Payments language demystified

Account-to-account (A2A) payments involve transferring funds directly from one bank account to another without intermediaries like card networks. This payment method is commonly used for real-time payments, recurring bill payments, or direct debit transactions. A2A payments are increasingly popular in peer-to-peer (P2P) transfers and business transactions due to their cost efficiency, security, and speed, especially when leveraging modern payment infrastructures like Open Banking or ACH (Automated Clearing House).

A financial institution or payment processor like Finix responsible for securely facilitating card payments on behalf of merchants. They also handle aspects like risk management, fraud prevention, and settlement of payments, making them critical players in the payments ecosystem. The Acquirer Agreement Formalizes the relationship between a payment facilitator, ISV, or ISO and an acquiring bank. This contract defines the terms for payment processing, including transaction pricing, service-level agreements (SLAs), liability distribution, and any value-added services. A well-negotiated acquirer agreement is crucial for optimizing transaction costs and ensuring smooth payment operations.

Costs incurred by merchants for verifying the billing address of a cardholder during a transaction. Leveraging the Address Verification System (AVS), this security measure matches the provided address with the card issuer's records to reduce fraud, particularly in card-not-present (CNP) scenarios.

The system that verifies the zip code that is submitted at the time of processing matches the zip code of the cardholder's billing statement.

Alternative payment methods refer to payment options beyond traditional credit or debit cards. Examples include digital wallets (e.g., Apple Pay, PayPal), bank transfers, “Buy Now, Pay Later” (BNPL) solutions, cryptocurrency, and mobile payment systems. These methods cater to diverse consumer preferences, particularly in global markets where certain payment types dominate over cards. Offering alternative payment methods can improve customer experience, expand reach, and boost conversion rates.

Recurring charges associated with maintaining accounts, such as credit card memberships or subscription-based payment services. These fees often cover benefits like fraud protection, rewards programs, or access to exclusive features, depending on the financial product.

Refers to regulations and practices designed to detect, prevent, and report financial crimes, particularly the process of disguising illicit funds as legitimate. Financial institutions must comply with AML laws, such as the Bank Secrecy Act (BSA), by implementing robust monitoring systems and reporting suspicious activities.

The process where a payment card issuer validates a transaction request, confirming the cardholder has sufficient funds or credit to complete the purchase.

An authorization hold is a temporary freeze on a specific amount of funds in a cardholder’s account during the payment authorization process. This ensures the funds are available to complete the transaction without immediately withdrawing them. Commonly used in industries like hospitality and car rentals, authorization helps merchants secure payments while verifying details or delivering a service. The hold is eventually either captured (finalized) or released, typically within a few days if no action is taken.

An electronic network for processing transactions between bank accounts. ACH transactions include payroll deposits, bill payments, and government benefits, offering an efficient alternative to paper checks. Finix enables billions of dollars in ACH payment processing for companies of all sizes.

An electronic funds transfer where money is pushed from the payer’s account to a recipient's account. Examples include payroll deposits and vendor payments, commonly used for recurring disbursements.

Pulls funds from a payer’s bank account to fulfill a payment obligation, such as a utility bill or loan repayment. It streamlines recurring payments and reduces manual intervention.

Occurs when funds from a previously completed ACH transaction are returned to the payer, often due to an overpayment or reversal of a payment agreement.

Indicates a failed transaction due to insufficient funds, incorrect account details, or revocation of payment authorization. The ACH network communicates the reason for the failure via specific return codes.

Bank account verification is the process of confirming that a bank account is valid and belongs to the intended user. It reduces fraud, ensures payment accuracy, and supports regulatory requirements. Common verification methods include micro-deposits, instant verification via Open Banking APIs, or document review. It is particularly crucial for recurring payments, direct debits, and payouts.

Identifies the financial institution that issued a payment card. Found in the first six or eight digits of a card number, the BIN determines the card type, network, and issuing bank to facilitate transaction routing and fraud detection.

Identifies banks globally for international transactions to ensure funds are accurately routed to the correct financial institution. Also known as a SWIFT code.

Mandates U.S. financial institutions to assist in detecting and preventing money laundering and other illicit activities. By requiring institutions to report large or suspicious transactions, the BSA supports transparency and regulatory compliance.

A standardized unit for measuring percentage changes in financial terms, particularly interest rates or transaction fees. One basis point equals 0.01%, simplifying precision in calculations.

