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Glossary

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TL;DR
  • Plain-English definitions for the jargon that turns up in processor emails and network notices
  • Starts with the questions merchants actually ask, then runs A to Z
  • Want the abbreviation expanded rather than explained? Use Acronyms

Key terms and definitions in payments, chargebacks, and risk management.

Common Questions​

What is a chargeback ratio and why does it matter? : It's the share of your transactions that turn into disputes. Visa and Mastercard both track disputes, but their program metrics differ. Your processor can set a stricter limit. Get it in writing and read the counts beside the rate. It's one of the most important numbers in payment risk. → Chargebacks Overview | Network Programs

Why is Visa threatening to fine me? : First, check whether the notice comes from a network program or your processor's own limit. Ask which metric you breached, which fees apply, and what deadline you've been given. Cut disputes fast. → Reduce Chargebacks Fast | Network Programs

Why was my merchant account terminated? : Usually one of three things. Excessive chargebacks, excessive fraud, or a terms violation. If you landed on the MATCH list, that's an industry blacklist. Most processors won't onboard you for the five years it lasts. → MATCH/TMF List

How do I lower my processing fees? : Start with your effective rate: total fees divided by total volume. Compare the same card mix, ticket size and channel against your processor's written schedule. Then price interchange-plus against your flat rate and negotiate the markup. → Buying Payments | Interchange

What does the charge description on my customer's statement mean? : That's your billing descriptor. If customers don't recognize it, they dispute the charge. Show your business name plus a phone number or URL. → Descriptors and Comms

What's the difference between fraud and friendly fraud? : "Real" fraud means someone used a card without the owner's consent. Friendly fraud is a real customer who made a real purchase, then disputed it. You will also see friendly fraud called first-party fraud or first-party misuse, which mean the same thing. They'll claim they didn't authorize it, never got it, or weren't satisfied. Different problems, different fixes. → Fraud Types | Friendly Fraud

Should I fight this chargeback or just accept it? : Depends on the recoverable amount, reason code, evidence and cost of responding. Compare the likely recovery with response costs. If the dispute is valid, accept it through your provider's process. Don't send a separate refund on an open dispute. → Chargebacks Overview | Compelling Evidence

What is interchange and can I negotiate it? : Interchange is paid by the acquiring bank to the issuer. This site's assumed US card mix gives 0.89% + $0.158 in person and 1.36% + $0.152 online, not a published industry average. DERIVED Inputs and sums. You can't negotiate the network's rate, but you can negotiate the processor's markup. → Interchange

How do I know if my processing fees are too high? : Calculate your effective rate: total fees divided by total volume. Reconcile the fees against your contract, then compare quotes on the same sales mix and ticket size. A percentage alone doesn't prove you're overpaying. → Reading Statements | Benchmarks

What is 3D Secure and do I need it? : 3D Secure (3DS) is an extra verification step at online checkout. The customer confirms through their bank's app or a one-time code. Fraud liability shifts from you to the bank. If you sell online and have a fraud problem, nothing else works as well. → 3D Secure

  • Chargeback - Forced transaction reversal initiated by the cardholder's bank
  • Authorization - The process of verifying a transaction can proceed
  • 3DS (3D Secure) - Authentication protocol for card-not-present transactions
  • Interchange - Fee paid by acquiring bank to issuing bank per transaction
  • PCI DSS - Security standard for handling cardholder data

A​

AAV (Accountholder Authentication Value) : Mastercard's authentication verification value generated during Identity Check (3DS) authentication.

ABU (Automatic Billing Updater) : Mastercard's service that automatically updates stored card credentials when cards are replaced or renewed.

ACMP (Acquirer Chargeback Monitoring Program) : Mastercard's umbrella name for ECM, HECM and EFM. It has no separate threshold or fine. For subscription merchants covered by section 5.4.1, the receipt recommendation becomes a requirement after four months or more of ACMP identification in the same audit period. Exceptions and charity treatment apply. → Network Programs

ACH (Automated Clearing House) : US electronic network for bank transfers, including direct deposits and bill payments. → ACH Operations

Acquirer : The financial institution that processes card transactions on behalf of merchants. Also called "acquiring bank" or "merchant bank." → Payment Ecosystem

Allocation : Visa's dispute process. Liability is assigned automatically from transaction data, with no merchant response.

ARN (Acquirer Reference Number) : A 23-digit number assigned by the acquirer to uniquely identify a transaction. Critical for dispute tracking.

ATO (Account Takeover) : Unauthorized access to and control of a legitimate user's account. → Account Takeover

Authorization : Checking that a transaction can proceed. Verifies available credit or funds and card validity. → Authorization & Capture

AVS (Address Verification Service) : Compares the billing address the customer gives you to the one the issuer has on file. → AVS & CVV

B​

BIN (Bank Identification Number) : First 6-8 digits of a card number identifying the issuing bank. Also called IIN (Issuer Identification Number).

