National payment education resource
Payment Processing Glossary
Use plain-language definitions to follow how a payment moves, compare provider materials, and ask better operational questions. Exact contract language, network rules, product features, and provider procedures can differ, so confirm any term that affects a specific account.
How to use this guide
Start with the part of the payment journey you are reviewing
Payment terminology becomes easier when terms are grouped by purpose. Begin with the parties involved, then trace authorization, capture, clearing, settlement, and funding. Use the operations and security sections when reviewing equipment, account procedures, or a customer dispute.
Parties and accounts
Who participates in a card payment?
Cardholder
The person or organization authorized to use a payment card account. A cardholder may not always be the individual physically presenting the card.
Merchant
A business or organization that accepts payment for goods, services, donations, or another permitted transaction under its acceptance agreement.
Issuer
The financial institution or other authorized entity that issues a payment card or account to the cardholder and decides whether to approve an authorization request.
Acquirer
An institution that contracts for merchant acceptance and submits eligible card transactions into a payment network. Account structures and provider roles vary.
Payment network
A system with rules and technical infrastructure that routes transaction messages among participating entities. Network and provider responsibilities should not be treated as interchangeable.
Merchant account
A commercial arrangement used to accept and settle card transactions. A merchant may interact with an acquirer, processor, payment facilitator, or another provider depending on the model.
Transaction flow
What happens from checkout to deposit?
Authorization
A request for the issuer to approve or decline a transaction based on the submitted information and its decision process. Approval confirms an authorization response, not final settlement or a guarantee against later disputes.
Authorization code
A value returned with an approved authorization. It helps identify that approval but is not a substitute for the complete transaction record.
Capture
The step that confirms an authorized transaction should move forward for clearing and settlement. Some payment flows authorize and capture together; others separate the steps.
Batch
A group of captured transactions submitted for processing. A terminal, gateway, POS system, or provider may close or submit batches automatically or through a merchant action.
Clearing
The exchange and reconciliation of transaction data used to calculate obligations among payment participants before settlement.
Settlement
The process of satisfying financial obligations arising from cleared transactions. The term may be used differently in network, provider, and merchant-facing materials.
Funding or deposit
The provider's transfer of net transaction proceeds to the merchant's designated bank account, subject to the account agreement, adjustments, returns, and timing rules.
Pending transaction
A transaction that has been authorized or reported but has not reached its final posted state. Issuer displays and timing can vary.
Acceptance technology
How payment information enters the workflow
Payment terminal
A device used to initiate supported in-person payment transactions. Hardware, software, connectivity, certification, and provider support must be verified for the intended setup.
Point-of-sale system
Software and hardware used to manage sales and related operations. Payment acceptance may be built in, connected through an integration, or handled separately.
Payment gateway
Technology that transmits payment transaction data between a merchant-facing checkout or application and downstream payment services.
Virtual terminal
A provider-hosted interface that lets an authorized user enter transaction information without a physical checkout terminal. Procedures and security scope depend on the implementation.
Contactless payment
An in-person interaction that uses supported proximity technology between a payment credential and an acceptance device. The contactless symbol does not establish compatibility by itself.
EMV chip transaction
A payment interaction using EMV specifications for compatible chip-based credentials and acceptance devices. EMV is a technical framework, not the name of a single card network.
Data and security concepts
Terms used to protect payment workflows
Tokenization
A process that substitutes a token for a sensitive data element. Token design, permitted use, storage, and the system that can map or use the token vary by solution.
Encryption
A cryptographic transformation intended to make data unreadable without the appropriate key or process. Encryption does not remove the need for access controls, secure configuration, monitoring, and other safeguards.
Card verification value
A security value associated with a payment card and used in certain transaction checks. Names and rules differ by network, and merchants should follow current handling requirements.
PCI DSS
The Payment Card Industry Data Security Standard, maintained by the PCI Security Standards Council, sets baseline technical and operational requirements for protecting account data. Applicability and validation questions require current official guidance.
Account data
A PCI security term covering categories of cardholder data and sensitive authentication data. The exact definitions and permitted handling should be checked in current PCI SSC materials.
Data breach
An incident involving unauthorized access to or disclosure of data. Incident classification, notification, investigation, and response duties depend on the facts and applicable requirements.
Bank-account payments
ACH terms merchants often encounter
ACH
The Automated Clearing House is a U.S. electronic payment network used for eligible credit and debit transfers between accounts at participating financial institutions.
Originator
The person or organization that authorizes or initiates an ACH entry through an originating financial institution under the applicable arrangement.
ACH credit
An entry that directs funds toward a receiving account, commonly used for direct deposit and other push-payment use cases.
ACH debit
An entry that pulls funds from a receiving account under a valid authorization and applicable rules. Authorization requirements depend on the transaction context.
Operations and disputes
Terms used after a transaction is submitted
Void
An attempt to cancel a transaction before it completes the provider's processing flow. Whether a void is available depends on the transaction status and system.
Refund
A separate transaction that returns an eligible amount to the original payment method after the sale has progressed beyond the point where it can be voided.
Chargeback
A card transaction reversal initiated through the issuer and network dispute process. Reason, evidence, deadlines, and merchant options depend on current rules and case facts.
Retrieval or inquiry
A request for transaction information that may precede or exist apart from a chargeback. Terminology and response procedures vary by network and provider.
Reconciliation
The process of matching sales, refunds, adjustments, batches, provider reports, fees, and bank deposits to explain differences and complete accounting records.
Billing descriptor
Merchant-identifying information that may appear with a transaction on a cardholder's statement. Use provider-approved wording customers recognize and test the actual display.
Related resources
Continue learning about payment operations
Common questions
Payment terminology FAQ
Are a processor and an acquirer the same thing?
Not necessarily. Organizations can perform multiple roles, but processing services and acquiring relationships are distinct concepts. Confirm the legal and operational roles in the account documents.
Does authorization mean the merchant has been paid?
No. Authorization is an approval response at one stage of the transaction. Capture, clearing, settlement, funding, adjustments, and disputes can follow.
Is a gateway the same as a merchant account?
No. A gateway transmits transaction data, while a merchant account describes a commercial acceptance arrangement. Some providers package them together.
Why do providers define a term differently?
Some words describe a broad industry concept while provider interfaces use the same word for a specific workflow. Treat the governing agreement and current provider documentation as controlling.
Last editorial review: August 12, 2026. Sources reviewed: current Federal Reserve payment-system materials, Nacha ACH guidance, PCI SSC terminology, EMVCo information, and Visa rules resources.
Next step
Map the terms to your actual payment flow
List the parties, systems, reports, and handoffs involved in your checkout, then confirm account-specific definitions with the provider responsible for each stage.
To learn more about how TSYS can help improve the way your organization accepts payments, markets to new customers, or manages its HR responsibilities, get in touch by calling 585-981-8463 to get started.
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