A processing charge assessed for submitting a group of transactions to a payment processor like Finix for settlement. These fees depend on the volume of transactions included in the batch and are integral to merchant cost structures.

Biometric payments use unique physiological or behavioral traits, such as fingerprints, facial recognition, or voice recognition, to authenticate and authorize transactions. They are increasingly integrated into payment systems for their convenience and enhanced security, reducing dependency on (Personal Identification Number) PINs or passwords. Biometric technology is frequently used in mobile wallets, ATMs, and point-of-sale (POS) systems, creating frictionless payment experiences while mitigating fraud.

Buy Now, Pay Later (BNPL) is a flexible payment option that allows consumers to split the cost of a purchase into interest-free or low-interest installments over time. Leading providers like Afterpay, Klarna, and Affirm facilitate BNPL arrangements. This option appeals to customers by improving affordability and cash flow while boosting sales and average order values for merchants. However, merchants pay a fee to BNPL providers for offering this service.

The global payment networks—Visa, Mastercard, American Express, and Discover—that facilitate credit and debit card transactions. These networks connect issuers, acquirers, and merchants, ensuring interoperability and compliance standards while enabling secure and frictionless payment acceptance across millions of businesses worldwide.

A transaction type where the physical card is not present during payment that Finix supports. Predominantly used in e-commerce, subscription billing, and mobile commerce, CNP transactions are authenticated through cardholder details like CVV, billing address, and 3D Secure protocols, mitigating fraud risks while enabling global reach for merchants.

A transaction where a payment card is physically presented to a merchant at the point of sale. These transactions use chip readers, magnetic stripe readers, or contactless NFC technology for fast and secure payment processing, minimizing fraud risks compared to CNP transactions. Finix supports CP transactions and even offers omni-channel in-person payment devices and tools.

A unique three-digit security code printed on the back of payment cards, ensuring that the cardholder is in possession of the card during card-not present (CNP) transactions. This code acts as a critical fraud prevention tool, commonly used in e-commerce and remote payment scenarios.

Embedded within a payment card’s magnetic stripe, this security code is read during card-present (CP) transactions. It validates that the physical card is genuine, enhancing transaction integrity for swipe-based payments.

A reversal of funds initiated by the card issuer due to a transaction dispute, fraud, or processing error. Chargebacks protect consumers but can impact merchants’ revenue and reputation, making proactive chargeback management crucial for maintaining compliance and reducing fees. Businesses can improve chargeback rates by detecting and blocking fraudulent transactions through Finix. This entails a chargeback fee which is assessed to a merchant when a chargeback occurs, covering administrative efforts for dispute resolution, fraud investigation, and operational adjustments. Effective payment platforms help minimize chargebacks and associated fees by ensuring real-time fraud detection.

The chargeback ratio represents  the percentage of chargebacks—disputed transactions that result in funds being returned to the cardholder—relative to total transactions. This metric is critical for evaluating  a merchant’s operational and financial risk. A high chargeback ratio can signal fraudulent activity or poor customer satisfaction, and may result in penalties, including higher fees or termination of the merchant account by payment processors.

A checkout page is the final stage of an e-commerce transaction where customers provide payment, shipping, and billing information to complete their purchase. A well-optimized checkout page ensures security, ease of use, and minimal friction, helping to reduce cart abandonment rates. Features like auto-fill functionality, multiple payment options, and clear pricing transparency create a seamless experience, ultimately driving conversions.

The potential exposure to loss within a payment processor’s portfolio when transactions or partnerships are overly reliant on a single counterparty, merchant vertical, or geographic market. Diversified revenue streams and risk assessments mitigate such vulnerabilities.

Cross-border payments are transactions in which the payer and payee are located in different countries. These transactions often involve currency conversion, compliance with varying regulations, and navigation of multiple financial systems. Cross-border payments are critical for global trade, remittances, and e-commerce. Solutions like SWIFT, PayPal, and regional payment systems facilitate secure and efficient transfers.

A regulatory requirement for U.S. financial institutions to report transactions exceeding $10,000 to FinCEN. CTRs ensure transparency and compliance with anti-money laundering (AML) laws.

A financial institution or entity responsible for safeguarding and managing financial assets, ensuring their security and compliance. Custodians often partner with Finix-powered platforms to provide seamless, API-integrated payment and account management solutions.

A regulatory practice requiring U.S. financial institutions to verify the identities and transactional patterns of their customers. CDD minimizes fraud and compliance risks, enabling robust transaction monitoring and risk scoring.