BRAM (Business Risk Assessment and Mitigation) : Mastercard program for high-risk merchant category oversight. → Network Programs

Bust-Out : Credit built up legitimately over time, then maxed out all at once before the account vanishes. → Fraud Rings

C​

CAVV (Cardholder Authentication Verification Value) : Visa's cryptographic value proving cardholder authentication during 3D Secure.

Central Site Business Date : Mastercard's reference date found in PDS 0158, subfield 5, used for calculating chargeback time frames.

Chargeback : Forced reversal of a transaction initiated by the cardholder's bank. Also called "dispute" in some contexts. → Chargebacks Overview

CIT (Cardholder Initiated Transaction) : A transaction initiated directly by the cardholder, as opposed to merchant-initiated.

CNP (Card Not Present) : Transactions without the physical card. Online, phone, or mail orders. → Payments Overview

Collaboration : Visa's dispute process. The merchant can send evidence before the final decision.

Compelling Evidence : Documentation that proves cardholder participated in or benefited from a disputed transaction. → Winning Evidence

CP (Card Present) : Transactions where the physical card is used at a terminal or point of sale.

CVV/CVC (Card Verification Value/Code) : 3-4 digit security code on card used for CNP verification. CVV2 specifically refers to the printed code. → AVS & CVV

D​

DE (Data Element) : Specific field in ISO 8583 message format used for payment card transactions. Example: DE 72 contains message text.

DPD (Days Past Due) : Number of days a payment is overdue from its due date.

E​

ECI (Electronic Commerce Indicator) : Value indicating the authentication level of an e-commerce transaction. Key values: 05 (fully authenticated), 06 (attempted), 07 (not authenticated).

ECP (Excessive Chargeback Program) : Mastercard's monitoring program for merchants exceeding chargeback thresholds. ECM is 100-299 chargebacks AND a 1.50-2.99% ratio. HECM is 300+ AND 3.00%+. → Network Programs

EFM (Excessive Fraud Merchant) : Mastercard's fraud-side program, separate from ECM and running alongside it. All four entry tests must be met. Check the counts, ratio, 3DS coverage and regional conditions in Network Programs.

EMV (Europay, Mastercard, Visa) : Global standard for chip card payments providing enhanced security over magnetic stripe. → EMV & Contactless

F​

False Positive : A legitimate transaction incorrectly flagged or blocked as fraud.

First-Party Fraud : Fraud committed by the actual customer using their own identity, with intent to defraud. → First-Party Fraud

Friendly Fraud : Legitimate cardholder disputing a valid transaction they actually made. Also called "first-party misuse." → Friendly Fraud

FRR (First Ride Risk) : Mastercard transit program allowing initial ride without prior authorization.

G​

GCMS (Global Clearing Management System) : Mastercard's transaction clearing system.

GMAP (Global Merchant Audit Program) : Mastercard's merchant audit program, suspended since 15 October 2020. Its 3%, 5% and 8% tiers get quoted as live thresholds. They aren't current thresholds. Reason code 4849 belongs to QMAP, not GMAP. A relaunch dated 1 April 2027 has been reported and Mastercard hasn't confirmed it. → Mastercard GMAP

I​

Identity Check : Mastercard's brand name for 3D Secure authentication. → 3D Secure

Interchange : Fee paid by the acquiring bank to the issuer. This site's assumed US mix gives 0.89% + $0.158 card-present and 1.36% + $0.152 online. Those are model results, not the rate on every card. DERIVED Card mix, inputs and sums. → Interchange

IPM (Integrated Product Messages) : Mastercard's clearing message format.

Issuer : The bank that issues cards to consumers and is responsible for cardholder accounts. → Payment Ecosystem

K​

KBA (Knowledge-Based Authentication) : Identity verification using questions only the user should know.

KYC (Know Your Customer) : Process of verifying customer identity, required by regulations. → AML Basics

L​

Liability Shift : Transfer of fraud loss responsibility between parties based on EMV/3DS compliance. When implemented correctly, liability shifts from merchant to issuer. → 3D Secure | EMV Liability

M​

Mastercom : Mastercard's online dispute management platform.

MCC (Merchant Category Code) : Four-digit code classifying merchants by business type. → MCC Codes

MERP (Merchant Elevated Risk Program) : Visa's program for merchants showing unusual activity, AP Region only. Visa's 18 April 2026 public rules give 9 April 2026; Checkout.com's notice gives 9 October 2026. Ask your acquirer which date and notice apply. The criteria sit in the Merchant Elevated Risk Program Guide. Visa's public rules publish acquirer assessments of USD 25,000 for first identification and USD 50,000 for a repeat with the same acquirer. → MERP sources and conditions

MFA (Multi-Factor Authentication) : Authentication requiring multiple verification methods.

