

Ethoca (alerts)

The Mastercard pre dispute alert network. How Ethoca warns merchants of a dispute in time to refund and avoid the chargeback.

Friendly fraud

Friendly fraud is a cardholder disputing a charge they actually made. It is the dominant dispute type for subscriptions and digital goods.

Order Insight (Verifi CDRN)

How the Verifi tools Order Insight and CDRN deflect disputes and friendly fraud before they turn into chargebacks.

Pre-arbitration

The issuer's second challenge after you win a representment. Pre-arb is the last chance to settle a dispute before costly, binding arbitration.

RDR (Rapid Dispute Resolution)

The Visa automated rules engine that refunds eligible disputes instantly, before they become chargebacks or count against your ratio.

Representment

Representment is how a merchant fights a chargeback with evidence. When to fight, what evidence wins and why win rate is the wrong metric.

Retrieval request

A retrieval request asks the merchant for transaction details before a dispute is filed. Ignoring one is an avoidable way to lose.

3D Secure (3DS)

3D Secure authenticates the cardholder during checkout and shifts fraud liability to the issuer. When to use it and when it hurts.

Alternative payment method (APM)

APMs are every payment method outside the global card networks, from wallets to bank transfers to crypto. Why they matter for high risk.

Crypto on-ramp and off-ramp

The fiat-to-crypto and crypto-to-fiat conversion points where card rails meet crypto. They concentrate the chargeback and compliance risk acquirers fear.

Customer-initiated transaction (CIT)

A payment the cardholder actively triggers and is present for, where SCA applies. The first CIT sets the mandate that later merchant initiated charges use.

Local payment method (LPM)

LPMs are the payment methods a single market actually prefers, like iDEAL in the Netherlands. Skipping them caps your conversion abroad.

Merchant-initiated transaction (MIT)

A card payment the merchant triggers on a stored credential after setup. Why correctly flagged MITs skip SCA step up and keep recurring billing running.

Negative option billing

Negative option billing keeps charging until the customer cancels. Regulators and card networks are squeezing it from both sides.

Open banking

Open banking lets customers pay straight from their bank account through regulated APIs, with no card networks and no chargebacks.

SEPA Direct Debit

The euro area scheme that pulls recurring payments straight from a bank account. Its 8-week no-questions refund window behaves a lot like a chargeback.

Stablecoin settlement

Stablecoin settlement moves merchant funds in tokenized dollars instead of bank rails. Why high risk merchants are watching it.

Age verification

Age verification laws now decide whether adult merchants keep their payment accounts. What the laws require and how payments enforce them.

AML

Anti money laundering rules shape what acquirers may process and monitor. What AML means in practice for high risk merchants.

KYB

KYB is the business level counterpart of KYC: verifying the company, its owners and its licences before an acquirer will board it.

KYC

KYC is the identity verification acquirers must perform before boarding a merchant. Here is what they check and why it keeps expanding.

PCI DSS

PCI DSS is the card industry's security standard for handling card data. What compliance levels mean and what a breach actually costs.

PSD2

The EU directive behind SCA and open banking. Why 3DS is unavoidable in Europe and which exemptions protect your conversion rate.

PSD3

The proposed successor to PSD2. What the PSD3 and PSR package changes for SCA, fraud and open banking, and why it is not in force yet.

PSR (Payment Services Regulation)

The directly applicable EU regulation moving through Brussels alongside PSD3, the third leg of the PSD2 to PSD3 to PSR package.

RTA label (Restricted To Adults)

A free meta tag that flags a page as adult for parental filters. It is not age verification, but skipping it still costs you at underwriting.

Sanctions screening (OFAC)

Checking customers and payments against OFAC and other sanctions lists. A confirmed match blocks the payment, and acquirers require it before they process.

Strong Customer Authentication (SCA)

SCA is the European rule requiring two factor authentication on most electronic payments. What it covers and where the exemptions are.

TRA (Transaction Risk Analysis)

The SCA exemption under PSD2 and PSD3 that lets a PSP skip step up authentication on low value transactions when fraud rates stay low.

Transaction laundering

Transaction laundering is processing another business's sales through your merchant account. Networks treat it as fraud, and detection is good.

Authorization

The real time yes or no that starts every card payment, and why your authorization rate is the most honest health metric you have.

AVS and CVV checks

Address and security code checks return match flags, not decisions. How AVS and CVV results filter fraud and strengthen dispute evidence.

BIN

The first digits of a card number identify the issuer, card type and country. How BIN data drives routing, risk rules and cross border strategy.

Card scheme

Visa, Mastercard and their peers run the rails and write the rules: interchange, chargeback deadlines and the monitoring programs that discipline merchants.

Card testing

Fraudsters validate stolen cards on fast, frictionless checkouts. How to spot a card testing attack and what it costs when you miss one.

Continuity billing

Charging on a schedule until the customer cancels is the strongest model in payments and the fastest route into a monitoring program. The rules decide which.

Decline codes

05, 51, 54: what issuer decline codes mean, the difference between soft and hard declines, and why retry discipline now carries fines.

Dunning

Failed payments cancel more subscribers than dissatisfaction does. How decline aware retries and card updaters turn involuntary churn back into revenue.

Independent sales organization (ISO)

The reseller layer of acquiring: ISOs sell merchant accounts for banks they do not own. Why the layers matter and how ISOs differ from PayFacs.

Issuer

The bank behind the cardholder: the issuer approves or declines every authorization and files the chargebacks. Why issuer confidence quietly sets your approval rate.

Merchant underwriting

The review that decides whether you get a merchant account and on what terms. What underwriters check and the one sin they never forgive.

Payment gateway

The technology layer between your checkout and your acquirer. What a gateway actually does, and why it is not the same thing as a PSP.

Tokenization

Swapping card numbers for vault tokens shrinks PCI scope and lifts approval rates. Why network tokens matter and when vaults become lock in.

Velocity limits

Caps on attempts per card, IP or device are the cheapest defense against card testing. The craft is tuning them without declining real customers.