A withdrawal or payment made directly from a bank account or prepaid card balance. Debit transactions often leverage real-time payment networks for instant fund transfers and improved cash flow.

Digital wallets are electronic tools that securely store payment information, including credit and debit cards, bank accounts, and loyalty cards for quick and convenient transactions. Finix simplifies the process of providing a seamless payment experience across in-person and online channels. With a single integration, you can manage payments wherever your customers prefer —whether in-store, on mobile devices, or online. Accessible on smartphones, tablets, and desktops, digital wallets like Apple Pay, Google Pay, and PayPal are widely used for in-store, online, and app-based payments. They enhance security through tokenization and biometric authentication.

Disbursements, also known as payouts, refer to outgoing payments made by businesses or organizations to individuals, vendors, or partners. Examples include payroll, vendor payments, refunds, and insurance payouts. We (Finix) streamlines payouts so you can focus on what matters most–your product, customers, and business growth. With Finix, you benefit from around-the-clock support from a dedicated team  that ensures your funds are disbursed on time and to the right parties, every time. Disbursements can be processed through various methods, such as bank transfers, checks, or digital wallets. Efficient disbursement systems ensure timely, accurate, and cost-effective transactions.

A formal claim initiated by a cardholder, questioning the validity of a transaction. Disputes, often synonymous with chargebacks, are resolved through issuer-merchant collaboration, supported by Finix’s comprehensive transaction data and fraud tools.

A formal claim initiated by a cardholder, questioning the validity of a transaction. Disputes, often synonymous with chargebacks, are resolved through issuer-merchant collaboration, supported by Finix’s comprehensive transaction data and fraud tools.

Charged by card networks to merchants for transaction processing. These fees sustain the global card ecosystem, ensuring seamless payment routing, fraud prevention, and compliance enforcement.

Dynamic Currency Conversion (DCC) is a payment service that allows international cardholders to pay in their home currency instead of the local currency at the point of sale. This service provides transparency by displaying the conversion rate and total cost in real-time. While convenient, DCC may include additional fees or less favorable exchange rates for the cardholder.

Penalties incurred by merchants for canceling payment processing agreements before the contract term ends. Transparent contract terms and flexible processing platforms reduce these risks for merchants.

An electronic version of a paper check, enabling ACH transactions for seamless bank-to-bank payments. eChecks are commonly used for recurring billing, invoice payments, and B2B transactions.

The reversal of a completed eCheck transaction. Refunds are processed via ACH systems, ensuring compliance and accuracy in customer reimbursement scenarios.

Occurs when an eCheck fails due to insufficient funds, closed accounts, or invalid information. Returns are automatically flagged within payment systems for resolution.

This is a method of transferring money electronically between bank accounts without the need for physical checks or cash. This process leverages digital networks, such as the Automated Clearing House (ACH) system or card networks, enabling seamless payment transactions. EFTs are commonly used in various scenarios, including direct deposits, online bill payments, and automated business-to-business transactions, offering speed, efficiency, and security. By simplifying the movement of funds, EFTs enhance financial accessibility and play a critical role in modern payment systems

Involve seamlessly integrating payment processing into a business's platform or service offering. This allows merchants or software providers to manage payments within their existing workflows, without needing external gateways or complex integrations. By embedding payments directly into the product experience using Finix, businesses can streamline transactions, improve customer satisfaction, and enhance revenue generation.

The costs merchants incur for leasing, purchasing, or maintaining the hardware necessary to process payments, such as point-of-sale (POS) terminals, card readers, and payment kiosks. These fees can vary depending on equipment type, lease length, or device maintenance and support. These fees ensure merchants can securely accept payments while staying up to date with the latest technology.

A Flexible Spending Account (FSA) is a tax-advantaged account funded through pre-tax payroll contributions, allowing employees to pay for eligible medical, dental, and dependent care expenses. FSAs come with annual contribution limits and generally require funds to be used within the plan year. Some employers may provide grace periods or carryovers for unused funds, adding flexibility for account holders.

Finix simplifies accepting FSA card payments for businesses, enabling them to meet compliance requirements and streamline transactions. By supporting FSA card payments, Finix helps businesses expand their customer base, reduce cart abandonment, and cater to consumer payment preferences, ensuring a seamless checkout experience for both employers and employees.

