Glossary of Payment Terms
Discover clear definitions of key payment and fintech terms in our comprehensive glossary. Learn essential industry terminology to stay informed.
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1-9
2DS
2DS (Two-Domain Secure) is a simplified version of 3D Secure used in some online card payments.
3DS
3D Secure (3DS) is an extra security step for online card payments. It helps confirm that the person making the payment is the real cardholder.
A
A2A payments
Accounts payable
Accounts Payable (AP) is the money a business owes to its suppliers or vendors for goods and services received but not yet paid.
Accounts receivable
Accounts Receivable is the money owed to a business by its customers for goods or services already delivered but not yet paid for.
ACH
ACH (Automated Clearing House) is a network in the US that processes electronic bank-to-bank payments.
Acquire / acquiring
AFT
An Account Funding Transaction (AFT) is an electronic transfer of funds used to add money to a bank account or prepaid card.
API
An API (Application Programming Interface) lets different software systems talk to each other. It allows apps to share data or functions—for example, a weather app showing Google Maps.
Approval
Approval in payment systems means that a payment transaction has been authorized by the card issuer or bank.
Approval rate
B
B2B payments
B2C payments
B2B2C payments
BAAS
Banking as a Service (BaaS) is a model where banks provide their financial services—like accounts, payments, or loans—via APIs to third-party companies.
Bank identification number
Bank payment processing
Batch payment processing
Business identifier code
C
C2C payments
Chargeback
A chargeback happens when a customer disputes a credit or debit card payment, asking their bank to reverse the transaction.
Checking account
A checking account is a bank account that lets you easily deposit and withdraw money for daily use.
Clearing
Clearing in payments is the process where banks or payment systems exchange information to confirm and prepare a transaction for settlement.
Credit card
A credit card is a small plastic or digital card that lets you borrow money to make purchases, up to a set limit. You pay the money back later, often with interest if not paid in full each month.
Credit score
A credit score is a number that represents your creditworthiness. In the UK, it’s calculated by agencies like Experian, Equifax, and TransUnion. The score is based on your borrowing and repayment history.
CVC/CVV
D
Debit
A debit is an accounting term for money taken out of an account. In banking, it means a payment or withdrawal that reduces your account balance.
Debit card
A debit card is a payment card that lets you spend money directly from your bank account. When you use it, the money is withdrawn immediately.
Declined
Digital wallet
A digital wallet is an app or software that stores your payment information securely on your phone or computer.
Dispute
A payment dispute happens when a customer challenges a charge on their account, claiming it was unauthorized, incorrect, or for a faulty product or service.
E
E-commerce payment gateway
Electronic funds transfer
Encryption
Encryption is a way to protect information by converting it into a secret code that only authorized people can read.
F
Faster payments
Faster Payments is a UK banking service that allows near-instant bank transfers between accounts, usually within seconds or minutes.
H
Hold
A payment hold is when a payment is temporarily paused or delayed by a bank or payment provider.
I
Issuer
K
KYB
KYB (Know Your Business) is a process used by financial institutions to verify the identity and legitimacy of a company before providing services.
KYC
KYC (Know Your Customer) is a process used by banks and financial services to verify a customer’s identity. It usually involves checking documents like a passport or utility bill.
M
Mastercard securecode
Merchant
A merchant is a person or business that sells goods or services and accepts payments from customers.
Merchant account
A merchant account is a special bank account that allows businesses to accept payments by credit or debit cards.
Merchant identification number
Mobile payment
A mobile payment is a way to pay for goods or services using a smartphone or other mobile device.
O
OCT
An Original Credit Transaction (OCT) is a type of payment that allows money to be sent to a card, rather than taken from it. It’s commonly used for payouts like refunds, gig worker earnings, or money transfers.
Overdraft
An overdraft is a bank service that lets you spend more money than you have in your current account, up to an agreed limit.
P
Payment gateway
A payment gateway is a technology that connects an online store or app to the payment processor.
Payment method
A payment method is any way you can pay for goods or services.
Payment processor
A payment processor is a company or service that handles transactions between a customer’s bank and a merchant’s bank.
Payment service provider
A Payment Service Provider (PSP) is a company that helps businesses accept electronic payments, like credit cards or digital wallets, by handling the technical and security processes behind the scenes.
Payout
A payout is the transfer of money from a business or platform to an individual or another business.
PCI DSS
PCI DSS (Payment Card Industry Data Security Standard) is a set of security rules that businesses must follow to protect cardholder data.
Personal identification number
Prepaid card
A prepaid card is a payment card loaded with a fixed amount of money in advance. You can spend only the amount available on the card, making it different from credit or debit cards linked to bank accounts.
Processor
R
Recurring payments
Risk management
Risk Management is the process of identifying and reducing potential financial or security problems, like fraud or chargebacks, in a business.
Routing
Payment routing is the process of directing a payment transaction through the best path or network to ensure it is authorized and completed quickly and securely.
S
SAAS payment gateway
SAAS payment processing
SEPA
SEPA (Single Euro Payments Area) is a system that simplifies bank transfers in euros across Europe. It allows people and businesses in SEPA countries to send and receive euro payments easily.
Settlement
Settlement in payment processing is the final step where money from a customer’s payment is transferred to the merchant’s bank account.
T
Tokenization
Tokenization in payments is a security method that replaces sensitive card details with a unique, random code called a token.