Acquirer
A bank or financial institution that provides credit/debit card processing services directly to merchants. Acquirers offer in-house processing platforms (front-end and/or back-end), support technologies, back-office services, and manage merchant onboarding and settlement.
Acquiring Processor
A company that performs the technical functions of credit card processing on behalf of an acquirer or independent sales organization (ISO). This includes authorization, billing, reporting, and settlement of transactions.
Address Verification Service (AVS)
A fraud-prevention tool that verifies the billing address provided by the customer with the address on file at the card-issuing bank. AVS helps detect suspicious activity but does not guarantee a transaction's validity or approval.
Adjustment
A correction (either debit or credit) made to a merchant’s or cardholder’s account to resolve a transaction error, such as a duplicate charge or incorrect amount.
Amount
The total monetary value submitted for authorization during a transaction. Also referred to as the payment amount or authorization amount.
Assessments
Quarterly fees paid by acquirers to card networks (like Visa and Mastercard) to support network operations, marketing, and compliance efforts.
Authorization
The process of validating that a cardholder has sufficient available funds or credit to complete a transaction. If approved, an authorization code is returned to the merchant.
Authorization Code
A unique identifier assigned to a successfully authorized transaction by the card processor. It verifies that the funds were approved for the transaction.
Authorized / Pending Capture
Transactions that have received authorization but have not yet been captured (settled). They remain in a pending state until the merchant submits them for capture and settlement.
Basis Points (bps)
A unit of measure used to describe interest rates or interchange fees. One basis point equals 0.01%. For example, 100 basis points = 1%.
Batch Processing
Grouping multiple card transactions together and submitting them collectively for settlement. This method is used to process transactions efficiently and reduce costs.
BIN (Bank Identification Number)
The first six digits of a credit or debit card number. It identifies the issuing bank or financial institution and is also known as the Issuer Identification Number (IIN).
Capture
The step in which an authorized card transaction is finalized and submitted for settlement. A transaction must be captured before a merchant receives payment and the cardholder is charged.
Captured / Pending Settlement
These transactions have been captured (finalized) and are awaiting submission to the card network for settlement, typically processed according to the merchant’s daily cut-off time.
Card Networks
Organizations like Visa, Mastercard, American Express, and Discover that facilitate electronic payments between merchants, acquirers, and issuers.
Cardholder
The individual or entity to whom a credit or debit card is issued. The cardholder is responsible for the use and repayment of charges on the card.
Card-not-Present (CNP) Transaction
A transaction where the physical card is not presented at the time of purchase (e.g., online or phone orders). These transactions typically involve higher fraud risk and processing fees.
Chargeback (Dispute)
A process initiated when a cardholder or issuer disputes a transaction. If successful, the sale amount and a chargeback fee are deducted from the merchant’s account. Common reasons include fraud, product issues, or duplicate charges.
Chargeback Period
The time window—ranging from 45 to 180 days depending on the transaction type—during which an issuer can initiate a chargeback.
Chargeback Reason Code
A numerical identifier that explains the specific reason for a chargeback. Visa and Mastercard each maintain their own set of codes.
Chargeback Reference Number
A unique 10-digit identifier for each chargeback, used for tracking and documentation purposes.
Chip Cards (EMV Cards)
Cards embedded with a microchip that offers stronger encryption and security for in-person transactions. EMV stands for Europay, Mastercard, and Visa—the founding members of the chip card standard.
Compliance (Visa/Mastercard)
A formal process for resolving disputes between network members (e.g., acquirer vs. issuer) when chargeback rules do not apply. The burden of proof lies with the party filing the claim.
Credit Card Number
The full or partial card number used in a transaction. For refunds, the merchant may provide only the first four and last four digits, depending on the processor's requirements.
CVV2 / CVC2
Card Verification Value (Visa) and Card Verification Code (Mastercard). These are three-digit security codes printed on the back of the card, used to validate the card's authenticity during card-not-present transactions.
CVV2 Status
Indicates whether the entered CVV2/CVC2 code matches what’s on file with the issuer. Processors return both a status code and description for merchant reference.
Data Security Standard (DSS)
Part of the Payment Card Industry Data Security Standard (PCI DSS). It defines best practices for protecting cardholder data wherever it's stored, processed, or transmitted.
Discount Rate
The percentage fee charged to merchants for processing credit card transactions. This covers costs such as authorization, settlement, and funding.
Dispute Resolution
The structured process of handling a chargeback or transaction dispute, typically involving evidence submission and network-mediated arbitration.
Downgrade
Occurs when a card transaction fails to meet optimal interchange criteria (e.g., missing AVS data), resulting in higher interchange fees for the merchant.
EMV (Europay-Mastercard-Visa)
The global standard for chip card technology, offering enhanced security during face-to-face transactions. EMV cards are harder to clone than traditional magnetic stripe cards.
Gateway (Payment Gateway)
A service that securely transmits transaction data from the point-of-sale or online checkout to the payment processor. It acts as a bridge between the merchant and the acquiring processor.
Interchange Network
The system operated by card brands (e.g., Visa, Mastercard) that enables communication and data exchange between issuers and acquirers to facilitate card payments.
Interchange Fees
Fees collected by the card-issuing bank from the acquiring bank to cover costs associated with transaction processing, fraud prevention, and risk management. Rates vary by card type, merchant category, and transaction specifics.
Issuer
A financial institution or other entity that provides payment cards and credit lines to consumers or businesses. Issuers are responsible for approving transactions and managing the cardholder relationship.
MCC (Merchant Category Code)
A four-digit code assigned to merchants by card networks based on the type of products or services they offer. It impacts interchange rates and reporting.
Payment Gateway
(See Gateway) A service that authorizes and transmits online or terminal-based credit card payments to a processor for approval and settlement.
PCI DSS (Payment Card Industry Data Security Standards)
A set of security standards developed by major card brands to protect cardholder data and reduce payment fraud across the industry.
Point-of-Sale (POS)
The location or system where a cardholder completes a transaction with a merchant—typically a physical register, mobile device, or online checkout portal.