Refers to the global market where currencies are traded. In payment processing, FX occurs when a transaction involves multiple currencies, and a conversion fee is applied by the issuing or acquiring bank. Merchants and customers engaging in international payments may be subject to FX fees, which vary based on market conditions and the financial institutions involved in the transaction.

Fraud monitoring involves the real-time analysis of payment transactions to detect and prevent fraudulent activity. Advanced fraud monitoring systems leverage machine learning, behavioral analytics, and rule-based algorithms to identify anomalies and flag potentially risky transactions. These systems protect businesses and customers, preserving trust and ensuring compliance. With the Finix Dashboard, email notifications, and centralized reporting, you can easily track merchants' compliance deadlines, monitor statuses, and identify problem areas.

Refers to the temporary restriction of assets, such as funds or bank accounts, preventing their use, withdrawal, or transfer. This action is often used by financial institutions, regulatory bodies, or courts to protect assets during investigations, disputes, or legal proceedings. Unlike forfeiture, frozen assets remain the property of the account holder but are temporarily inaccessible.

A legitimate-looking business set up to obscure the true identity or activity behind it, often for illicit purposes such as money laundering.

A secure technology layer that enables communication between a merchant's point of sale (POS) and the acquiring bank or payment processor like Finix. It’s essential for e-commerce or in-person transactions, and encrypts and transmits transaction data to ensure secure authorization, fraud protection, and settlement.

A gateway fee is the charge merchants pay to use a payment gateway—a platform that securely transmits payment information between the merchant’s website and the payment processor. This fee varies by provider and is typically charged per transaction, monthly, or as a flat fee.

A hard descriptor is the permanent identifier displayed on a customer’s bank or credit card statement for a specific transaction. It includes details like the merchant’s name or website URL to minimize disputes and clarify charges.

A Health Savings Account (HSA) is a tax-advantaged savings account designed for individuals with high-deductible health plans. Contributions are made pre-tax, and funds can grow tax-free when used for qualified medical expenses. Unlike FSAs, HSA funds roll over annually, offering long-term flexibility. Additionally, HSA balances can be invested to generate tax-free growth, making them a valuable tool for both short-term healthcare expenses and long-term financial planning.

Finix enables businesses to accept HSA card payments seamlessly, providing access to the growing healthcare spending market. By integrating HSA payments, businesses can cater to consumer payment preferences, reduce cart abandonment, and increase customer loyalty. Finix's platform supports compliance and ensures smooth transactions, helping businesses tap into new revenue opportunities while simplifying payment processes for consumers.

High-risk merchant accounts are payment processing accounts designated for businesses with elevated risks of chargebacks, fraud, or regulatory scrutiny. Industries like gaming, health supplements, and CBD often require these accounts, all of which Finix supports. Payment processors may charge higher fees for these accounts to offset risks.

Partner with acquiring banks to help merchants set up the necessary infrastructure to accept card payments and manage related services. They provide valuable insights on rates, equipment, and transaction types to optimize the merchant’s payment acceptance process.

Refer to incorporating payment processing into an existing software system or business operation. This approach enhances automation, reduces manual errors, and streamlines the customer experience by linking payments directly to business management platforms, accounting systems, or customer relationship tools.

Provides software solutions that include built-in payment capabilities as part of their product offering. This integration allows businesses to manage both their operations and payment transactions within a single platform, enabling smooth workflows, reducing friction, and enhancing customer experiences. ISVs play a critical role in the growing embedded payments landscape.

Fees paid between banks for card-based transactions, typically going from the acquiring bank to the issuing bank. These fees are set by the card networks and compensate the issuer for the risk and operational costs associated with card issuance and fraud prevention. Interchange fees can vary based on transaction types and the involved parties.

Charged by payment processors for submitting tax-related information on behalf of merchants to the IRS, ensuring that merchants comply with tax regulations. This includes reporting payment transaction data required for tax filing purposes, such as Form 1099-K.

Invisible payments are seamless, automated transactions that occur without requiring customer interaction at the point of sale. Common in subscription services or ridesharing apps (e.g., Uber), these payments use pre-stored payment credentials to complete transactions in the background. Invisible payments enhance convenience by removing friction and creating a smooth customer experience.

The financial institution that provides credit or debit cards to consumers and businesses and maintains cardholder accounts. It is responsible for authorizing and managing card transactions, determining credit limits, and ensuring that payments are processed securely.

An entity that directly connects to card networks to process payment transactions between issuers and acquirers. It handles authorization, clearing, and settlement of card transactions, ensuring that the transaction data is accurately transmitted and funds are securely transferred between the involved parties.

