A Glossary of Payment Terms
Blog post from Basis Theory
Payment processing involves interconnected banks, card networks, merchants, service providers, and security systems that authorize, settle, and protect electronic transactions. Acquiring banks collect and settle merchant funds, while issuing banks provide consumer accounts or credit, and card networks such as Visa and Mastercard connect these parties. The glossary distinguishes credit cards, which use unsecured bank credit and can generate interest, from debit cards, which access existing deposits and face regulated U.S. fees, while also explaining authorizations, declines, chargebacks, refunds, and involuntary churn. It outlines merchant support options including payment service providers, full-service providers, high-risk specialists, and embedded iframe checkout solutions, alongside risk classifications based on merchant category codes. Security concepts include PCI-DSS compliance, multifactor authentication, encryption, tokenization, token vaults, network Token Requestor IDs, and privacy-oriented one-time-use or vaultless tokens. It also describes consumer and merchant payment products such as gift cards, frictionless payments, and fraud risks including triangulation fraud, in which a fraudulent seller uses stolen card details to purchase goods from a legitimate merchant.
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