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Term Definition
ABA Transit Routing Number, also Route Transit Number (RTN)

An ABA transit number (also known as a route transit number, RTN, or simply a routing number) is a nine-digit bank code identifying a particular financial institution. These numbers appear on most checks and are also used in automated clearinghouse (ACH) transactions. The combination of the ABA transit number and the account number allows a specific account to be quickly identified.

Acquiring Banks

An acquiring bank is a financial institution that receives credit and debit card payments for merchants, depositing them into merchant accounts. An acquiring bank may also be referred to simply as an acquirer. Acquiring banks are usually contrasted with issuing banks, which are the institutions that issue credit and debit cards to their customers. Read more >>>

Payment Processor

Payment Processors process credit and debit card payments for merchants. While processing services are often provided by acquiring banks, they are also offered by third-party merchant services companies and independent sales organizations (ISOs) who handle the processing of payments before sending the funds to a separate merchant account. Read more >>>

Address Verification System (AVS)

The Address Verification System (AVS) is a fraud prevention tool used to help prevent credit card fraud. AVS matches the numeric elements in the billing address the customer provided with those in the address on file at the bank for that card. Although cardholders sometimes forget to update their bank about a change of address, AVS is overall a simple and effective way to screen out a significant percentage of credit card fraud. Read more >>>

Alternative payment methods

An alternative payment method is a method of paying for a purchase that serves as an alternative to a credit or debit card. The term is typically used to refer to recently-developed methods of payment that not all merchants accept. Examples of alternative payment methods include PayPal, cryptocurrency, Apple Pay, and Klarna. Read more >>>

Application Program Interface (API)

An application programming interface (API) is a software interface that allows an external computer or program to connect without exposing the underlying software. APIs are frequently used to allow third-party companies to access internal data without accessing internal systems, such as a hotel allowing travel websites to access information about current vacancies.

Authentication

Authentication is the process of determining that someone is who they say they are. In the context of payments, merchants and processors use various authentication methods to verify that the customer making the payment is an authorized user and not someone attempting to commit fraud. The customer may be asked to present additional information such as a password, billing address, or PIN. Read more >>>

Payment Authorization

Payment authorization is the process through which merchants request approval for a credit or debit card transaction from the customer's bank. The bank verifies that the account is active and has enough credit or funds to make the transaction. Then the bank sends a response code to the merchant, which indicates whether the transaction has been approved or declined. Read more >>>

Authorization Amount

The authorization amount is the transaction amount a merchant submitted to the customer’s issuing bank for approval. The issuing bank verifies that the cardholder has an available balance for the purchase and grants a reserve equal to the amount of the transaction. The reserve is in place until the transaction is captured, a void transaction is submitted, or the 30-day authorization period has expired. Read more >>>

Payment Capture

Payment capture is the process to complete a credit or debit card purchase by capturing or settling the funds for the transaction. After the payment has been authorized, the capture request can be submitted by the payment gateway to the issuing bank either immediately or at a time of the merchant's choosing. Read more >>>

Credit Card Authorization Code

A credit card authorization code is an alphanumeric code sent by the issuer in response to an authorization request from a merchant. The authorization code tells the merchant whether the transaction has been approved or declined. If the transaction was declined, the code will also indicate the reason for the decline. Authorization codes may also be referred to as response codes. Read more >>>

Authorization Only

Authorization only transactions occur when a merchant instructs their payment gateway to authorize a transaction without also capturing the funds. This results in a pending charge on the customer's account that reserves those funds for the merchant. Depending on the merchant category code (MCC), card network, and issuing bank, these holds may expire after anywhere from 5 to 30 days.

Authorization Request

An authorization request is a message sent by a payment gateway to the issuer after a credit or debit card has been read. The issuer's system checks that the card is valid, the account has the funds or credit needed to make the purchase, and the transaction doesn't violate any account restrictions. The issuer then sends a response indicate whether the transaction has been approved or declined. Read more >>>

Automated Teller Machine (ATM)

An automated teller machine or ATM is a standalone terminal that dispenses cash, accepts deposits, and allows customers to view the status of their accounts. ATMs are often available 24/7 and are frequently located in shopping areas, gas stations, hospitals, and in many businesses. Many ATMs are provided by banks for their customers to use freely, but charge customers of other banks a fee for withdrawal. Read more >>>

Automated Clearing House (ACH)

The Automated Clearing House or ACH is a network that handles the electronic transfer of funds between bank accounts in the united States. ACH transfers are commonly used for taxes and payroll, but may also be used to make certain payments, especially utilities. ACH payments are made using a routing number and an account number. Read more >>>

Bank Identification Number

A Bank Identification Number or BIN is the first four to six digits of a debit or credit card number. These digits identify the bank and card network responsible for issuing the card. They may also be referred to as the Issuer Identification Number or IIN, since institutions other than banks may issue credit cards. Read more >>>

Bank Rate

bank rate is the interest rate a country's central bank charges when loaning money to private banks in the country. The bank rate can be lowered to encourage borrowing and increase economic activity or raised to combat inflation. In the United States, the bank rate is set by the Federal Reserve, and may also be referred to as the discount rate.

Bank Card

A bank card is a payment card issued by a bank to its customers. The term bank card often refers to either an ATM card, used solely for making transactions at the bank's ATMs, or a debit card that can be used to make purchases anywhere. However, it may also be used to refer to payment cards in general.

Basis Points (BPS)

Basis points (BPS) are a unit for measuring and describing interest rates. On basis point is .01%. Basis points are usually used to describe changes in interest rates. This removes the potential for ambiguity that can arise when discussing a change in a percentage and makes it easier to grasp changes that often occur in small fractions of a percent.

Batch Processing

Batch processing is a method for processing a large group of transactions at the same time, often after the close of business each day. Transactions can also be processed individually immediately after authorization, but batch processing often reduces the total processing fees a merchant will be charged by their processor.

Brick and Mortar

A brick-and-mortar business is one that operates one or more retail shops to serve local customers. The opposite of a brick-and-mortar business is an e-commerce business, which accepts purchases online rather than in person. In the payments industry, a similar distinction may be made using the terms "card present" and "card not present." Many businesses have both e-commerce and brick-and-mortar storefronts.

Cancellation Code

A cancellation code is a code issued by a merchant to confirm a cardholder’s cancellation of a hotel or car rental reservation. Cancellation codes provide a unique reference to that cancellation request that can be referred to later in case the cardholder is charged in error for the canceled reservation.

Capture Only

A capture only transaction is a request to capture funds for a credit card transaction that was authorized outside of the payment gateway. Merchants typically use a telephone authorization to submit a previously assigned authorization code from an issuing bank. Note that this differs from a prior authorization capture, which is used following an authorization only transaction.

Card Association

A card association is a group of banks or other financial institutions that licenses credit cards and processes their transactions. Card associations are more commonly referred to as card networks. The two largest of these are Visa and Mastercard. These networks facilitate all transactions conducted with their cards.