A regulatory process that requires businesses, particularly in financial services, to verify the identity of their customers by gathering identification documents and validating them against official records. This process helps prevent fraud, money laundering, and terrorist financing by ensuring that businesses know who they are dealing with before initiating transactions.

A compliance process focused on understanding the background and activities of employees within a financial institution. This includes screening for conflicts of interest, criminal activity, and financial misconduct. KYE is part of broader anti-money laundering (AML) efforts, ensuring that employees do not participate in or enable illegal financial activities within businesses.

The process of creating multiple complex financial transactions to obscure the origins of illicit funds, making it harder to trace the money's source. In payment systems, this can involve using digital wallets, merchant accounts, and cross-border payments to disguise the flow of funds, which poses a challenge for detecting financial crimes like money laundering. Effective payment processors and platforms must implement anti-money laundering (AML) tools to prevent and flag suspicious layering activities.

Potential financial impact of lawsuits, unenforceable contracts, or regulatory actions that could disrupt payment processing or cause financial loss. Payment processors must adhere to payment regulations such as the Payment Card Industry Data Security Standard (PCI DSS) to manage disputes and ensure that merchant agreements are compliant with consumer protection laws.

This refers to the basic level of payment data capture used in most standard card transactions. It involves transmitting minimal data required for authorization, such as the cardholder's name, account number, and transaction amount. Unlike Level 2 or Level 3 processing, L1 does not include enhanced or itemized details, which means merchants typically incur higher interchange fees. L1 is sufficient for consumer card transactions but lacks the cost-saving benefits offered by the advanced data provided in L2 and L3 processing.

Rich data transaction requirements specified by Visa and Mastercard for corporate and commercial card transactions. These levels allow merchants to provide detailed transaction data, including itemized purchases and shipping information, which result in lower interchange rates. This enables businesses to save on processing costs, and payment platforms to save on reduced fees if they support these data fields.

Predefined penalties included in merchant agreements to recover costs incurred by the payment processor or acquirer when merchants terminate their contracts early. These fees are typically structured to cover the costs of account setup, maintenance, and operational expenses associated with processing payments for merchants. Payment processors must clearly communicate these fees to ensure transparency and minimize disputes during contract termination.

Additional charges applied by credit card processors on top of the base transaction fees. These fees can vary depending on the merchant’s processing volume, industry, and negotiation with the payment processor. So it’s essential for merchants to evaluate multiple payment providers and optimize their payment solutions for cost-efficiency.

Also known as the Terminated Merchant File (TMF), is maintained by Mastercard and identifies merchants that are considered high-risk or have been terminated by other payment processors due to violations, fraud, or financial instability. Merchants on this list face difficulty in securing future processing accounts since payment platforms must verify merchant identities against this list to mitigate risk and prevent fraud.

Any business entity that accepts electronic payments, including credit or debit cards, mobile payments, or alternative methods like digital wallets, in exchange for goods or services. In the payment ecosystem, merchants rely on payment gateways and processors like Finix to securely handle transactions, ensuring customer data is protected and payments are efficiently processed.

A four-digit code that categorizes a business based on the types of goods or services it provides. This code is essential in determining transaction rates, fraud risk, and compliance requirements for merchants within the payment network. Payment processors like Finix use MCCs to classify merchants, helping optimize transaction fees and ensure proper handling of compliance regulations, especially for high-risk industries.

The Merchant Discount Rate (MDR) is the percentage fee charged to merchants for processing card payments. It includes interchange fees (paid to card-issuing banks), network fees, and processor fees. The MDR is deducted from the total transaction amount and varies based on factors such as industry, card type, and transaction risk. It serves as a key revenue source for payment processors.

A unique identifier assigned to a business by their payment processor. This number is used to track and process payments made to the merchant and manage their payment activities, including transaction monitoring, billing, and settlement.

Merchant onboarding is the process through which businesses are evaluated and approved to accept payments via a payment processor or acquiring bank. This process includes verifying business details, assessing risk levels, and setting up accounts for transaction processing. A streamlined onboarding process ensures regulatory compliance while providing merchants with swift access to payment services.

Merchant services are financial solutions that enable businesses to accept and process payments from customers, including credit and debit card transactions, ACH transfers, and mobile payments. Finix  manages these services, often bundling payment gateways, point-of-sale systems, and fraud prevention tools to support seamless payment operations.

