An authentication layer that asks the cardholder to verify identity with their bank during checkout, shifting liability for certain fraud away from the merchant. It can reduce fraud and chargebacks when applied where it makes sense.

Electronic bank-to-bank transfers processed through the Automated Clearing House network. ACH and eChecks offer a lower-cost alternative to cards for recurring or high-ticket payments, with different timing and risk characteristics.

The bank that holds a merchant account and enables the business to accept card payments, ultimately depositing settled funds. The acquirer carries the risk if a merchant cannot cover its chargebacks, which is why underwriting exists.

A check that compares the billing address entered at checkout with the one on file at the cardholder's bank. AVS is a simple, widely used fraud signal for card-not-present transactions, often combined with other checks.

The laws, checks, and monitoring designed to stop illicit funds from moving through the payment system. Merchants encounter AML through onboarding checks and ongoing transaction monitoring, especially in higher-risk categories.

The step where a customer's bank confirms a card is valid and has funds available, placing a hold on the amount. Authorization approves the sale but does not yet move money — that happens at capture and settlement.

The temporary reduction in a cardholder's available balance created by an authorization, before the charge is captured. Holds expire if not captured, which is why the timing between authorization and fulfillment matters.

The typical dollar amount of a single transaction, calculated as total volume divided by transaction count. Underwriters use it to set expectations — a sudden jump above your stated average ticket can trigger a review or hold.

A group of captured transactions submitted together for settlement, typically once per day. Closing batches consistently ensures sales fund on schedule and keeps your records aligned with your deposits.

An individual who ultimately owns or controls a meaningful share of a business, whom providers must identify during onboarding. Disclosing beneficial owners accurately is a standard KYC step that prevents delays and later account issues.

The text that appears on a customer's card statement for a purchase. A clear, recognizable descriptor — with a name customers associate with your brand and a support contact — is one of the cheapest ways to prevent disputes.

A checkout option that splits a purchase into installments, with the provider paying the merchant up front and collecting from the customer over time. BNPL can raise conversion and average order value when it fits your audience.

The step that converts an approved authorization into an actual charge, flagging the transaction to be settled and funded. Capturing only when you can fulfill the order helps avoid disputes over charges that ship late or not at all.

The short security code printed on a card that proves the buyer physically has it during a card-not-present sale. Requiring CVV is a basic, effective fraud check, and the code must never be stored after authorization.

A transaction where the card is not physically presented — online, over the phone, or in-app. CNP sales carry higher fraud and chargeback risk than in-person sales, which is why they rely on fraud tools like CVV, AVS, and 3-D Secure.

Securely storing a customer's tokenized payment credentials for future purchases, subscriptions, or one-click checkout. Done compliantly, card-on-file boosts conversion and retention while keeping raw card data out of your hands.

A transaction where the card is physically read at a terminal by chip, tap, or swipe. Card-present sales generally carry lower fraud risk and interchange than online sales because the card and cardholder are verified in person.

A forced reversal of a card payment initiated by the cardholder's bank, usually after a dispute over fraud, a product issue, or a billing complaint. Chargebacks return funds to the customer and often add a fee for the merchant.

A near-real-time notification that a cardholder has disputed or is about to dispute a transaction, giving the merchant a chance to refund before it becomes a formal chargeback. Alerts help keep the chargeback ratio under network thresholds.

A card-network program that places merchants exceeding chargeback thresholds under heightened scrutiny, with fees and remediation requirements. Staying out of these programs — or exiting quickly — is essential to keeping an account healthy.

The percentage of a merchant's transactions that become chargebacks, typically measured monthly. Card networks set thresholds — commonly around 1% — above which a merchant faces monitoring programs, higher costs, or termination.

A transaction the customer's bank refuses to authorize. Declines can be soft (temporary, worth retrying) or hard (permanent, do not retry). Managing them well recovers revenue that would otherwise be lost at checkout.

A mobile or online service that stores tokenized payment credentials for fast, secure checkout. Offering wallets can lift conversion — especially on mobile — because they reduce typing and add device-level authentication.

The percentage a merchant pays on each transaction under a bundled pricing model. It packages interchange and markup into one rate, which is simple to read but can obscure how much margin the provider is actually taking.

Total processing fees divided by total sales volume for a period, expressed as a percentage. It is the single most useful number for comparing providers because it captures every fee, not just the advertised rate.

Encoding payment data so it is unreadable to anyone without the key, protecting it in transit and at rest. Strong encryption is a core PCI requirement and the foundation of trustworthy checkout.

The percentage of transactions flagged as fraudulent, tracked separately from the chargeback ratio. High fraud ratios trigger their own network programs, so fraud tools that block bad transactions protect both metrics at once.

A chargeback filed by a legitimate customer who actually received the product or service — sometimes from confusion over a billing descriptor, sometimes deliberately. It is one of the most common and preventable chargeback types.