Card Verification Value (CVV2)

A card verification value or CVV2 is a three or four-digit security code found on credit cards that is separate from the card number itself. It may also be referred to as a card security code or CSC. This number can be used in online payments to verify that the card number wasn't obtained from a compromised database of customer information, since merchants are prohibited from storing CVV2 numbers. Read more >>>

Card Not Present (CNP)

A card-not-present (CNP) transaction is one in which credit or debit card information is being used to make a purchase without the presence of the physical card. Online purchases are the most common form of CNP transaction, but the term also covers phone and mail orders. The opposite of a CNP transaction is a card-present (CP) transaction. Read more >>>

Card Present (CP)

A card-present (CP) transaction is one that's made with a physical credit or debit card rather than by conveying the card information. Card-present transactions include those made by inserting the card into a payment terminal to scan the EMV chip as well as those made using contactless cards. Due to the added security of these payment methods, card-present transactions don't expose merchants to liability for fraud as much as card-not-present (CNP) transactions do.

Card Reader

A card reader is a terminal that permits the payment information stored on a card’s magnetic stripe or EMV chip to be read and used to process a payment. Card readers may be built into point-0f-sale terminals or may be standalone devices. The card reader typically sends the card information to the merchant's payment gateway, which then transmits that information to a payment processor.

Cardholder

The cardholder is the person to whom a bank issued a particular credit or debit card. For most purchases, the cardholder and the customer will be one and the same. When fraud occurs, however, the customer is the perpetrator of the fraud while the cardholder is the victim. In these cases, the cardholder will file a chargeback to recover the stolen funds. Read more >>>

Cardholder Authentication Programs

Cardholder authentication programs are security processes that protect merchants by verifying a customer’s identity. The two largest cardholder authentication programs are Visa Secure and Mastercard Identity Check, which are both implementations of 3-D Secure 2.0. These programs ask the issuing bank to verify the legitimacy of a transaction or, if unable to do so, confirm the customer's identity through a one-time-password. Read more >>>

Cardholder Dispute

A cardholder dispute is the process by which a cardholder claims a charge on their account is illegitimate and requests a chargeback, which may be granted by their issuing bank. Cardholder disputes should only be filed in cases of true fraud or when a merchant has failed to uphold their end of the sales agreement and refuses to provide a refund. Unfortunately, many cardholder disputes are filed based on false claims. Read more >>>

Cash Disbursement

A cash disbursement is a payout of funds in cash. In the payments industry, the term typically refers to a withdrawal made from an ATM or a cash back transaction. These transactions can typically only be made with debit cards, not credit, and are often subject to different rules than ordinary purchases. Read more >>>

Chargeback

A chargeback is a process through which an issuing bank debits funds from a merchant's account in order to return them to the cardholder. Chargebacks typically occur when the cardholder has claimed that the charge was unauthorized or that the merchant failed to deliver the product or service that was purchased. Merchants can fight chargebacks using evidence that the reason for the dispute is false or invalid. Read more >>>

Representment

Representment is the process by which merchants contest a chargeback, submitting evidence that proves the dispute has no legitimate basis. The issuing bank will review this evidence and make a decision to either reverse or uphold the chargeback. If the chargeback is reversed, the funds will be returned to the merchant, but the merchant will still be responsible for paying a chargeback fee. Read more >>>

Chargeback Reason Code

Chargeback reason codes are alphanumeric codes established by the major card networks that indicate the reason a chargeback was filed. When filing a chargeback, the issuing bank chooses a reason code from the list for the applicable card network. Reason codes give merchants information about the cause of a chargeback and what evidence would be needed to reverse it. Read more >>>

Check 21

Check 21 is a shortened term for the Check Clearing for the 21st Century Act, which allows banks to create images of customer checks that can be submitted electronically. These images are known as substitute checks. This eliminates the need to physically transport paper checks between banks.

Check Verification

Check verification is a process that compares an electronic check against a high-risk or bad check database. This is usually done through a third-party check verification service. A more specific form of check verification can be done manually by calling the bank and giving them the routing number account number, and amount on the check to confirm that the funds are available.

 

Clearing

Clearing is the process that acquirers and issuers use to settle a transaction. Often taking place long after a transaction has been authorized and submitted, clearing is the part of the process where the funds are actually transferred from one account to another. For most ordinary purchases, the funds are transferred through either an automated clearing house (ACH) or a credit card network.

Co-Branded Card

A co-branded card is a credit card that's jointly issued by a merchant and a credit card network. These cards often allow cardholders to make purchases anywhere cards from that network are accepted, but offer special rewards and incentives for making purchases from the applicable merchant. Co-branded cards were originally developed by airlines to reward frequent flyers for brand loyalty.

Code 10 Authorization

A code 10 authorization is a phone call merchants can make to an issuing bank to alert them of suspected fraud without tipping off the customer. When a merchant makes a code 10 call, the bank representative will ask a number of yes or no questions in order to gain an understanding of the situation. They will then instruct the merchant on how to proceed. Read more >>>

Commerce Server

A commerce server is a server with software designed to operate an e-commerce store. The services it provides may include credit card processing, inventory management, a shopping cart system for customers, and a checkout page, among others. A number of technology companies provide commerce servers, with the most well-known provider being Microsoft.

Corporate Card

A corporate card is a credit card issued to an employee of a company to allow them to pay for certain work-related expenses without needing to file for reimbursement. Employees who travel frequently are often issued these cards to pay for meals, transportation, and other expenses. Corporate cards may also be referred to as commercial cards.

Credit Card

A credit card is a payment card used to make purchases on credit, repaying them at later date or spreading out the repayment over time, with interest. Some credit cards must be paid in full each month. Other credit cards require installment payments or minimum monthly payments. Issuing banks charge monthly interest on unpaid credit card balances and may also charge annual fees.

Credit Card Number

A credit card number is an account number that's assigned to a particular credit card upon issuing it. Credit card numbers, often along with other information to prevent fraud, are used to make online purchases. These numbers are also encoded in the magnetic stripe on the card for in-person purchases, although most transactions now use the more secure EMV chip.

Currency Conversion

Currency conversion is the process that facilitates transactions where the issuer and acquirer use different currencies by exchanging one type of currency for another. Currency conversion typically results in some added costs for the customer. Dynamic currency conversion allows the customer to see the transaction amount in their own currency, with additional costs included, but also results in a higher total cost than traditional currency conversion.

Customer IP Address

A customer IP address is a numerical identifier assigned to a device connected to the internet. Each device has its own IP address, and these addresses may be permanent or may change periodically. A customer's IP address can be used to identify the approximate location of that customer, typically giving the nearest city. Read more >>>

Debit Network

A debit network is an electronic network that permits several types of financial transactions, including ATM cash withdrawals, debit card transactions, and online bill pay. Merchants can choose which debit network to route their transactions through, and are required to be offered at least two unaffiliated networks to choose from. Major debit networks include Visa, Mastercard, and Star.

Decline Code

A decline code is a two-digit code that gives merchants more information about why a particular transaction was declined. This can tell merchants whether or not a transaction should be reattempted as well as provide additional instructions for certain situations, such as telling the merchant to retain possession of the card if possible. Read more >>>

Digital Certificate

A digital certificate is an electronic file that can be used to prove the legitimacy of a public key. Also called public key certificates, they contain information about the creator of the key and proof of verification by a trusted third party. The EMV chips in modern debit and credit cards contain digital certificates used to verify the card's authenticity.