A service provider that connects a platform or merchant to a payment processor like Finix and other financial institutions through software integrations. Middleware solutions act as a bridge, enabling seamless data exchange between various systems, and facilitating secure and efficient payment transactions.

Involves the illegal act of concealing the origins of money often through legitimate businesses, payment systems, or international financial institutions. Payment processors like Finix play a critical role by implementing anti-money laundering (AML) policies, monitoring transactions for suspicious activities, and ensuring compliance with regulatory frameworks like the Bank Secrecy Act (BSA).

Refers to the continuous review of payment transactions for unusual or suspicious patterns that could indicate fraudulent or illegal activity. Payment processors like Finix use advanced transaction monitoring systems, powered by artificial intelligence and machine learning, to detect anomalies.

The national body responsible for setting the rules and standards for the Automated Clearing House (ACH) network, which facilitates secure electronic payments, including direct deposits and bill payments, in the U.S.

Fee charged by financial institutions when a transaction is attempted but the account lacks sufficient funds to cover the payment. This fee is typically assessed to the merchant or the consumer, depending on the context of the transaction. For payment processors like Finix, managing NSF transactions involves ensuring that such fees are clearly outlined in agreements and preventing future occurrences through better account verification methods.

An ACH transaction notification that informs the originating financial institution of any changes to the recipient’s bank account details. NOCs are essential for ensuring that payments are routed to the correct account and discrepancies are resolved quickly.

Omnichannel payments provide a unified payment experience across multiple sales channels, such as in-store, online, and mobile. By integrating payment methods and customer data across platforms, businesses can deliver consistent and convenient checkout experiences. This approach caters to consumer preferences for flexibility while boosting loyalty and operational efficiency.

Refers to the potential for financial loss due to failed internal processes, human error, system breakdowns, or external disruptions. It can impact the efficiency of payment processing systems, leading to delays, fraud, or compliance issues. Effective risk management strategies, such as robust fraud detection and system redundancy, are essential for maintaining trust and safeguarding financial operations.

A financial institution that initiates ACH (Automated Clearing House) transactions by transmitting the payment instructions to the Federal Reserve or ACH network, ensuring compliance, and mitigating risks.

The entity that initiates payment transactions, typically a business or merchant processing ACH, card payments, or real-time payments on behalf of their customers.

A Payment API (Application Programming Interface) is a software interface that enables developers to integrate payment processing capabilities into applications or websites. Payment APIs allow businesses to accept various payment methods, such as cards, digital wallets, and bank transfers, while ensuring secure and efficient transactions.

A comprehensive security standard that ensures businesses handling card transactions maintain strict controls over sensitive cardholder data. It aims to reduce card transaction fraud by mandating robust encryption, secure data storage, and access control mechanisms. Compliance with PCI-DSS is critical for any business accepting card payments, ensuring that both customers and merchants remain protected from breaches.

Encompass the costs associated with maintaining PCI-DSS compliance, such as audit fees, external security assessments, and consulting charges for businesses without dedicated compliance officers. Regularly assessing these costs is essential for businesses that process high transaction volumes.

Enables businesses, especially smaller merchants, to accept payments without the need to set up their own merchant accounts. Acting as an intermediary, PayFacs like Finix aggregate transactions from multiple merchants, providing them with simplified payment acceptance solutions and compliance management. By leveraging PayFac’s infrastructures, merchants gain access to payment gateways and processors, streamlining their payment operations.

Payment links are URLs or QR codes that direct customers to a secure online checkout page. Finix uses payment links to request payments via email, SMS, or social media, offering a simple and flexible way to collect payments without requiring a full e-commerce platform.

Payment orchestration is the process of managing multiple payment providers and services through a single platform. It enables businesses to optimize transaction routing, reduce costs, and improve authorization rates while offering backup solutions for payment failures. Payment orchestration also provides unified reporting and simplifies compliance.

Payment rails are the infrastructure networks that facilitate the transfer of funds between parties. Examples include ACH, SWIFT, and card networks (e.g. Visa and Mastercard). The choice of payment rail significantly impacts the speed, cost, and security of transactions, making it a critical consideration for businesses.

The technology provider that facilitates the transfer of funds between merchants, acquiring banks, and issuing banks. Payment processors like Finix handle the authorization, settlement, and reconciliation of transactions, ensuring funds are securely transferred and deposited. With the rise of digital and mobile payments, payment processors are pivotal in ensuring scalability, security, and speed for both merchants and consumers.

