Glossary

Filter by first letter

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Search by keyword

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.

Account Takeover Fraud

Account takeover fraud occurs when a user account is compromised and used to make fraudulent payments using stored payment credentials. Account takeover fraud is often more difficult to detect than credit card fraud since the fraudster will have access to all the correct billing information. Accounts are commonly compromised through phishing attacks or credential stuffing. 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 >>>

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 >>>

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 >>>

Affiliate Fraud

Affiliate fraud occurs when a fraudster poses as an affiliate marketer and uses manufactured traffic and/or fraudulent purchases to obtain a higher payout. Automated bots and scripts can repeatedly click ads while switching IP addresses. Sometimes fraudsters use stolen payment credentials to make fraudulent purchases, giving themselves the credit for the conversion and skipping out when the chargebacks start rolling in. 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 >>>

AliPay

AliPay is one of the world's largest payment platforms, serving customers primarily in China and the broader Asia-Pacific region. Unlike most payment platforms, AliPay holds funds in escrow for seven days after a transaction is made before transferring them to the merchant. If the customer reports an issue with their purchase, the funds are held until the dispute is resolved, and may be returned to the customer if necessary. 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 >>>

Amazon One

Amazon One is a payment method that allows customers to pay for their purchases using only a palm print. Accounts are set up in advance using a payment card and phone number, negating the need to enter payment information at checkout. Amazon One is currently in use only at certain Amazon-owned stores but is expected to be offered to third-party merchants in the future. 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 >>>

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 >>>

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 >>>

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 >>>

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 >>>

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. Read more >>>

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 >>>

Authorized Push Payment Fraud

Authorized push payment fraud is a type of fraud conducted using real-time push payments. These payments remove the delay between authorizing a transaction and settling it, which means the recipient has access to the transferred funds almost immediately. For fraudsters, this means they can cash out immediately after a successful fraud attempt. Read more >>>

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.

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 >>>

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 >>>