Payments Terms, Translated for Real Merchants.
The payments industry loves complicated language. This glossary breaks down the terms merchants actually need to understand — from chargebacks and interchange to reserves, fraud tools, card brand rules, gateways, underwriting, and high-risk processing.
Payment Processing Glossary & Merchant Guide
This payment processing glossary explains the terms merchants need to understand before choosing a processor, reviewing a merchant statement, fighting chargebacks, or applying for a high-risk merchant account.
Based in Las Vegas, Align Ecommerce helps merchants nationwide understand payment processing fees, fraud tools, card brand rules, underwriting requirements, and chargeback prevention strategies.
Payment Processing Fees & Pricing
Understand interchange, basis points, processor markup, daily discount, dual pricing, and effective rate.
Chargebacks & Disputes
Learn how chargebacks, TC40 reports, RDR, chargeback alerts, representment, and dispute ratios affect account stability.
Fraud Tools & Risk Controls
Review AVS, CVV, 3D Secure, velocity checks, fraud filters, and risk monitoring.
Gateway & Payment Infrastructure
Explore gateways, MIDs, authorization, settlement, hosted payment pages, tokens, and payment orchestration.
Quick Answers for Merchants
What is a chargeback? A chargeback is a forced reversal of a card transaction when a customer disputes a purchase through their bank.
What is TC40? TC40 is a Visa fraud report that can affect fraud monitoring even before a chargeback occurs.
What is RDR? Rapid Dispute Resolution helps resolve eligible disputes before they become formal chargebacks.
What is dual pricing? Dual pricing shows different prices based on payment method, typically cash versus card.
What is a payment gateway? A payment gateway securely transmits transaction data between your checkout, processor, card networks, and banks.
ACH
ACH is a bank-to-bank electronic payment method often used for direct debit, bill pay, payroll, and recurring payments.
Acquirer
The acquiring bank is the financial institution that sponsors a merchant account and accepts card transactions on behalf of the merchant.
Authorization
An authorization is the issuer’s approval that a card is valid and funds or credit are available for the transaction.
Authorization Rate
The percentage of attempted transactions that are approved by issuing banks.
AVS
Address Verification Service checks whether a customer’s billing address matches the address on file with the card issuer.
Basis Points
A pricing measurement used in payments. One basis point equals 0.01%. One hundred basis points equals 1%.
Batch
A group of transactions submitted together for settlement, usually at the end of the business day.
Billing Descriptor
The business name or text that appears on a customer’s card statement after a purchase.
Card Brands
Card brands are the networks that govern payment rules, including Visa, Mastercard, American Express, and Discover.
Card Brand Fees
Fees charged by card networks such as Visa, Mastercard, Discover, or American Express.
Card-Not-Present
A transaction where the cardholder and physical card are not present, such as ecommerce, phone orders, or subscription billing.
Card-Present
A transaction where the customer physically presents the card at a terminal, usually by chip, tap, or swipe.
Chargeback
A forced reversal of a card transaction when a customer disputes a purchase through their bank.
Chargeback Alerts
Early warning systems that notify merchants of disputes before they become formal chargebacks.
Chargeback Ratio
The percentage of transactions that turn into chargebacks during a given monitoring period.
CVV
The three- or four-digit security code printed on a payment card, used to help verify card possession.
Daily Discount
A pricing model where processing fees are deducted daily from each batch before funds are deposited.
Decline
A declined transaction occurs when the issuer rejects a payment attempt.
Dispute
A dispute happens when a cardholder questions or challenges a transaction with their issuing bank.
Dual Pricing
A pricing model where customers are offered different prices depending on payment method, typically cash vs card.
Ecommerce Payments
Payments accepted through an online store, checkout page, shopping cart, or hosted payment form.
Effective Rate
The total processing cost divided by total card sales, usually shown as a percentage.
Friendly Fraud
Friendly fraud occurs when a real customer disputes a legitimate purchase, either intentionally or by mistake.
Fraud Filter
A fraud filter is a rule or system that screens transactions for suspicious behavior before approval.
Future Delivery Risk
Future delivery risk exists when customers pay now for goods or services delivered later.
Payment Gateway
The technology that securely transmits transaction data between your website, processor, card networks, and banks.
Gateway Token
A gateway token is a secure reference to stored payment credentials that can be used for future transactions.
High-Risk Merchant
A business considered more exposed to chargebacks, fraud, regulatory scrutiny, future delivery, or reputational concerns.
Hosted Payment Page
A secure checkout page hosted by a gateway or processor to collect payment information.
Interchange
The base cost paid to the issuing bank when a customer uses a credit or debit card.
Interchange Plus
A pricing model where the merchant pays actual interchange plus a processor markup.
Issuing Bank
The bank that issued the customer’s credit or debit card.
Load Balancing
Load balancing routes payment volume across multiple merchant accounts or processors.
MCC Code
A Merchant Category Code identifies the type of business accepting payments.
Merchant Account
A merchant account allows a business to accept debit and credit card payments through an acquiring bank or processor.
MID
A Merchant Identification Number is the unique ID assigned to a business by its processor or acquiring bank.
Payment Facilitator
A payment facilitator allows businesses to accept payments under a shared processing model instead of a traditional merchant account.
Payment Orchestration
Payment orchestration manages routing, processors, gateways, fraud tools, and payment methods from one layer.
Payment Processor
A payment processor handles the movement of transaction data and funds between merchants, banks, and card networks.
PCI Compliance
PCI compliance refers to card data security standards that businesses must follow when handling payment information.
PCI SAQ
A Self-Assessment Questionnaire used by merchants to validate payment card data security practices.
Processor Markup
The additional fee charged by the processor above interchange and card brand costs.
Recurring Billing
Recurring billing automatically charges customers on a scheduled basis for subscriptions or memberships.
Refund
A refund is a merchant-initiated return of funds to the customer after a purchase.
Refund Ratio
The percentage of sales refunded during a given period.
Representment
The process of fighting a chargeback by submitting evidence that the original transaction was valid.
Reserve Cap
A reserve cap is the maximum amount a processor or bank may hold in reserve.
Retrieval Request
A request for transaction documentation before or during the dispute process.
RDR / TC15
Rapid Dispute Resolution allows merchants to automatically refund disputes before they become chargebacks. TC15 is Mastercard’s equivalent fraud reporting signal.
Risk Monitoring
Ongoing review of merchant activity, including chargebacks, fraud, refunds, volume spikes, and fulfillment issues.
Rolling Reserve
A percentage of sales temporarily held by the bank or processor to protect against future chargebacks, refunds, or losses.
Settlement
Settlement is the process of moving approved transaction funds from the card system to the merchant.
TC40
A TC40 is a fraud report issued by Visa when a transaction is confirmed as fraudulent, even if no chargeback has occurred.
3D Secure
An authentication layer that helps verify cardholder identity during checkout.
TMF / MATCH List
A database used by processors and banks to identify merchants previously terminated for serious processing issues.
Tokenization
Tokenization replaces sensitive card data with a secure token that can be used for future transactions.
Underwriting
Underwriting is the review process banks and processors use to evaluate a merchant before approving payment processing.
Velocity Checks
Velocity checks monitor repeated transaction attempts over a short period of time.
Visa VAMP
Visa’s Acquirer Monitoring Program tracks merchants and acquirers with elevated fraud or dispute activity.
Void
A void cancels a transaction before it settles.
Confused by your processing statement?
Align Ecommerce helps merchants understand the real cost, risk, and structure behind their payment processing.