Payouts, also known as disbursements, refer to the distribution of funds from a business to individuals, such as employees, contractors, vendors, or customers. Common examples include payroll, affiliate payments, and refunds. Payouts can be facilitated via bank transfers, checks, or digital payment methods, with modern platforms offering automated and real-time options.

PCI compliance refers to adherence to the Payment Card Industry Data Security Standards (PCI DSS), a set of guidelines designed to protect cardholder data during transactions. Businesses that process, store, or transmit credit card information must complete PCI compliance forms and implement stringent security measures to prevent breaches and avoid penalties.

Refers to the initial stage of money laundering, where illicit funds are injected into the financial system through legitimate channels. Financial institutions must monitor and report suspicious activity during the placement phase to prevent laundering and comply with anti-money laundering (AML) regulations.

Underlying offenses that generate proceeds, which could be laundered through financial transactions. These crimes can include fraud, theft, or drug trafficking, and the proceeds are often funneled through payment systems to obscure their origins.

A real-time payment solution that enables individuals or businesses to instantly transfer funds to specific cards using existing card networks.With its ability to facilitate quick payouts, P2C is increasingly used in industries like gig economy, insurance, and refunds.

A financial institution that receives ACH payment instructions from the Originating Depository Financial Institution (ODFI) and processes them on behalf of its account holders for payroll, bill payments, and government disbursements. RDFIs play a critical role in ensuring that funds are accurately and promptly deposited into the recipients' accounts, maintaining the integrity and timeliness of ACH transactions.

Process of matching incoming and outgoing transaction data to ensure the accuracy of financial records. This includes verifying transaction amounts, ensuring funds are deposited and withdrawn correctly, and resolving discrepancies. Effective reconciliation helps businesses track payments, identify errors, and ensure that financial statements reflect accurate, up-to-date information.

Recurring payments refer to automatic, scheduled transactions for subscription-based services or ongoing purchases. Examples include gym memberships, streaming services, and utility bills. Businesses utilize recurring billing systems to enhance customer convenience and maintain reliable revenue streams.

Occurs when a merchant reverses a payment transaction, returning funds to the customer after a product or service purchase is canceled or disputed. Refunds can be initiated due to customer dissatisfaction or errors in transaction processing. This process must be efficiently managed through payment systems like Finix to ensure customer satisfaction and maintain trust in payment channels.

A process within the chargeback cycle where a merchant challenges a customer’s claim of a fraudulent or disputed transaction. If a customer disputes a payment, the merchant can provide evidence to demonstrate the legitimacy of the transaction, often by submitting transaction data and supporting documents. Representment ensures that legitimate transactions are upheld, protecting merchants from unjust chargebacks.

Refers to the potential damage of a financial institution's reputation, resulting in negative publicity, inaccurate information, or association with illegal activities like fraud, security breaches, or non-compliance with regulations.

A fee charged by the payment processor when a customer or their issuing bank requests a copy of a transaction record, such as a sales draft. This fee is typically nominal but serves as an administrative cost for handling and processing requests. For businesses leveraging payment platforms like Finix, understanding and managing RRFs are crucial for optimizing transaction processing and minimizing unnecessary costs related to post-transaction inquiries.

Assessing varying risks tied to different industries, clients, and transactions to tailor compliance strategies effectively. Some payment platforms like Finix leverage advanced risk management tools to monitor transaction patterns and comply with anti-money laundering (AML) regulations.

Risk monitoring is the ongoing assessment of payment activity to identify and mitigate potential fraud, chargebacks, or compliance issues. By leveraging advanced analytics and real-time data, businesses can detect anomalies, minimize losses, and maintain secure transactions.

Refers to the legal action where competent authorities or courts temporarily take control of assets, including funds, due to suspicious activities or regulatory concerns. Unlike a freeze, where assets remain under the owner’s control, seizure involves active management or possession of the assets.

The process of collecting and consolidating batches of transaction data and paying out merchants for transactions processed during a specified period. Payment processors, like Finix, handle settlement by ensuring that funds are accurately transferred to merchant accounts, reflecting completed transactions.

The settlement timeframe refers to the period between when a transaction is processed and when funds are deposited into a merchant’s account. Settlement times vary based on payment methods, processors, and bank policies, ranging from same-day deposits to several business days.