Device Fingerprint

A device fingerprint or browser fingerprint is a collection of data that can be used to identify a particular device through a combination of several pieces of public information about it, including operating system version, browser version, and screen resolution. With enough information, device fingerprinting can correctly identify a device 99% of the time. The method is often used by businesses to obtain data about customer habits. Read more >>>

Digital Wallet

digital wallet is a service that allows users to store payment information from cards or bank accounts and make purchases with added security and convenience. Digital wallets are frequently accessed through mobile apps, and therefore may also be referred to as mobile wallets. A digital wallet app on a smartphone can be used to make contactless purchases using NFC technology at compatible payment terminals. Read more >>>

Merchant Discount Rate

A merchant discount rate is a fee charged to a merchant for each debit and credit transaction processed. This fee is charged by the merchant's payment processor, and includes separate fees charged by the issuer, the card network, and the processor itself. The amount a merchant is charged will vary depending on the processor and the merchant's industry.

Electronic Commerce Indicator (ECI)

An Electronic Commerce Indicator (ECI) is a number that indicates the level of security that was used when obtaining the customer's payment credentials. An ECI is included as part of the authorization request for each transaction. The ECI number used for a particular method of payment may vary depending on the card network.

Electronic Draft Capture (EDC)

Electronic draft capture (EDC) is a system that captures transaction data for processing and storage at the merchant location. It may also be referred to as remote deposit capture. A point of sale system uses EDC to settle transactions, using the information in the provided payment credentials to initiate the transfer of funds from the issuing bank to the acquirer.

Electronic Funds Transfer (EFT)

An Electronic funds transfer (EFT) is a transfer of money from one account to another via computer. Direct deposit payments, ATM withdrawals, and debit or credit card transactions are all types of EFTs. In the United States, basic protections for people using EFTs were established by the Electronic Funds Transfer Act of 1978.

EMV

EMV is a method of payment that uses a chip embedded into a credit or debit card rather than the traditional magnetic stripe. The standards for this technology are created and maintained by EMVC0, an organization established through a partnership of major credit card networks. EMVCo also sets standards for contactless, mobile, and QR code payments to ensure security and compatibility. Read more >>>

Floor Limit

A floor limit is the maximum transaction value for a debit or credit card purchase that doesn't require prior authorization. Transactions for an amount greater than the floor limit can't be processed without authorization, but modern payments technology automatically conducts authorization for every transaction, making floor limits largely irrelevant except in cases of a network problem.

Fraud

Fraud is a crime committed by using intentional dishonesty to take something from a victim. Examples of fraud include credit card fraud, where someone uses stolen payment credentials to make a purchase, identity theft, where one person pretends to be another using stolen personal information, and merchant fraud, where someone sells goods or services they don't intend to deliver. Read more >>>

High-Risk Merchant

A high-risk merchant is one that has been judged by a processor or bank to present an increased level of risk for chargebacks and fraud. This may be because the merchant operates in a high-risk industry, sells products or services that experience a high level of chargebacks, or is prone to fraudulent transactions. High-risk merchants pay higher payment processing fees and are often unable to open a merchant account with many providers. Read more >>>

Holdback

A merchant reserve is an amount of funds held back by a merchant account provider to cover the costs of potential chargebacks. Merchant reserves are frequently required for high-risk merchant accounts. They often take the form of a rolling reserve, a percentage of each transaction that is held for a predetermined amount of time before being released. Read more >>>

Card Imprint

A card imprint is a record of a customer's credit card maintained by a merchant. The term comes from the days before computer payment terminals, when merchants would use a mechanical device to take an imprint of the raised card number on a sheet of paper. Modern point of sale terminals instead take a digital imprint of the card.

Independent Sales Organization (ISO)

An independent sales organization (ISO) is a company that provides standalone credit card processing services for merchants. Many merchants obtain payment processing through the bank or other financial firm that provides their merchant account. However, ISOs provide more options for merchants to choose from and serve those who might otherwise have difficulty obtaining processing services due to their status as high-risk merchants. ISOs may also be called merchant service providers (MSPs).

Interchange Fee

An interchange fee is a fee merchants pay to the issuing bank in a credit card transaction. Interchange fees may be included as part of the merchant discount rate or may be added on separately. The amount of the fee is determined by the applicable credit card network, and different networks have different fees. Read more >>>

Issuer

The issuer or issuing bank is the organization that created a customer's credit card account. When a customer makes a purchase, the merchant's bank, also known as the acquirer, arranges a transfer of funds from the customer's account with the issuer to the merchant's account with the acquirer. Many banks serve as issuers for both Visa and Mastercard credit cards, and American Express and Discover often serve as the issuer for their own cards. Read more >>>

Level 2 Data

In credit card processing, level 2 data means additional information beyond the minimum requirements that's included with each credit card transaction. Merchants who fulfill the requirements of level 2 processing may be eligible for a reduction in their processing fees. The information needed for level 2 may include the customer code, tax amount, and merchant postal code. Level 2 may also be referred to as data rate 2.

Level 3 Data

In credit card processing, level 3 data refers to additional information beyond the minimum requirements and beyond level 2 that's included with each credit card transaction. Merchants who meet the requirements for level 3 processing may be eligible for lower processing fees. Information need for level 3 may include the product description, product ID or SKU, unit price, and unit of measure. Level 3 may also be referred to as data rate 3.

Magnetic Stripe

A magnetic stripe is a band of magnetic material on a plastic card that can store simple binary data via the orientation of the magnetic particles it contains. A credit card's magnetic stripe contains the account number, country code, name, and expiration date. The low security of magnetic stripes eventually led to the introduction of the EMV chip now used by most credit cards.

MATCH List

The MATCH list is a record of merchants that have had their accounts terminated due to excessive fraud, chargebacks, bankruptcy, or illegal activity. Merchants on the MATCH list often have significant difficulties opening new accounts. They also usually pay higher fees than other merchants and may have higher account reserve requirements. Read more >>>

Merchant Account

A merchant account is an account with a bank or other financial institution that allows a merchant to receive credit and debit card payments. Merchant accounts have fees and costs associated with them that individual bank accounts don't have, but they also come with a variety of capabilities and services necessary for operating a business. Read more >>>

Merchant Bank

merchant bank is an institution that provides financial services to businesses. These services may include merchant accounts, payment processing, business loans, etc. In the context of payments, the merchant bank is typically referred to as the acquiring bank or acquirer. Examples of merchant banks include Citigroup, Goldman Sachs, and JPMorgan Chase. Read more >>>

Merchant ID

A merchant ID or MID is a unique number that identifies a specific merchant. New merchants are typically assigned a merchant ID by an acquiring bank or merchant services provider when they open an account. MID numbers are used to route payments to the merchant and ensure they're deposited into the correct account. Merchant IDs aren't public information, but merchants can find their own ID on a merchant statement or by asking their merchant account provider. Read more >>>

Purchasing Card (P-Card)

A purchasing card or P-card is a commercial credit card that can be used by a business to make purchases. These cards are often used to make small purchases for which the invoicing process would be inconvenient. Unlike typical corporate credit cards, P-cards aren't linked to an employee expense account, but instead are used to make purchases on behalf of the company itself.

