The payment industry has its fair share of jargon. In this glossary, we break down what key terms mean to help you navigate the world of travel payments and merchant accounts.
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3D Secure 2: An authentication protocol designed to verify customers' identities when they make credit or debit card purchases. 3D Secure 2, a more seamless version of 3D Secure 1 (3DS1), protects consumers from fraud and helps merchants comply with Strong Customer Authentication (SCA) rules.
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Acquirer: The financial institution that processes and settles card payments for merchants. The acquirer essentially acts as the business's bank, acquiring the money from the customer's account and depositing it in the merchant's account.
Acquiring Bank: Used interchangeably with the term ‘acquirer’. The acquiring bank holds the merchant account and settles payments on the merchant's behalf.
Alternative Payment Method: Payments that differ from traditional online payment options, including cash and cards. Examples include direct debits, digital wallets, mobile payments, cryptocurrency payments, bank transfers and Buy Now, Pay Later (BNPL) services.
Anti-Money Laundering (AML): A set of laws, regulations and procedures designed to stop criminals from disguising funds obtained illegally as legitimate revenue.
Application Programming Interface (API): A set of rules that allow software applications to communicate with each other. In the payments world, APIs allow companies to integrate payment processing functionality into their applications.
Assessment Fee: Also known as network fees, assessment fees are charges made by card networks like Mastercard and Visa on transactions, usually a small percentage of the transaction volume.
ATOL: ATOL, which stands for Air Travel Organisers' Licence, is a financial protection scheme in the UK for package holidays and flights. Managed by the Civil Aviation Authority (CAA), ATOL provides travelers with financial security if a travel company fails, covering refunds for holidays not yet taken and repatriation for travelers already abroad. Travel providers selling flights or package holidays with flights included are legally required to hold an ATOL.
Authorization Rates: The metric that measures the percentage of attempted transactions that are successfully authorized by the issuing bank. To calculate authorization rate, divide the number of authorized payments by the number of attempted transactions.
Automated Clearing House (ACH): A network that electronically moves money between bank accounts. ACH supports a wide variety of payment methods, including bill payments, tax refunds, debit transfers and payroll deposits.
Automatic Funds Transfer: An automatic scheduled transfer of funds between two accounts without further intervention from the account holder. Automatic funds transfers are ideal for paying bills, saving money or contributing to retirement funds.
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Bank Transfer: Also known as a wire transfer, a bank transfer is an electronic method for moving funds from one bank account to another. Bank transfers can be domestic or international, and they can be made via online banking or at a bank's branch. They require the payee to enter the recipient's name, sort code and account number. Payments tend to arrive instantly, but delivery times vary based on the payment system the payee uses.
Bank Identifier Code (BIC): A BIC is a unique set of characters (either 8 or 11 numbers and letters) that allow for the easy identification of financial institutions for the purpose of making international transactions. Also referred to as a SWIFT code, BICs are managed by the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
Bank Identification Number (BIN): A BIN is a code assigned to financial institutions to identify them for the purposes of electronic transactions. The code consists of the first four to six numbers on a payment card, identifying the card brand, type and the issuing bank's country. BINs help financial institutions identify and prevent fraudulent activity by tracing cardholder and transaction data.
Blended Rate: In payment processing, a blended rate refers to the pricing model where a payment provider combines all processing costs (including interchange fees and scheme fees) into a single, fixed percentage per transaction. Standard blended rates for accepting card payments typically range between 1.5% and 3.5% per transaction, but the exact rate depends on the provider. Find out more about the impact of blended rates: What You Need to Know About Card Payment Facilities for Travel Tech Platforms
Biometric Authentication: In payments, biometric authentication refers to the use of customers' physical characteristics (including their face, fingerprints and voice) to identify users for the purpose of authorizing payments. An alternative to passwords and PINs, biometric authentication makes the verification process fast, convenient and secure.
Buy Now, Pay Later (BNPL): An alternative payment method that allows customers to purchase products and services in installments rather than paying the full price upfront. In July 2026, the UK will regulate BNPL for the first time after concerns were raised about the risks of BNPL, including payment stacking, late fees, impacts on credit scores and issues with refunds.
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CAPTCHA: Completely Automated Public Turing Test To Tell Computers and Humans Apart, or CAPTCHA, is a security challenge websites use to differentiate between human visitors and robotic agents. Newer versions of CAPTCHA offer multimodal challenges such as recognizing images ("select all the squares with bicycles") and reading and inputting distorted letters and numbers.