MIT (Merchant Initiated Transaction) : A transaction initiated by the merchant without cardholder interaction, such as recurring billing. → Subscriptions & Recurring

Metro 2 : Standard format for reporting credit information to bureaus.

N​

No-Show : A missed appointment or reservation. For salons and other booked services, see appointment fees and deposits. Hotel, B&B and vacation-rental guarantees use separate card rules; ask your processor which apply.

P​

PAN (Primary Account Number) : Full card number, typically 16 digits.

PCI DSS (Payment Card Industry Data Security Standard) : Security standard for handling cardholder data. → PCI-DSS Compliance

PDS (Private Data Subelements) : Mastercard's extended data fields in ISO messages.

PII (Personally Identifiable Information) : Data that can identify a specific individual.

POI (Point of Interaction) : Location/device where card transaction occurs (terminal, website, etc.).

Pre-Arbitration : On Visa and Mastercard, the dispute stage after representment where the issuer challenges the merchant's response before arbitration. Amex has re-disputes instead. → Chargeback Lifecycle

Q​

QMAP (Questionable Merchant Audit Program) : Mastercard's audit program for merchants with fraud patterns it wants to look at directly. It isn't a ratio program. Reason code 4849 is QMAP's, not GMAP's, and a MATCH listing under QMAP goes in as code 08. → Network Programs

R​

RDR (Rapid Dispute Resolution) : Visa's program allowing pre-dispute resolution before chargebacks file. → Chargeback Alerts

Reason Code : Code indicating the specific category/reason for a chargeback. → Reason Codes Reference

Representment : Merchant's response to a chargeback with evidence disputing the claim. Also called "second presentment" (Mastercard). → Representment Workflow

ROC (Record of Charge) : American Express's term for transaction record.

S​

SafeKey : American Express's brand name for 3D Secure authentication. → 3D Secure

SCA (Strong Customer Authentication) : EU requirement under PSD2 for multi-factor authentication on certain transactions. → 3D Secure

Second Presentment : Mastercard's term for representment - merchant's response to a chargeback.

SLI (Security Level Indicator) : Mastercard's indicator of authentication level. Values: 1 = first-party authenticated, 2 = delegated authentication.

SMMP (Scam Merchant Monitoring Program) : Mastercard's scam investigation duty for card-not-present merchants. A qualifying trigger requires the acquirer to start investigating within 72 hours; blocking follows if scam activity is confirmed. The new-merchant refund-and-chargeback test has its own acceptance-history and purchase-count conditions. Mastercard now publishes them in section 7.2.1. → Scam Merchant Monitoring

Stand-In : Network-level authorization when issuer is unavailable.

Synthetic Identity : Fabricated identity mixing real and fake data. It belongs to no real person. → Synthetic Identity Fraud

T​

Third-Party Fraud : Fraud committed using stolen identity of an innocent victim. → Third-Party Fraud

TLID (Transaction Link Identifier) : Mastercard's identifier linking related transactions.

3DS (3D Secure) : Authentication protocol for card-not-present transactions providing liability shift. → 3D Secure Guide

U​

UCAF (Universal Cardholder Authentication Field) : Mastercard's authentication data field containing AAV and authentication details.

V​

VAU (Visa Account Updater) : Visa's service that automatically updates stored card credentials.

VCR (Visa Claims Resolution) : Visa's dispute resolution system including Allocation and Collaboration workflows. → Chargeback Lifecycle

VDMP (Visa Dispute Monitoring Program) : Visa's program monitoring merchants exceeding dispute thresholds. Now consolidated into VAMP. → Network Programs

Velocity : Rate of transactions or activities over time. Velocity rules detect unusual transaction patterns. → Velocity Rules

VFMP (Visa Fraud Monitoring Program) : Visa's legacy program monitoring merchants exceeding fraud thresholds. Now consolidated into VAMP. Dispute condition 10.5 remains live; check the current program in Network Programs.

VFMP-3DS (Visa Fraud Monitoring Program for 3-D Secure) : A historical label for fraud monitoring on Visa Secure traffic. Adyen and Stripe still describe U.S. Visa Secure Excessive Fraud, which can remove your 3DS liability shift. Don't use old VFMP-3DS thresholds for today's program. → Network Programs

Visa Secure : Visa's brand name for 3D Secure authentication. → 3D Secure

VROL : Visa Resolve Online - Visa's dispute management platform.

X​

X-Code : Network authorization when issuer declines but network approves based on risk assessment.

See Also​

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