A soft descriptor is a temporary label displayed on a customer’s bank or card statement before a transaction is finalized. It provides initial transaction details and may differ from the final hard descriptor, helping to reduce confusion and prevent chargebacks.

Split payments enable customers to divide a transaction across multiple payment methods or share costs among multiple payers. For example, a customer might use both a gift card and a credit card for a single purchase, or friends might split the cost of a restaurant bill. Split payments enhance flexibility and improve customer satisfaction.

SIC codes are broad classifications used by government and industry organizations to group businesses. MCCs are more specific codes derived from SIC classifications, tailored for payment processing and assigned to merchants based on their primary goods or services.

Charges imposed by payment processors or financial institutions for providing periodic statements related to transactions. These fees can vary depending on the frequency and level of detail required in the statements. By understanding and managing statement fees, merchants can optimize their payment processing costs and maintain clear records for accounting, reconciliation, and tax reporting purposes.

Legal order issued by a court requiring an individual or entity to provide transaction records or other data for investigations involving fraud, money laundering, or other financial crimes. Payment processors like Finix must comply with subpoenas, ensuring all necessary data is provided in a timely and secure manner.

Subscription billing is a payment model where customers are charged periodically (e.g., monthly or annually) for access to goods or services. Common in industries like SaaS, media, and e-commerce, subscription billing automates recurring payments and supports customer retention strategies.

Refers to irregular or out-of-pattern behaviors by a customer that could indicate fraudulent transactions, money laundering, or other illicit activities. This may include sudden large transactions, frequent changes in spending patterns, or transactions inconsistent with historical behavior. Advanced fraud detection algorithms within platforms like Finix are crucial in identifying such activities to mitigate risk and maintain transaction security.

A formal notification filed by financial institutions or payment processors to report suspected illegal activities, such as fraud or money laundering, to regulatory authorities like FinCEN. Payment platforms like Finix play a vital role in the detection and reporting process, ensuring compliance with regulatory standards and maintaining the integrity of the payment ecosystem.

A unique identification number assigned to each merchant’s point-of-sale (POS) terminal by a payment processor like Finix. This number helps identify the source of a transaction, facilitate accurate tracking, prevent fraud, and settle reconciliation.

Refers to the rights of a merchant to end their contractual relationship with a payment processor or service provider if they are dissatisfied or have different business needs. Understanding termination rights helps businesses avoid contractual lock-ins and maintain competitive payment solutions.

A security process that replaces sensitive payment card data with a unique, encrypted identifier called a "token." This tokenized data is used for processing payments without exposing the original card information, reducing the risk of fraud. Tokenization is governed by PCI DSS (Payment Card Industry Data Security Standard) and critical for payment processors like Finix.

Tokenization is a security process that replaces sensitive payment data, such as credit card numbers, with a unique, non-sensitive identifier called a token. This protects payment information during transactions, reducing the risk of fraud and data breaches.

Refers to the individuals who ultimately own or control a legal entity, such as a business or trust. Identifying UBOs is an essential part of anti-money laundering (AML) and Know Your Customer (KYC) compliance in the payments industry.

Underwriting in payment processing involves assessing the risk level of a merchant before approving them for a payment processing account. Factors like business type, transaction volume, and chargeback history are analyzed to determine eligibility and pricing. This process ensures financial stability and regulatory compliance.

A virtual card is a digital payment card with a unique card number used for online or in-app transactions. Linked to a primary credit or debit account, virtual cards offer enhanced security by limiting usage to specific transactions or merchants. They are popular for e-commerce and business expense management.

A virtual terminal is a web-based payment interface that allows merchants to manually process card transactions without the need for physical card readers. It is commonly used for phone orders, remote billing, and in-person scenarios where traditional POS systems are unavailable.

A transaction that is canceled before it is finalized or settled due to errors or cancellations. Voiding a transaction helps prevent charges from being applied to the customer’s account and avoid complications in the settlement process. Platforms like Finix allow merchants to quickly and efficiently void transactions to maintain accurate transaction records.

White labeling is a business practice where a company provides payment solutions that can be rebranded and marketed under another company’s name. White-labeled payment platforms enable businesses to offer customized payment experiences while leveraging the infrastructure of established providers.

A direct, near real-time transfer of funds between bank accounts, typically used for larger transactions or transfers between financial institutions, even across regions. For businesses using Finix, wire transfers can be integrated into payment flows, providing a secure and efficient method for moving funds, especially for cross-border transactions or large settlements.