Card Issuer: A financial institution (such as a bank) that issues cards to customers, like Lloyds Banking Group, Santander and Barclaycard. Card issuers decide if transactions are authorized, manage funds transfers, identify and prevent fraud and deal with disputes.
Card-Not-Present (CNP) Transaction: When a customer makes a payment remotely, without presenting their card.
Card-Present (CP) Transaction: When a customer makes a payment face-to-face, using their physical card at the point-of-sale.
Card Scheme: The payment network that connects banks, merchants and cardholders to process card transactions. Visa, Mastercard and American Express are popular card schemes, and each provide a network that processes payments globally. The card scheme ecosystem involves several parties, including the cardholder, merchant, issuer, acquirer and the card scheme itself. Card schemes charge the merchants that use their networks fees for processing transactions, charged as a percentage of a transaction's value.
Cart Abandonment: When a potential customer begins an online transaction but leaves the website without completing the transaction. Cart abandonment happens for various reasons, including limited payment options, unexpected/hidden costs, security concerns, a complex checkout process and website performance issues. The travel industry has one of the highest cart abandonment rates: 82% of potential customers start the process and drop off before completing checkout.
Chargeback: A chargeback is the reversal of a charge on a credit or debit card. Chargebacks are initiated when customers dispute transactions following issues with a purchase, including faulty goods, service non-delivery and incorrect charges. Chargebacks move through four stages: a request for information, the chargeback itself, a dispute where merchants can contest it with evidence or accept its validity, and finally a refund for the merchant if they win, and loss if the chargeback is upheld. Travel businesses can reduce chargebacks by providing clear information on receipts and bank statements, protecting against fraud, implementing a transparent returns and cancelations policy, providing detailed and accurate product/service descriptions and documenting all communications with customers. Find out more about reducing chargebacks: Top 5 Tips for Reducing Chargebacks as a Travel Business
Chargeback Fraud: Chargeback fraud happens when a cardholder knowingly makes a legitimate purchase with a card, then disputes the charge with their card provider. The global cost of chargeback fraud will rise from $33.79 billion in 2025 to almost $42 billion by 2028. There are several types of chargeback fraud, including friendly fraud, return fraud, subscription fraud and digital goods chargebacks. Businesses that sell high-value products and services, online retailers and subscription-based businesses are particularly susceptible to receiving chargebacks. Chargeback fraud prevention involves the use of strong fraud prevention tools, clear return policies and careful chargeback management.
Chargeback Ratio: A chargeback ratio, sometimes referred to as chargeback rate, is the percentage of the merchant's total transactions that are successfully disputed by customers. The chargeback ratio is calculated by dividing the number of chargebacks by total transaction volume for a given time period and multiplying by 100. Card networks track merchants' chargeback ratios to evaluate risk. Most card networks require merchants to keep their chargeback ratios below 1%, however, the threshold varies between networks. Merchants with high chargeback ratios are subject to fines, or, in some cases, account termination.
Contactless Payment: A contactless payment is a touch-free method for paying for goods and services, where the payee taps their physical card, smartphone or wearable device (such as a smart watch) over a payment reader.
Control Account: A control account is a dedicated account structure that holds and tracks client funds separately from the company's operational funds. In the context of the travel industry, control accounts support multi-currency transactions, help with reconciliation and reporting and keeps funds segregated to meet acquirer regulatory compliance requirements. Find out more about control accounts for travel merchants: Integrated Control Account Services
Cross-Border Fees: A cross-border fee is a charge incurred when sending or receiving money internationally. Cross-border fees vary depending on the card network used, and the more complex a transaction, the higher the fee will be. There are several types of cross-border fees, including foreign transaction fees, currency conversion fees, international transfer fees, intermediary fees and assessment fees. Find out more about cross-border payments in travel: The Ultimate Guide to Cross-Border Payments in Travel and Tourism
Cryptocurrency Payment: A cryptocurrency payment is a transaction made with a digital currency that is independent of central banks or governments. Instead of routing through traditional bank networks, crypto payments move between digital wallets over blockchain, a distributed public ledger. Popular cryptocurrencies include Bitcoin, Ethereum and Tether.
Currency Conversion: Currency conversion refers to changing one currency into another during the payment process. It happens when a customer pays for goods or services in a foreign currency to the merchant. Currency conversion relies on an exchange rate, which changes daily based on market demand, interest rates, inflation rates and economic performance.
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Decline Code: A decline code is a numeric response code that an issuing bank or payment network returns when an authorization request isn't approved, indicating the reason for the decline. Declines can be ‘soft’ or ‘hard’. ‘Soft’ declines mean the transaction was not authorized, but for a temporary or retryable reason, such as decline code 51 (Insufficient Funds). Hard declines indicate a more serious issue where the issuing bank has initiated a permanent rejection that cannot be retried, for example: 43 (Stolen Card) or 54 (Expired Card).
