Payment Dictionary

Payment terms, in plain English

A searchable glossary of the words you'll see on a merchant statement, a POS, or a sales call — written for business owners, not engineers.

Definitions are educational. They do not include rates, guarantees, or approval promises.

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ACH: A bank-to-bank transfer used to move money between accounts in the U.S. — commonly used for payroll, recurring bills, and processor payouts.
Authorization: The real-time check that confirms the cardholder's bank has enough funds and approves the transaction. Authorization holds the money; it doesn't move it yet.

Batch: The group of card transactions you 'close out' at the end of the day so the funds get sent to your bank.

Card-Present: A transaction where the customer's card is physically at your counter — usually has lower fees than typing a card number in by hand.
Cash Discount: A program that posts the card price as the listed price and offers a small discount to customers who pay with cash.
Chargeback: When a customer disputes a charge with their bank and the money is pulled back from the merchant while the bank investigates.
Contactless Payment: Any payment made by tapping a card or phone on the terminal — no swipe, no chip insert, no signature.

Dual Pricing: Showing two prices at checkout — one for cash and one for card — so customers can choose. The card price covers the processing cost.

EMV / Chip: The chip on the front of a credit or debit card. EMV-enabled terminals read the chip instead of the magnetic stripe, which makes payments more secure.

Flat Rate: A pricing model that charges the same blended rate for most card transactions, regardless of which card the customer uses. Simple to read, but the markup is bundled in.

Interchange: The base fee that card networks (like Visa and Mastercard) charge on every transaction. It is set by the networks, not by your processor.
Interchange-Plus: A pricing model where you pay the card network's interchange fee plus a separate, disclosed markup to the processor — so you can see the cost breakdown line by line.

Merchant Account: The bank account that holds card-payment funds before they are deposited to your business checking account. It is opened in your business's name after underwriting approval.
Merchant ID (MID): The unique account number your business gets from the processor. You will see it on statements and need it whenever you call support.

NFC / Contactless: Short-range wireless tech that lets a customer tap a phone, watch, or card on the terminal to pay — no swipe or chip insert.

Payment Gateway: Software that securely passes card data from your website, terminal, or app to the processor for authorization. Common for online and keyed-in payments.
PCI Compliance: A set of security standards every business must follow when accepting credit cards to help keep customer card data safe.
PCI-DSS: The full name of the credit card security standard. 'Level 1' is the highest level of certification a payments provider can hold.
POS (Point of Sale): The full system you use to ring up a sale — typically a screen, software, and a way to take payment. A POS does more than a basic terminal: inventory, employees, reporting, and more.

Settlement: The step where authorized transactions are actually funded — money moves from the cardholder's bank to your merchant account, usually after the batch closes.
Surcharge: An extra fee added to a credit card payment to help offset the cost of processing. Rules vary by state, so eligibility is reviewed case by case.

Terminal: The countertop or handheld device that reads a payment card (chip, tap, or swipe) and sends it for authorization.
Tiered Pricing: A pricing model that groups card transactions into 'qualified', 'mid-qualified', and 'non-qualified' tiers. The actual cost of each transaction can be harder to see than with interchange-plus.
Tokenization: Replacing a card number with a random 'token' so the real number is never stored in your POS. If a hacker grabs the token, it is useless to them.

Underwriting: The review a processor does on your business before approving a merchant account — it looks at things like business type, history, and volume.

Talk to a payments specialist — no pressure, no obligation.

All programs subject to underwriting approval. Terms and conditions apply.