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Acquiring Bank or Acquirer

A bank that accepts payments for a payments network. Often the financial institution that provides a merchant account and processes card transactions via POS equipment on behalf of a merchant. The acquirer feeds transaction data into the interchange system.

Issuing Bank or Issuer

The bank that holds the customer’s credit or debit card account and settles funds to the acquiring bank for payment to the merchant. The issuing bank bills the cardholder for transactions at a later date, typically monthly.

Merchant Discount Rate (MDR)

A merchant discount rate is the rate levied on debit and credit card transactions to a merchant for the payment processing services. Before accepting debit and credit cards as payment the merchant must set up this service and agree to the rate.

National Automated Clearing House (NACH)

A web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. NACH System can be used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc. National Automated Clearing House (NACH) is a centralised system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors.

Bank Identification Number (BIN)

The first digits — typically the first four digits or first six digits — that are found on a card from an issuing or acquiring institution as unique identifiers of that institution.


A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account statement or transactions report. A chargeback may occur on debit cards (and the underlying bank account) or on credit cards. Chargebacks can be granted to a cardholder for a variety of reasons.

Chargeback Period

A chargeback period is the time frame during which a credit card holder can dispute a credit card transaction with a merchant. Disputed charges within the chargeback period typically are credited back to the cardholder while the dispute is resolved. Chargeback periods vary by the payment processor and by transaction type but are typically 120 days following the initial purchase or delivery of the purchased goods.


The process of transmitting information about a transaction or transactions that eventually results in a decision of approval or denial of the transactions and the settlement of funds involved.


Any process that is used by any of the partners in a payment transaction to meet with and follow regulatory procedures applying to that transaction. These can include government regulations, card network regulations, bank regulations and others.


The transaction request has been refused, usually by the issuing bank but sometimes by other entities along the processing chain. Reasons are typically insufficient funds or more rarely fraud or theft. Reasons are coded for return with the decline.


A claim made by a cardholder to the issuing bank questioning the validity of a credit or debit card charge. Disputes start an interaction with the merchant that could lead to retrievals or chargebacks.

Europay, MasterCard and Visa (EMV)

A commonly-available chip-based standard for smart payment cards using chip and pin systems for card present transactions. Designed to combat fraud by making cards much harder to counterfeit.


The domestic and international systems operated by VISA and MasterCard for authorization, settlement and the passing through of interchange and other fees, as well as other monetary and non-monetary information related to bankcard activities.

Interchange fee

A fee specified by card associations that is paid by the acquirer to the issuing bank for each credit or debit card transaction to cover transaction costs. The acquirer passes this fee to merchants, in addition to any other fees charged for processing credit or debit card transactions. The fee depends on a number of variables, such as card type, business type, card acceptance method, settlement or batch timeframe, information submitted with the transaction, and more.

Know Your Customer (KYC)

The compliance process of confirming the identity of a merchant or customer. Most commonly refers to government, bank, and card network requirements to verify identity to prevent fraud, identity theft, money laundering, and terrorist financing.

Merchant Agreement

The contract between merchant and acquiring bank listing legal warranties, rights and responsibilities.

Merchant Identification Number (MID)

A unique number to identify each merchant to everyone else in the processing chain for accounting and billing purposes.

Terminal Identification Number (TID)

A Terminal ID or TID is a unique number that is assigned to your merchant number once you have been on-boarded. They are a series of numbers (usually 8 digits long) that are used to assign the transactions processed through your account to your merchant number.

Multi-Factor Authentication (MFA)

A defense against hacking and identity theft that requires multiple steps and pieces of information in order to gain access to an online account.

Near Field Communication (NFC)

Near-field communication (NFC) is a short-range wireless connectivity technology that lets NFC-enabled devices communicate with each other. With NFC, you can transfer information between devices quickly and easily with a single touch.

Payment Card Industry (PCI)

The credit, debit, prepaid and other payment card businesses. Also refers to the requirements that they have set out that provide security management, policies, procedures, network architecture, software design and more.

Payment Card Industry Data Security Standard (PCI DSS)

A proprietary information security standard for the payment card industry. A requirement for merchants and payment processors to meet security requirements that are used extensively across almost all card systems for security.

PCI compliance

A common term used to indicate that a particular organization meets the Payment Card Industry Data Security Standard (PCI DSS) requirements. Failure to meet PCI compliance can mean penalties or the suspension of the ability to make card transactions.

Prepaid Cards

Similar to a Debit card that is acquired with a balance already associated with it. Prepaid cards allow the cardholder to spend up to the amount deposited into the prepaid card.


The process through which incoming and outgoing funds and transactions are matched up.


The transfer of funds to satisfy a payment transaction that has been approved. Once approval is granted, the funds travel back to the acquiring bank and the merchant account, with associated fees deducted along the way.


Cancellation of a payment transaction and also cancellation of the transfer of funds from customer to merchant.