Payment Gateway

A payment gateway is software designed to collect payment information from customers in order to authorize payments and submit them to the merchant's payment processor. The payment gateway can be integrated into a point-of-sale terminal or can exist as software on a computer. Payment gateways are often provided by processors, but merchants can also use a third-party payment gateway so long as it's compatible.

PCI DSS

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security requirements that any organization that stores payment information must comply with. These standards are laid out in the form of twelve high-level requirements organized under six objectives. Organizations can be certified for PCI DSS compliance at 4 different levels, depending on their size. Read more >>>

Transaction Fee

A transaction fee is a fee paid by a merchant to their processor for each credit card transaction they process. This fee often includes both a flat charge and a percentage of the transaction amount. The total amount of a transaction fee includes multiple fees that are distributed between the processor, card network, and issuer. Read more >>>

Personal Identification Number (PIN)

A personal identification number (PIN) is a code chosen by a user that can be used to later confirm their identity. While they can take a variety of forms, the most common format for a PIN is a sequence of four or five numbers. PINs are commonly used in debit transactions, and are used in credit card transactions as well in countries other than the United States. Read more >>>

Point of Sale (POS)

The point of sale (POS) is the location where a customer made a payment for goods or services. In a typical brick-and-mortar store, the point of sale would be the checkout counter where customers scan their cards using the merchant's POS system. Such systems may be self-contained payment terminals or software on a phone or computer equipped with an EMV reader.

Point of Sale (POS) Solutions Provider

A point of sale (POS) system is a combination of software and hardware that allows a merchant to accept payments. For card-present merchants, this typically includes an EMV reader, a checkout system, and a receipt printer. In e-commerce, however, a merchant's POS system may be entirely software-based. POS systems are often provided by a merchant's processor, but may also be obtained separately.

Prior Authorization Capture

prior authorization capture is a request sent by a merchant's payment gateway to settle a transaction that was previously authorized through an "authorize only" request. The merchant may be required to manually enter a code given during the initial authorization, or the payment system may include this information automatically. Merchants have a limited time to submit a prior authorization capture request after the initial authorization, though the exact time limit may vary.

Retrieval Request

A retrieval request is a request for more information about a transaction sent to a merchant by the issuing bank. These requests are typically made when the cardholder doesn't recognize a charge on their account but doesn't have a compelling reason to suspect fraud. Retrieval requests have recently been phased out by the largest card networks in favor of newer systems for exchanging transaction details. Read more >>>

Transaction Settlement

Transaction settlement is the part of the transaction process where funds are transferred from a customer's account to the merchant's account. Settlement often occurs when the merchant submits a transaction batch to their processor at close of business. During settlement, the various transaction fees are deducted from the total amount before the remainder is deposited into the merchant account. Read more >>>

Smart Card

A smart card or chip card is a plastic card containing a computer chip and a method of interfacing with an external device. The most common form of smart card is the modern credit or debit card, which contains an EMV chip for securely making payments. These chips are significantly less vulnerable to skimming and cloning than the magnetic stripes they're intended to replace.

Stored-Value Card

A stored-value card is a payment card that has a monetary value stored within the information on the card itself rather than being linked to an external bank or credit card account. Gift cards associated with a particular store are the most common type of stored-value card, but there are also prepaid cards that can be used anywhere. Read more >>>

Third-party Processing

Third-party processing is an arrangement that allows a merchant to accept payments indirectly without a merchant account. Instead of the merchant having their own account into which payments are routed, a third-party processor accepts those payments itself on behalf of the merchant. The merchant may then be able to make payments with those funds directly or transfer them to a separate bank account.

Transaction ID

A transaction ID is a unique string of numbers and letters attached to a particular transaction. Every transaction ID is unique. A bank can use the transaction ID to request further information about a specific purchase from a merchant, and the merchant can then use the ID to pull up the details of that purchase in their system. Transaction IDs also streamline the process of issuing a refund for a purchase.

Transaction Type

The transaction type defines the basic parameters of the transaction being processed, such as whether it will withdraw or deposit funds. Other transaction types can authorize a future transaction without completing it, void a previous transaction that hasn't yet been settled, or verify the validity of the customer's payment credentials.

Value-Added Reseller (VAR)

A value-added reseller (VAR) is a company that increases the value of another company's product before reselling it to the end user. This added value may come in the form of service, installation, customization, or additions to the product itself. Value-added resellers typically make their profit from what they add to the product rather than by marking up the price of the product itself.

Verified by Visa

Verified by Visa is Visa's implementation of 3-D Secure 1.0, a tool that enables e-commerce merchants to reduce the risk of fraud by asking the customer to enter a password that the cardholder set up with their bank. If the customer isn't the cardholder or an authorized user on the account, they likely won't know the correct password. With the advent of 3-D Secure 2.0, Verified by Visa has been largely replaced by Visa Secure.

Virtual Point of Sale (VPOS)

A virtual point of sale (VPOS) is a system that allows a merchant to accept credit card payments without installing any hardware or software. Instead, the merchant logs in to the provider's website in order to process payments using the web interface, typically by manually entering the customer's payment credentials.

Virtual Terminal

A solution that allows merchants to submit their card transactions by manually keying in and submitting transactions or via a VPOS.

Visa Cardholder Information Security Program (CISP)

Visa’s security compliance program that protects sensitive data and technology of merchants and merchant service providers Member institutions are required to comply.

Void Transaction

A void transaction or voided charge is a credit or debit card transaction that has been canceled by the merchant before settlement. If a merchant notices an error in time, the pending transaction can be voided, eliminating the need to issue a credit. After being voided, the transaction may still show as pending in the customer's account for a few days.

Velocity Check

Velocity checks are a fraud prevention tool that can help e-commerce merchants stop fraudsters from using stolen credit card information to make purchases. Velocity checking looks for multiple transaction attempts made in quick succession with certain details in common, such as the same credit card number or IP address. This can identify card testing and flag fraudsters trying to make multiple smaller purchases to avoid scrutiny. Read more >>>

Buy Now Pay Later

Buy now, pay later (BNPL) is an alternative payment method that allows customers to sign up for short-term payment plans rather than paying for their purchases up front. These plans often don't charge interest to customers who make their payments on time, instead charging the merchant a percentage of the sale. Read more >>>

Buy Online Pick Up in Store

Buy online, pick up in store, also referred to as BOPUS or BOPIS, is a sales method that allows customers to make a purchase online and pick it up at a nearby retail location rather than having it shipped to them. BOPUS allows brick-and-mortar retailers to offer the convenience of online shopping without the inconvenience of waiting several days for the shipment to arrive. Read more >>>

Fraud Tools

Fraud tools are programs or systems designed to identify and screen out fraudulent purchases. Fraud prevention software often includes several different tools, including velocity checking, risk scoring, AVS, and device fingerprinting. These fraud prevention tools must often be carefully calibrated to effectively detect fraud without rejecting too many legitimate customers. Read more >>>

Pre-Arbitration

Pre-arbitration is the part of the chargeback process where the merchant must decide to either accept liability for the chargeback or escalate the case to arbitration by the card network. This occurs after the merchant has already pursued representment, providing evidence against the chargeback claim. If the dispute isn't resolved in representment, pre-arbitration follows. Read more >>>