Digital Wallet: A digital wallet is a software application on an electronic device (such as a smartphone) that stores payment information and allows users to make purchases without cash or a card. The most popular digital wallets include Apple Pay, Google Pay, Paypal, Alipay and Samsung Wallet.
Direct Debit: A direct debit is a cashless payment method that businesses use to process payments. Businesses can collect payments from customers' bank accounts on a set due date automatically, without the customer having to manually initiate the payment. Direct debit transactions require a direct debit instruction, the customer's written consent that the payment amount is allowed to be debited from their bank account.
Dispute: In the payments world, a dispute is the formal process where a cardholder challenges a transaction and asks their bank or card issuer to reverse the transaction. Disputes are typically initiated due to fraud (such as stolen card details), non-receipt of services and goods/services not matching the seller's description.
Diversified Acquiring: Diversified acquiring refers to processing payments through multiple acquiring banks instead of a single one. This spreads risk because if one acquirer changes terms, experiences downtime or withdraws service altogether, transactions can be routed through another, maintaining payment continuity and reducing the risk of disruption or account closure. Find out more about diversified acquiring: Risk Mitigation and Diversified Acquiring
Dynamic Currency Conversion (DCC): Dynamic currency conversion is a service used in international transactions, allowing the transaction to be processed at the point of sale in the cardholder's currency.
Dynamic Routing: Dynamic routing is an intelligent routing system that analyzes transactions and automatically directs them to the most suitable acquiring bank/payment gateway. Dynamic routing boosts approval rates, reduces processing fees and retries failed transactions.
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E-Commerce: E-commerce is the buying and selling of goods and services over the internet, including websites, mobile apps and social media.
Electronic Funds Transfer (EFT): Electronic funds transfers (EFTs) are transactions that move money electronically between different bank accounts and financial institutions. It's a broad term that includes many different types of transactions and transfers, including but not limited to credit and debit card payments, direct debits and wire transfers.
Encryption: Payment encryption transforms sensitive card details into unreadable code, protecting them during transmission, making it impossible for intercepted data to be used.
Exchange Rate: An exchange rate is the price of one currency measured against another. At the time of writing, for example, £1 equaled €1.16, while $1 equalled £0.74. Exchange rates constantly change based on market demand, interest rates, inflation rates and economic performance.
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Fraud Detection: Fraud detection is the process of identifying and then halting suspicious payments. Fraud detection software is used by banks and businesses to analyze transactions in real-time, flag anomalies and block malicious payments before they result in a financial loss. Key fraud detection methods include real-time transaction monitoring and machine learning algorithms (like anomaly detection, risk scoring and network analysis).
Fraud Prevention: Fraud prevention is the strategy organizations put in place to prevent fraud from causing financial and reputational harm. It includes fraud prevention technologies and processes like two-factor authentication to lock out fraudsters before they can access funds, behavioral analytics, deepfake detection and multi-modal analysis.
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High-Risk Merchant: A high-risk merchant is a business that payment processors view as more likely to encounter fraud, customer disputes like chargebacks and regulatory issues. To mitigate financial risk, payment processors offer high-risk merchants specialized accounts or, if the risk is deemed too high, refuse to serve them entirely.
Hold: A payment hold is the temporary delay of funds that lowers your available balance. Payment holds typically happen when there are concerns or discrepancies that prevent an immediate payment from being made.
Hosted Payment Page: A hosted payment page, also known as an external checkout or a hosted payment gateway, is a web page hosted by a third party that provides highly secure checkout capabilities to businesses. It means that businesses can access payment gateways on their websites without building and managing them alone. Hosted payment pages accept a range of payment methods, including but not limited to credit and debit cards and digital wallets.
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IBAN: International Bank Account Number, or IBAN, is the system that identifies bank accounts across countries. IBAN codes, which can be up to 34 alphanumerical characters long, identify bank accounts for cross-border payments, significantly reducing errors and speeding up international transactions.
Insolvency: Insolvency is when a company cannot pay what they owe on time, or when the total value of their assets is less than the money they owe.
Insolvency Protection: Insolvency protection is a safeguard that keeps customer funds secure if a travel supplier or operator fails financially before the booking is fulfilled. It uses segregated fund structures to make sure money paid for a trip is available for resolution even if the business behind the booking becomes insolvent. This protects the customer's payment and the merchant's account stability (should a supplier fail). Find out more about insolvency protection for travel businesses: Chargeback Management and Insolvency Protection
Interchange Fee: An interchange fee is the transaction fee paid by a business's acquiring bank to the customer's bank every time a card payment is processed. Card networks, such as Visa and Mastercard, set the interchange fee rate, which is typically a percentage of the value of the transaction as well as a fixed per-transaction fee.
