Payment Terms
A
Authorization / Auth
Reserve funds in cardholder’s account without immediately charging. After authorization, need to complete actual charge through post authorization (Post Auth) or batch close (Batch Close).
Use Cases: Hotel reservations, car rentals, and other scenarios requiring fund reservation.
Related Terms: Post Authorization, Capture
Acquirer / Acquiring Bank
Financial institution that contracts with merchants to provide payment processing services. Responsible for transmitting transaction information to card networks and settling funds to merchants.
B
Batch
A collection of transactions pending settlement. Usually at the end of each business day, merchants close the day’s batch, triggering the settlement process.
Related Terms: Batch Close, Settlement
Batch Close
Operation to close current batch and trigger settlement process. After batch close, all authorization transactions in that batch will be completed and charged.
C
Capture
Complete previous authorization transaction, actually charging cardholder’s account. Also called “Post Auth”.
Related Terms: Authorization, Post Authorization
Cardholder
Holder and user of credit or debit card.
Card Network / Card Scheme
Organizations providing payment network infrastructure, such as Visa, Mastercard, American Express, Discover, UnionPay, etc. Responsible for transmitting transaction information between issuing and acquiring banks.
Chargeback
Process where cardholder disputes transaction through issuing bank, requesting transaction reversal and refund. Chargebacks may be caused by fraud, goods not received, service dissatisfaction, etc.
Impact: Merchant not only needs to refund transaction amount but may also face chargeback fees and credit rating decline.
Clearing
Process where card network exchanges transaction information and funds between issuing and acquiring banks.
D
Debit Card
Payment card that directly charges cardholder’s bank account. Unlike credit cards, debit cards use cardholder’s own funds rather than credit limit.
Decline
Payment request rejected, transaction unsuccessful. Decline reasons may include: insufficient balance, card expired, card frozen, input error, etc.
E
EBT (Electronic Benefit Transfer)
Electronic payment system used by US government to distribute benefits. Mainly includes SNAP (food stamps) and Cash Benefits.
EMV
Chip card standard jointly developed by Europay, Mastercard, and Visa. EMV chip cards are more secure than magnetic stripe cards and can effectively prevent card counterfeiting.
I
Issuer / Issuing Bank
Financial institution that issues credit or debit cards to cardholders. Responsible for verifying transactions, authorizing payments, and collecting from cardholders.
Incremental Authorization
Operation to increase authorization amount on top of existing authorization.
Use Cases: Hotel guest extends stay, restaurant customer adds to order, etc.
M
Merchant
Business or service provider that accepts payment card payments.
Merchant Account
Account opened by merchant at acquiring institution for receiving payment funds.
MID - Merchant Identification Number
Unique identifier assigned to merchant by acquiring institution.
Magnetic Stripe Card / MSR
Payment card that stores card information using magnetic stripe. Due to lower security, gradually being replaced by EMV chip cards.
N
NFC (Near Field Communication)
Near field communication technology used for contactless payments. Cardholders only need to bring card or phone close to reader to complete payment.
Common Brands: Apple Pay, Google Pay, Samsung Pay
P
Partial Authorization
Situation where bank authorizes partial amount when cardholder account balance is insufficient to pay full amount.
Example: Customer purchases $100 item but card only has $60, bank authorizes $60, customer needs to pay remaining $40 using other method.
Partial Refund
Refunding only part of original transaction amount. Supports multiple partial refunds for same transaction, but total refund amount cannot exceed original transaction amount.
Post Authorization / Post Auth
Complete previous authorization transaction, actually charging cardholder’s account. Same concept as “Capture”.
R
Refund
Return funds from settled transaction to cardholder. Refunds usually take 3-10 business days to arrive.
Note: Unsettled transactions should use void rather than refund.
Response Code / Decline Code
Transaction result code returned by bank or card network, explaining reason for transaction success or failure.
Related Documentation: Transaction Result Codes
S
Sale
Complete payment transaction including both authorization and charge steps, completed at once.
Settlement
Process of transferring transaction funds from cardholder account to merchant account. Usually completed within 1-3 business days after batch close.
T
Terminal
Physical device used to process payment transactions, such as POS machines, payment terminals, etc.
TID - Terminal Identification Number
Unique identifier assigned to each payment terminal.
Tip / Gratuity
Additional service fee paid by customer on top of original transaction amount, common in dining industry.
Tip Adjust
Operation to adjust tip amount after transaction completion.
Use Case: Restaurant customer adds tip when signing receipt.
Tokenization
Use randomly generated token to replace sensitive card information (such as card number) to improve security. Tokens can only be used in specific systems; even if leaked, cannot be used in other scenarios.
Transaction
Complete payment operation, including authorization, charge, refund, etc.
V
Void
Cancel unsettled transaction. After void, transaction will not appear in batch and cardholder will not be charged.
Note: Only unsettled transactions can be voided; settled transactions need to use refund.