Chargeback Arbitration

Chargeback arbitration occurs when the merchant and the issuer are unable to resolve a chargeback dispute. In arbitration, the card network steps in to review the evidence and make a final decision on the case. The losing party will be charged hundreds of dollars in arbitration fees, which means escalating a case to arbitration is rarely the correct choice for merchants. Read more >>>

Chargeback Fraud

Chargeback fraud occurs when a customer disputes a charge on their account under false pretenses. These illegitimate chargebacks may result from confusion, ignorance, or a deliberate attempt at deception. Merchants can fight chargeback fraud through the representment process by providing evidence proving the charge was legitimate. Chargeback fraud may also be referred to as friendly fraud. Read more >>>

Chargeback Ratio

A chargeback ratio is the number of chargebacks a merchant received divided by the number of total transactions. A merchant's chargeback ratio is usually calculated on a monthly basis. Card networks and acquirers impose penalties for merchants who have high chargeback ratios, so merchants are generally advised to keep their chargeback ratios below 0.9%. Read more >>>

Dynamic Descriptor

A dynamic descriptor is a type of billing descriptor (or merchant descriptor) that can be customized to reflect the details of an individual purchase. Whether or not a merchant has the option to use a dynamic billing descriptor depends on whether their processor offers it. Dynamic descriptors are often available only for pending transactions, but can sometimes be used for settled ones as well.

Merchant Descriptor

A merchant descriptor or billing descriptor is the text that appears on an account statement to help identify a transaction. For most ordinary purchases, this text will include the name of the business the payment was made to. The descriptor may also include the location of the business, a website, or a customer service phone number. Read more >>>

Processing Fees

Processing fees are the fees merchants pay each time they accept a debit or credit card payment. Payment processors have different pricing models, which may include a flat fee per transaction, a percentage of each transaction, or both. The type of transaction also affects how much the processing fee will be, with e-commerce transactions carrying higher fees than those made by using an EMV chip at a payment terminal.

Payments Industry

The payments industry consists of a wide variety of companies and other organizations involved with making, processing, and accepting non-cash payments. This includes the credit card brands, the banks that issue those cards, the merchants that accept them, and the processors who route funds from one account to another, among others.

Chargeback Accounting

Chargeback accounting is the task of recording and reconciling the various transactions involved with chargebacks. In addition to the chargebacks themselves, this includes chargeback fees, chargeback reversals, and various hidden costs. The variety of ways in which chargebacks can impact a merchant's bottom line can make fully accounting for their true cost a difficult task, and the fact that a single dispute can stretch out for months can sometimes create issues. Read more >>>

ACH Chargebacks

ACH chargebacks, also known as ACH returns, are reversals of ACH payments due to claims by the sender that the transaction was fraudulent, incorrect, or a duplicate. Unlike credit card chargebacks, merchants can't fight ACH returns. However, the circumstances in which a customer can dispute an ACH payment are also far more limited than those for credit cards. Read more >>>

Chargeback Period

The chargeback period is the length of time during which a cardholder can dispute a charge on their account. Each card network sets its own time limits, and these limits may also vary depending on the reason for the chargeback. However, the most common chargeback period is 120 days, measured from the date of the transaction.

Authorized Transaction

An authorized transaction is a debit or credit card payment that has been authorized by the cardholder's issuing bank. When a transaction is not authorized, it will be declined, and the merchant will receive a decline code containing information about the reason for the decline. Once a payment has been authorized, it's ready for clearing and settlement, which is where the actual transfer of funds takes place.

Disputed Transaction

A disputed transaction is a debit or credit card transaction that the cardholder is claiming is illegitimate in some way. They may claim the purchase was fraudulent, they didn't receive what they paid for, or the amount was incorrect. When a charge is disputed, the cardholder's bank may grant a chargeback, taking the money from the merchant and returning it to the cardholder. Read more >>>

Afterpay

Afterpay is a short-term financing platform owned by Square that offers buy now, pay later (BNPL) services. It allows customers to make a purchase and pay for it in installments spread out over six months. Provided they make all the payments on time, customers aren't charged any additional fees or interest for the service. Instead, the merchant pays a percentage of the transaction amount to Afterpay. Read more >>>

3-D Secure 2.0

3-D Secure 2.0 is a payment authentication system that allows merchants to send detailed transaction information to the appropriate issuing bank in real time. The issuing bank can then conduct a fraud analysis and either approve the transaction or send a one-time password to the cardholder to verify the purchase. Read more >>>

Chargeback Alerts

Chargeback alerts are a system designed to notify merchants of potential chargebacks before they occur, allowing the merchant to prevent a chargeback by issuing a refund instead. The two major chargeback alert networks are Verifi and Ethoca. Each network includes a large number of issuing banks, with some banks included on both networks. Read more >>>

Apple Pay

Apple Pay is a digital wallet and mobile payment app for iPhones. Users can add credit or debit cards to their accounts and use them to make contactless payments using NFC technology at compatible payment terminals. Apple Pay tokenizes payment credentials for greater security, transmitting a unique token that's linked to the appropriate payment details but doesn't contain them. Read more >>>

Google Pay

Google Pay is a mobile payment app and digital wallet that allows users to make secure contactless payments at compatible point-of-sale terminals. After signing up, the user can add one or more payment cards to their account. When the user makes a payment, Google Pay tokenizes these payment credentials and transmits the token to the payment terminal using NFC technology. Read more >>>

Chargeback Threshold

A chargeback threshold is an upper limit to a merchant's chargeback ratio that, if exceeded, will lead to consequences from the card network, processor, or acquirer. Chargeback thresholds usually include a chargeback ratio and an overall number of chargebacks to account for situations where a small merchant might exceed the ratio based on just one or two chargebacks. Read more >>>

Dispute Remediation Plan

A dispute remediation plan or chargeback reduction plan is an outline of concrete steps a merchant will take to reduce the number of chargebacks they receive. These plans are often required to be created when a merchant is enrolled in a dispute monitoring program after their chargeback ratio exceeds a certain threshold. Read more >>>

Visa Merchant Purchase Inquiry (VMPI)

Visa Merchant Purchase Inquiry (VMPI) was a system designed to allow participating merchants to send additional transaction details to issuers automatically upon request. This was intended to reduce the number of false disputes by jogging the memory of forgetful customers and dissuading potential fraudsters. After acquiring Verifi, Visa merged VMPI into Verifi's Order Insight system, which fills the same role. Read more >>>

Dynamic Currency Conversion (DCC)

Dynamic currency conversion (DCC) is a system that allows foreign customers to make purchases using their home currency. Traditional currency conversion involves making the purchase using the merchant's currency, with an exchange fee added on when the transaction is processed. Dynamic currency conversion lets the customer see the final cost of the transaction in their own currency at checkout, but the total cost is usually higher to account for possible changes in the exchange rate. Read more >>>

Card-On-File Transactions

Card-on-file transactions are debit or credit card payments made using payment credentials stored by the merchant. The most common use of card-on-file transactions is for the recurring charges associated with a subscription. However, customers who make frequent purchases from a merchant may wish to have that merchant store their payment credentials for the sake of convenience, eliminating the need to scan their card or enter their payment information for each transaction. Read more >>>