Interchange-Plus Pricing: The Interchange Plus (IC+) pricing model is a payment processing model where merchants pay the wholesale card network rate (the interchange fee) plus a fixed markup set by their payment processor. Unlike blended or flat-rate pricing, IC+ passes the base cost of the transaction through to the merchant transparently, separating the interchange fee from the processor’s markup. IC+ is typically offered to merchants with high annual card turnover.
Issuer: An issuer, also referred to as the issuing bank or card issuer, supplies an individual with the payment card they use to make transactions. Typically a bank or financial institution, issuers provide access to funds or credit, authorize transactions and manage settlement.
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Know Your Customer (KYC): Know Your Customer (KYC) standards protect financial institutions against fraud, money laundering, corruption and terrorist financing. KYC processes establish customers' identities, understand the nature of their activities to determine whether funds are legitimate and assess money laundering risks.
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Ledger: A payment ledger is a record-keeping system that tracks all payments made by a business's customers and suppliers.
Local Acquiring: Local acquiring is a card processing method where the merchant acquirer is based in the country where a payment is taking place, rather than processing the payment through a foreign or cross-border acquirer. Local acquiring typically results in lower processing fees by avoiding cross-border charges, higher authorization rates and compliance with local regulations. Find out more about local acquiring: Why Localizing Card Payments Has Become a Margin Issue for Global Travel Businesses
Localization: Payment localization refers to changing the payment experience to match the habits and conditions of local markets. Localization reduces cart abandonment, increases conversion rates and helps build trust with potential customers. Examples of payment localization include local currency display, offering local payment methods and providing a localized checkout experience through accurate translation.
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MATCH List: The Mastercard Alert to Control High-Risk Merchants List, commonly known as the MATCH List, is a database acquiring banks and payment providers use to screen merchants during the underwriting process. Acquirers submit inquiries to the MATCH Pro API, which then returns details of possible merchants found on the MATCH List. Merchants are added to the database for several reasons, including excessive chargebacks and fraud.
Merchant Account: A merchant account is a specialized bank account that allows businesses to accept card payments. The account temporarily holds funds while transactions are authorized, cleared and settled before the funds are transferred to the business' bank account. Find out more about choosing a suitable travel merchant account: How to Choose the Right Travel Merchant Account For Your Business or Merchant Accounts for Tour Operators: What to Look Out For
Merchant Acquirer: A merchant acquirer is a bank or financial institution that handles the merchant accounts that give merchants the ability to accept card payments. They process card payments on behalf of merchants, receiving transaction requests, routing them through card networks to the card issuer for authorization before settling the funds into merchants' accounts.
Merchant Category Code (MCC): A Merchant Category Code (MCC) is a four-digit number assigned by card networks that classify businesses based on the goods or services they offer.
Merchant ID (MID): A Merchant ID (MID) is a code assigned to businesses by acquiring banks or payment processors that ensures card payments are securely routed from a customer’s account to the correct merchant account.
Merchant of Record (MoR): A Merchant of Record (MoR) is a service that takes responsibility for selling goods or services to consumers on behalf of a merchant. They take on legal responsibility relating to transactions, including managing exchange rates, dealing with refunds and chargebacks and complying with regulations.
Multi-Currency Pricing: Multi-currency pricing refers to allowing customers to browse goods and services online in their preferred currency. Merchants use multi-currency pricing because it increases conversion rates by making the checkout process feel more familiar, reduces costs on foreign exchange and provides a better customer experience by removing hidden fees.
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Open Banking: Open banking allows third-party service providers to access consumer data from traditional banking systems through APIs, increasing transparency, competition and innovation in the payments space. Open banking gives consumers control over the financial information and gives businesses access to banking data that helps them improve the payment services and banking products they offer.
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Payment Card Industry Data Security Standards (PCI DSS): PCI DSS are the security standards created to protect cardholder data during transactions, reducing the risk of fraud and data breaches.
Payment Facilitator (PayFac): A payment facilitator is a master merchant that submits transactions and provides acquiring services to sub-merchants through a relationship with an acquirer. A PayFac typically enters into contracts with sub-merchants, submits transaction data to acquirers and makes sure funds are settled and then paid to sub-merchants.