A merchant account for businesses that banks consider more likely to generate chargebacks, refunds, or regulatory scrutiny. It comes with stricter underwriting and often reserves, but it lets otherwise-hard-to-bank industries accept cards reliably.

The fee set by the card networks and paid to the customer's issuing bank on every transaction. Interchange is the largest, non-negotiable component of processing cost — everything a provider charges sits on top of it.

The verification of a business and its owners' identities during onboarding, required to prevent fraud and money laundering. Complete, accurate KYC documentation is one of the fastest ways to move an application through underwriting.

Payment flows for platforms that connect many buyers and sellers, including split payouts to third parties. Marketplaces face added complexity around onboarding sellers, distributing funds, and managing risk across many sub-accounts.

A card-network database of merchants terminated for cause, historically called the Terminated Merchant File. A MATCH listing makes new approvals difficult, but merchants can often address the underlying reason and pursue removal or a specialist review.

A four-digit code that classifies a business by the products or services it sells. Card networks and banks use the MCC to set risk expectations, interchange, and monitoring — which is why certain codes are treated as high-risk.

Accepting payments in more than one currency, letting customers pay in their local currency while you settle in yours. It improves international conversion but adds considerations around pricing, settlement, and cross-border compliance.

A provider that places many merchants under one shared master account for instant onboarding. Aggregators are convenient for low-risk businesses but freeze or drop high-risk merchants quickly, because one account's risk is pooled with everyone else's.

A company that onboards sub-merchants under its own master merchant account and takes on the associated risk and compliance. PayFacs speed up onboarding but apply their own risk appetite, which frequently excludes high-risk categories.

The technology that securely captures payment details at checkout and passes them to the processor for authorization. The gateway is what your customer interacts with online — it encrypts card data and returns an approved or declined response.

The company that moves a transaction between the customer's bank, the card networks, and the merchant's acquirer — handling authorization, clearing, and settlement. The processor is the engine that turns a card swipe or checkout into deposited funds.

Running more than one processing path so checkout keeps working if any single one goes down. For high-risk merchants — where a sudden account issue can halt sales — redundancy is the difference between a hiccup and going dark.

The deposit of settled funds into a merchant's bank account after fees and reserves are applied. Payout speed and schedule vary by provider and risk profile and directly shape a business's working capital.

The Payment Card Industry Data Security Standard — a set of security requirements every business handling card data must meet. Compliance protects customers and merchants and is a baseline expectation of any legitimate processing relationship.

The total charge a merchant pays to accept a card payment, combining interchange, network assessments, and the provider's markup. Comparing the all-in effective rate — total fees divided by total volume — is the clearest way to judge cost.

The total dollar amount a merchant processes over a period, usually monthly. Volume drives approval limits, pricing tiers, and reserve sizing. Claiming volume your bank statements cannot support is a common reason applications stall.

The card-network code that states why a chargeback was filed — such as fraud, product not received, or duplicate billing. The reason code determines what evidence a merchant must supply to dispute it successfully.

Automatically charging a customer's stored payment method on a schedule for subscriptions or installments. Getting recurring billing right — consent, dunning, clear descriptors — protects revenue and keeps subscription disputes low.

Returning funds to a customer for a settled transaction. Prompt, well-documented refunds prevent many disputes, but excessive refund rates can themselves draw underwriting attention, so a clear policy matters.

The process of disputing a chargeback by re-presenting the transaction with evidence that the charge was valid. A well-built representment package — proof of delivery, authorization, and policy acceptance — can recover the funds and the sale.

A portion of a merchant's funds a provider holds to cover potential future chargebacks or refunds. Reserves are common in high-risk processing and are released over time as the account proves stable.

The rules that govern when and how a failed payment is retried, especially for subscriptions. Thoughtful retry timing recovers genuinely recoverable declines without hammering the networks, which protects revenue and account standing.

A reserve where a set percentage of each period's sales is held for a fixed window — for example 10% held for 180 days — then released on a rolling basis. It steadily builds a buffer without taking a large lump sum up front.

The process of moving funds from captured transactions through the networks to the merchant's account, usually in daily batches. Settlement is when a sale actually becomes money you can spend, minus fees and any reserve.

A recurring-billing model that charges customers on a repeating cycle for ongoing access to a product or service. Subscriptions are attractive to underwriters and customers alike when renewals, cancellations, and refunds are handled transparently.

Replacing sensitive card data with a non-sensitive token that can be stored and reused safely. Tokenization lets merchants support recurring billing and one-click checkout without holding raw card numbers, reducing both risk and compliance scope.

The review process a provider uses to decide whether to approve a merchant and on what terms. Underwriters assess the business model, documentation, processing history, and risk exposure to set approval, pricing, limits, and any reserve requirements.

Canceling a transaction before it settles, releasing the authorization hold without a formal refund. Voiding a same-day error is cleaner than refunding after settlement, because no funds have moved yet.