Payment Processing Error

A payment processing error is a mistake made by a merchant or a member of their staff when processing a payment. Such mistakes often result in chargebacks. Examples of common payment processing errors include processing a transaction twice, processing a canceled transaction, and processing a transaction for an incorrect amount. Read more >>>

BIN Attack Fraud

BIN attack fraud is a method of payment fraud in which a large number of possible card numbers are generated from an existing bank identification number (BIN). These numbers are then tested to identify account numbers that are active. Active numbers are used to make fraudulent purchases for financial gain. Read more >>>

False Decline

A false decline is when a valid debit or credit card transaction is declined, often because either the merchant's fraud prevention system or the bank's mistakenly judged the transaction attempt to be fraudulent. In the context of fraud prevention software, false declines may also be referred to as false positives. Read more >>>

E-commerce Fraud

E-commerce fraud is payment fraud that targets e-commerce merchants. Common forms of e-commerce fraud include credit card fraud, account takeover fraud, and friendly fraud. E-commerce merchants are more vulnerable to fraud than card-present merchants and are granted fewer liability protections. Fraudsters often target e-commerce merchants in order to better preserve their anonymity. Read more >>>

QR Code Fraud

QR code fraud occurs when a fraudster creates a QR code that links to a malicious website. The website may ask users to enter payment details, personal information, or click a button that downloads a virus. The fraudster then replaces an existing QR code with their own, often simply by printing their code on a sticker and covering the existing code. Read more >>>

Network Mandates

Network mandates are sets of new rules and guidelines created by card networks to address changes or problems in the payments industry. Examples of such mandates include the EMV liability shift, new transparency and cancellation requirements for recurring billing merchants, and requirements for issuing banks to obtain additional information from cardholders before initiating chargebacks. Read more >>>

Consumer Clarity

Consumer Clarity is a system allowing issuing banks to access detailed transaction information when a cardholder is questioning or disputing a charge on their account. The information is sent automatically from the merchant's CRM to the bank in order to clarify the nature of the transaction for the customer. Consumer Clarity is offered by Mastercard through their subsidiary Ethoca.

Payment Limit

A payment limit is a cap on the maximum value of a single transaction or on the total value of all transactions within a specified time period. Payment limits can be either permanent or temporary, and are typically put in place to limit the amount of fraudulent spending that can take place if the account is compromised.

Near-Field Communication (NFC)

Near-field communication (NFC) is a technology that uses a type of radio frequency identification (RFID) chip that can only be read at very close range. It's used in contactless cards and by mobile wallet apps. The user holds the card or device up to the payment terminal and a token representing their payment credentials is transmitted. Tokenization prevents the possibility of payment credentials being intercepted and used fraudulently. Read more >>>

One-Click Checkout

One-click checkout is a service that lets customers make purchases using stored payment and shipping information without the need to go through the steps of a traditional checkout process. One-click checkout can reduce cart abandonment, but can also lead to customers placing orders by mistake. One-click checkout is typically provided as an opt-in service to limit such mistakes. Read more >>>

Merchant Fraud

Merchant fraud occurs when a fraudster poses as a merchant in order to steal money from would-be customers. In some cases, the fraudster will open a merchant account and start processing transactions using stolen credit card information. In other cases, they might sell products or services that they have no intention of delivering, often using payment methods that have fewer customer protections in place. Read more >>>

Face ID

Face ID is Apple's implementation of facial recognition software. Facial recognition can be used as a form of two-factor authentication for logging in to accounts and even making payments. While many forms of facial recognition can be fooled by a photo, Face ID uses an infrared projector to obtain depth information that it includes in the user's facial profile. Read more >>>

Amex SafeKey

SafeKey is American Express's implementation of 3-D Secure, a fraud prevention method that allows merchants to send real-time transaction data to the applicable issuer in order to verify the customer's identity. If the issuer can't confidently authenticate the cardholder using the information provided, it can send them a one-time password that can be used to confirm the purchase is authorized. Read more >>>

E-wallet Fraud

E-wallet fraud occurs when a fraudster gains access to an e-wallet or mobile wallet app and uses it to make unauthorized purchases for their own benefit. Since many users add multiple credit and debit cards to these apps, this can lead to several different payment cards being compromised simultaneously. Read more >>>

Visa Issuer Monitoring Program (VIMP)

The Visa Issuer Monitoring Program (VIMP) is an initiative intended to reduce the overall rate of fraud in the payments industry by identifying issuers that aren't taking the appropriate precautions to prevent it. An issuing bank may be enrolled in the VIMP if its ratio of fraudulent to legitimate payments exceeds 1% and the total volume of fraudulent payments exceeds $500,000. Read more >>>

Fraud Filter

A fraud filter is a program that analyzes incoming orders and screens out those that may be fraudulent. Simple fraud filters like AVS and CVV matching can screen out fraudsters with stolen payment credentials that are incomplete, while more complex fraud prevention software can use risk scoring to weigh the risk of fraud based on a variety of factors. Read more >>>

Dropshipping

Dropshipping is a business model where the merchant orders products from the manufacturer on an as-needed basis rather than keeping a selection of items in stock. This usually results in longer delivery times than a typical merchant, but it also significantly reduces overhead. Dropshipping merchants often receive more chargebacks due to shipping delays and problems with quality control. Read more >>>

Post-Authorization Tools

Post-authorization tools are tools designed to prevent chargebacks after a transaction has been authorized. While fraud prevention tools can prevent chargebacks that would result from fraud, post-authorization tools attempt to prevent other kinds of chargebacks, such as those caused by merchant error. Examples include inquiry tools, chargeback alerts, and chargeback deflection tools like Order Insight. Read more >>>

Fraud False Positives

Fraud false positives occur when a fraud prevention tool incorrectly identifies a legitimate transaction as fraudulent. Depending on the system the merchant has in place, these orders may be marked for manual review, taking up time and resources, or rejected outright, resulting in the loss of a sale and likely a customer. Read more >>>

Triangulation Fraud

Triangulation fraud occurs when a fraudster poses as a merchant and accepts orders from customers, fulfilling those orders by purchasing the items from a legitimate merchant with a stolen credit card. The fraudster may accept orders themselves through a website or may enlist sellers on sites like eBay to sell their goods. Read more >>>

Negative Option Billing

Negative option billing is a business model wherein customers are automatically enrolled in a paid subscription unless they opt out. For example, a customer may sign up to receive a free product and be charged automatically for further products on a monthly basis. Subscriptions that include a free trial period may sometimes be categorized as negative option billing. Read more >>>

Cart Abandonment

Cart abandonment refers to situations where an e-commerce customer places one or more items in their cart for purchase, then leaves the site without completing the checkout process. Cart abandonment often occurs when a customer reconsiders their purchase due to the price of the items, the cost of shipping, or the estimated shipping time. Some customers may also leave out of annoyance with a lengthy or complicated checkout process. Read more >>>

Chargeback Automation

Chargeback automation is a system that responds to chargebacks automatically based on rules set up in advance by the merchant. This reduces the need for merchants to review and respond to straightforward cases, but can cause problems if tasked with responding to more complex situations. Chargeback automation typically works best when used in combination with human expertise. Read more >>>