Payment Gateway: A payment gateway allows businesses to securely accept payments online. The technology connects a website or point-of-sale system to an acquiring bank or payment processor to authorize and facilitate financial transactions between consumers and businesses.
Payment Orchestration: Payment orchestration is the coordination of managing multiple payment service providers, acquirers and payment gateways in a single platform. This creates a unified interface where all payment operations can be efficiently managed.
Payment Processor: A payment processor facilitates electronic transactions between customers and businesses. They allow businesses to accept various payment methods securely and manage the transfer of funds from the customer's account to the busines's account.
Payment Services Directive 2 (PSD2): Introduced in the EU in January 2016, PSD2 is a regulation that is designed to make online payments more secure, protect consumers and boost competition between providers of financial services.
Payment Services Directive 3 (PSD3): PSD3 is the next iteration of PSD2. It aims to enhance consumer protection, reduce online fraud and promote open banking. PSD3 is not currently in effect, but is widely believed to come into law in 2027 or 2028.
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Refund: A refund is money returned to a customer after a payment has completed. In the context of travel, customers can get refunds when a trip is canceled, significantly altered by the provider or when they cancel the trip under a refundable cancelation policy.
Reserve: A reserve is a temporary hold on a portion of a merchant's transactions by a payment processor. It acts as a buffer to cover the cost of potential refunds and chargebacks.
Rolling Reserve: A rolling reserve is a percentage of a merchant's gross sales (usually between 5% to 15%) a merchant account or payment processor withholds to cover the cost of fraud, refunds and chargebacks. The rolling reserve is held for a specific period of time, typically between 90 and 180 days depending on the payment processor/merchant account.
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Settlement: In the context of payments, settlement happens when the requested funds are transferred from the payer to the payee's account, signaling the completion of a financial transaction.
Split Payments: A split payment is when a customer uses more than one payment method to complete a single transaction. For example, a traveler may split a payment for a holiday across multiple cards. Split payments help travel companies reduce failed transactions, recover declined payments and generate incremental revenue. Find out more about split payments in travel: How Multi-Card Payments Generate Millions in Incremental Sales
Statement: A statement is a summary of a consumer or a business' financial activity over a given time period. Statements include all incoming and outgoing payments made to and from the bank account.
Strong Customer Authentication (SCA): Strong Customer Authentication is a requirement of the EU's PSD2 regulations which increases the security of electronic payments. SCA requires banks to make additional identity checks when consumers make payments. Banks ask for two out of these three forms of identification at the checkout stage to confirm the consumers' identity: something they know (PIN or password), something they have (mobile phone or one-time passcode) and something they are (biometric authentication using fingerprints, voice or facial recognition).
Society for Worldwide Interbank Financial Telecommunication (SWIFT): Founded in 1973, SWIFT is a member-owned network that banks use to quickly and securely communicate with each other and facilitate international payments.
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Tokenization: Tokenization is the process of protecting sensitive data, such as a credit card number, by replacing it with tokens, which are unique, random identifiers linked to the original data that cannot be accessed.
Transaction Fee: A transaction fee is a charge a business pays to a payment processor or bank whenever an electronic payment is processed. Transaction fees vary depending on the payment service/bank used, but typically range from 1.3% to 3.5% of the transaction's value, plus a fixed fee.
Travel Payment Gateway: A travel payment gateway is a payment processing system built for travel bookings, handling multi-currency transactions, global and local payment methods, fraud prevention tools and automated reconciliation. Find out more about the benefits of travel payment gateways: What Makes a Payment Solution Truly Built for Travel?
Trust Account: In the context of travel, a trust account is an independent bank account where a travel provider deposits customer money. Travel trust accounts address providers' regulatory requirements under the Package Travel Regulations, inspire confidence in customers and allow for better financial planning and stability for the business.
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Underwriting: Underwriting is a risk-assessment process where a payment processor or acquiring bank evaluates the risk associated with processing payments for a specific merchant.
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Visa Acquirer Monitoring Program (VAMP): VAMP is a fraud program introduced by card network Visa to make online payments safer by incentivizing merchants and acquirers to keep fraud and disputes (like chargebacks) below a percentage of their total transactions. Visa calculates the VAMP ratio by adding the number of fraudulent transactions and number of non-fraud disputes and dividing it by the total settled VISA transactions. The ratio only applies if a merchant exceeds a minimum of 1,500 fraud and dispute events per month. As of April 2026, the merchant excessive threshold is a ratio of 1.5%.
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Wire Transfer: A wire transfer involves a payer sending a payee money electronically – essentially a bank to bank transfer. Wire transfers are preferred when payments need to be made quickly.
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