Dark Web

The dark web consists of various websites that aren't indexed by search engines and can only be accessed through the use of special protocols or browsers. Sites on the dark web often exist to hide certain activity from governments, which may include journalists avoiding government spying and criminals conducting illegal activity, such as buying and selling stolen credit card information. Read more >>>

Food Delivery Fraud

Food delivery fraud occurs when a merchant selling food for takeout or delivery is targeted by someone attempting to commit fraud. Often these are small-scale fraud attempts intended to achieve nothing more than a free meal, but food delivery fraud may also be used to conduct card testing in some cases. Read more >>>

Clean Fraud

Clean fraud refers to fraud that can't be detected by the most common methods of fraud prevention. Tools like AVS and CVV matching can spot transaction attempts that don't have the appropriate supplemental information: the billing address and the security code, respectively. However, there are a number of ways fraudsters can get their hands on the complete card information, allowing them to pass these checks. Read more >>>

Discover-ProtectBuy

Discover ProtectBuy is Discover's implementation of 3-D Secure, a system that allows merchants to transmit transaction information to the cardholder's issuing bank and ask them to authenticate the transaction. Based on an automated analysis of this information, the bank can either approve the transaction or send a one-time password to the cardholder that they can use to verify their identity. Read more >>>

Merchant Error Chargebacks

Merchant error chargebacks are those that result from some error on the part of the merchant, such as failure to deliver the products or services the customer paid for, providing a defective product, or processing the same transaction twice. Chargebacks due to merchant error can't usually be reversed, but they can be prevented by making sure customers with such issues will contact customer service for a refund instead. Read more >>>

Refund Fraud

Refund fraud occurs when a fraudster exploits a merchant's refund policies for financial gain. There are a wide variety of methods fraudsters may use to commit refund fraud, including falsely claiming a product was never delivered, returning a counterfeit item instead of the original, or purchasing an item with the intention of returning it for a refund after using it for a period of time. Read more >>>

Cash Back Debit Transaction

A cash back debit transaction is a purchase made with a debit card that includes an additional charge for an equivalent amount of cash that will be disbursed by the merchant. Cash back is provided as a voluntary service by merchants, so availability and limits may vary. The cash back amount is recorded separately from the purchase amount in case of a chargeback on the purchase. Read more >>>

Strong Customer Authentication (SCA)

Strong Customer Authentication (SCA) is a requirement of the EU Revised Directive on Payment Services (PSD2) that mandates the use of two-factor authentication in all electronic transactions. Chip-and-PIN transactions fulfill this requirement for card-present purchases, but e-commerce merchants must have another solution in place. The SCA mandate applies to payment service providers in the European Economic Area. Read more >>>

Loyalty Program Fraud

Loyalty Program Fraud occurs when exploits or abuses a customer loyalty program for personal gain. Common methods of loyalty program fraud include creating multiple accounts to abuse first-time purchase or referral rewards, gaining rewards points by purchasing and returning expensive items, and using employee access to manually add points to an account. Read more >>>

Electronic Identification (eID)

Electronic Identification (eID) is a system for providing digital proof of a person's identity. A number of countries currently issue eIDs for their citizens, often in the form of ID cards carrying an embedded RFID chip. As of 2018, all EU countries are required to recognize eIDs issued by other EU countries. Read more >>>

M-commerce Fraud

M-commerce fraud is a form of e-commerce fraud conducted using a mobile app or website. The methods involved are largely the same as in e-commerce fraud in general, but the availability and effectiveness of various methods of fraud prevention differ. As more online purchases are made using mobile devices, preventing m-commerce fraud is becoming a greater concern for merchants. Read more >>>

New Account Fraud

New account fraud occurs when a fraudster creates a new account with a bank or other financial institution using a false identity. This may be either a stolen identity or a synthetic identity created using several mismatched pieces of personal information. The institution that authorized the new account usually takes on financial liability for new account fraud. Read more >>>

P2P Payment App

A peer-to-peer (P2P) payment app is an application designed to facilitate the transfer of funds between individuals. These P2P payments are typically intended for use between friends, family members, or co-workers. However, the popularity of apps like Venmo and Cash App has led these companies to create options for merchants to accept payments through them as well. Read more >>>

Internet of Things (IoT)

The internet of things (IoT) is a term that describes the proliferation of internet-connected devices that transmit and receive information without the need for direct human interaction. This includes smart TVs, Wi-Fi connected thermostats, personal fitness devices, and internet-enabled home security systems. Some of the most popular IoT devices are smart speakers like Google Home and Amazon Echo. Read more >>>

Authorization Hold

An authorization hold is a way to reserve funds in a customer's account to ensure a future transaction can be processed successfully. Authorization holds are commonly used when the final amount of the transaction may vary, such as when using a gas pump or staying at a hotel. Authorization holds are typically lifted once the transaction is complete, but in some cases, they may remain in place for a few days. Read more >>>

Dynamic Linking

Dynamic linking is a process that links each transaction to a unique, dynamically-generated code. Confirmation of this code ensures that the details of the transaction weren't altered after the charge was authorized. Dynamic linking is a requirement of the EU Revised Payment Services Directive (PSD2) and must be implemented by all payment service providers in the European Economic Area. Read more >>>

Virtual Commercial Card

A virtual commercial card is a payment card number that's linked to an existing commercial card account but features certain restrictions designed to prevent fraud. These restrictions may limit the virtual card number to a single use, a single payee, or a certain amount of total spending. The use of these cards ensures the primary account number isn't exposed. Read more >>>

Mastercard Dispute Resolution Initiative

The Mastercard Dispute Resolution Initiative is a series of changes implemented by Mastercard to improve the process of handling credit card disputes. It was designed to reduce the number of illegitimate disputes that are filed, reduce the amount of time it takes to resolve a dispute, and integrate Ethoca Eliminator into the Mastercom system. Read more >>>

Customer Service Automation

Customer service automation is the practice of using systems like chatbots, interactive voice response, and self-service help centers to reduce the demands placed on customer service employees. While implementing automation to handle common customer inquiries can limit the need for additional staff, customers should still have an easy way to contact a representative for more complex issues. Read more >>>

Purchase Return Fraud

Purchase return fraud is a type of fraud involving the theft or cloning of an active POS terminal. The fraudster can use this terminal to process fraudulent purchase returns to a prepaid card. Because these prepaid cards can be difficult to trace, the fraudster can often get away with a significant amount of money. Read more >>>

Order Insight

Order Insight is a system that allows banks to retrieve detailed transaction information from a merchant when a customer questions or disputes a charge. Through integration with the merchant's CRM, details can be made available that may help a customer recognize an order. Order Insight was created by Verifi, which is now a subsidiary of Visa. Read more >>>

Visa Dispute Monitoring Program (VDMP)

The Visa Dispute Monitoring Program (VDMP) is a system set up by Visa to track merchants who receive a high number of disputes and incentivize them to find ways to correct the issue. The chargeback ratio of each merchant is tracked on a monthly basis. If it exceeds a certain threshold (0.9% for Visa, 1% for most others) the merchant may face fines and additional chargeback fees. Read more >>>

Visa Fraud Monitoring Program (VFMP)

The Visa Fraud Monitoring Program (VFMP) is a sytem set up by Visa to keep track of how many fraud claims are made against a merchant and incentivize those with high rates of fraud to find a solution to the problem. Merchants enrolled in the VFMP will have liability automatically assigned to them in fraud-related chargebacks without the possibility of appeal. Read more >>>

Chargeback Notifications

Chargeback notifications are messages a merchant receives informing them that a chargeback has occurred or will soon occur. Standard notifications are sent by the issuing bank when it initiates a chargeback, informing the merchant's acquirer of the situation. Merchants who use chargeback alerts can be notified of impending chargebacks before they occur, giving the merchant time to preempt them with refunds. Read more >>>

Rapid Dispute Resolution

Rapid Dispute Resolution is a Visa program that allows merchants to automatically issue refunds to resolve certain disputes. Merchants can set up rules according to their needs for which disputes should be resolved in this manner and which should be allowed to proceed. Rapid Dispute Resolution is part of the Visa Resolve Online (VROL) platform. Read more>>>

Payment Dispute

A payment dispute occurs when a cardholder contacts their bank to dispute a charge on their account. The cardholder may not recognize the charge and therefore beleive it to be fraudulent, or may have had an issue with their purchase that they were unable to resolve with the merchant. If the issuing bank determines that the dispute meets certain requirements, they will initiate a chargeback on the cardholder's behalf. Read more >>>

Double Refund Chargeback

A double refund chargeback occurs when a customer contacts their bank to initiate a chargeback while also contacting the merchant to request a refund. If both the chargeback and the refund are granted within a short amount of time, a double refund can occur. This causes the merchant to pay out twice the transaction amount to the cardholder. Read more >>>

Gig Economy Fraud

Gig economy fraud is a type of fraud scheme that employs gig workers to support its operation. These gig workers are often assigned tasks that don't seem obviously connected to anything nefarious. They may be asked to solve CAPTCHA tests, place online orders, or ship packages they receive to a different address. Read more >>>

Mobile App Fraud

Mobile app fraud is any fraud that occurs over a mobile app. While the methods involved are largely similar to those in typical e-commerce fraud, the tools and strategies available for detection and prevention differ. The most common types of mobile app fraud are account takeover and credit card fraud. Read more >>>

Fraud as a Service (FaaS)

Fraud as a service (FaaS) is an operation where fraudsters offer their tools or services for hire to clients on the dark web. These organizations are often run like a business, improving their methods and tools to improve efficacy and efficiency. They may offer access to botnets, automated software for committing fraud, or targeted hacking services. Read more >>>

Visa Claims Resolution (VCR)

Visa Claims Resolution (VCR) is an initiative rolled out by Visa in 2018 that made major changes to Visa's chargeback process, including automatically assigning liability for certain chargebacks, changing the system of chargeback reason codes, shortening the response deadlines for each stage of the chargeback process, and requiring merchants to acknowledge all disputes. Read more >>>

Return Item Chargeback

A return item chargeback is a fee charged to a bank customer who deposits a check that bounces. Despite the name, these fees have nothing to do with credit card chargebacks. Different banks use a variety of different names for this fee, including: deposited item returned, returned check fee, chargeback check fee, and cashed item returned unpaid. Read more >>>

Chargeback Insurance

Chargeback insurance is a product that reimburses merchants for the cost of a chargeback if certain conditions are met. These policies are usually paid for through a percentage fee on each transaction. Chargeback insurance is often tied to a fraud prevention tool that automatically rejects transaction attempts it deems to be potentially fraudulent. Read more >>>

TC40

TC40 is a report sent by issuing banks to Visa that contains information on claims of fraud made by cardholders. For each report of fraud, TC40 data may include information about the merchant, the issuing and acquiring banks, and the transaction itself. Merchants can only obtain their TC40 data if their acquiring bank agrees to share it with them. Read more >>>

SAFE

SAFE or System to Avoid Fraud Effectively is a Mastercard initiative that requires banks to document cardholder claims of fraud. Similar to Visa's TC40, Banks must send a SAFE report to Mastercard that details each fraud claim made on Mastercard debit and credit cards. Mastercard can use this data to search for trends in fraud, identify problem banks and merchants, and inform efforts to reduce the level of fraud in the payments ecosystem. Read more >>>

EMV Liability Shift

The EMV liability shift was a change in policy adopted by the major card networks to incentivize merchants to upgrade their payment terminals for compliance with the EMV chip standard. Merchants who process a transaction without scanning the EMV chip of a payment card that has one will be automatically assigned liability for any claim of fraud made against that transaction. Read more >>>

Promo Abuse Fraud

Promo abuse fraud refers to dishonest behavior intended to take advantage of a promotional offer for financial gain. It often involves a single user creating multiple accounts in order to take advantage of referral bonuses, free trials, or special offers for first-time users. Certain types of promotional offers, such as rewards in cash or credit for referring new customers, are especially prone to abuse. Read more >>>

Chargeback Rebuttal Letter

A chargeback rebuttal letter is the cover letter of a chargeback representment package. It summarizes the merchant's case for why the bank should reverse the chargeback and the supporting evidence included in the package. Rebuttal letters should be concise and convincing, ideally confined to a single page if the content allows. Read more >>>

Merchant Account Reserve Funds

Merchant account reserve funds are funds that are held back by a payment processor to cover potential costs associated with chargebacks. Merchant reserves may take the form of a fixed amount held by the processor until the account is closed or a rolling reserve that holds back funds from new transactions for a set period of time before releasing them. Read more >>>

Gift Card Fraud

Gift card fraud is a term for fraud conducted using gift cards. This may involve using stolen gift card numbers, purchasing gift cards using stolen payment credentials, physically tampering with gift cards in a store display, or gaining access to virtual gift cards using stolen passwords. Fraudsters may also attempt to return items bought through fraud to a gift card instead of the original method of purchase. Read more >>>

First-Party Fraud

First-party fraud occurs when a cardholder disputes a legitimate transaction on their account by giving the bank false information, whether knowingly or unknowingly. This type of fraud may also be referred to as friendly fraud or chargeback fraud. The term first-party fraud is also sometimes used to describe situations where a fraudster opens a new financial account using false identification information. Read more >>>

Card Testing Fraud

Card testing fraud occurs when a fraudster with access to multiple stolen credit card numbers attempts small transactions with each to determine which are still valid. This is often done through the use of automated software made for this purpose and sold or otherwise distributed on the dark web. Read more >>>

Pre-authorization Settlement

Pre-authorization settlement is a term for the settlement of funds from a transaction that was subject to a pre-authorization, otherwise known as an authorization hold. Authorization holds are often used when the transaction must be processed before the final amount can be determined. Once the final amount is determined, the transaction is settled, meaning funds are transferred. Read more >>>

Chargeback Fees

Chargeback fees are the fees merchants must pay to their payment processors whenever they receive a chargeback. The amount of a chargeback fee will vary widely based on the merchant and the processor involved. Unlike the funds for the transaction itself, chargeback fees are not refunded if the merchant successfully reverses a chargeback. Read more >>>