Payment Glossary

The payment industry loves jargon. Here's what it all means.

All (77)Pricing (10)Infrastructure (12)Risk & Compliance (19)Technical (16)Business Models (10)Regulatory (10)

A

Acquirer

Infrastructure

A bank or financial institution licensed by card networks to process card transactions on behalf of merchants. Also called acquiring bank or merchant acquirer. The acquirer provides the merchant account, assumes liability for merchant behavior, manages settlements, and handles chargebacks. Major acquirers include Worldpay, First Data (Fiserv), Chase Paymentech, and Elavon. Different acquirers have different risk appetites for merchant verticals.

C

Card Network

Infrastructure

Organizations that operate payment card networks and set rules for card acceptance. The major networks are Visa, Mastercard, American Express, and Discover. Networks set interchange rates, define operating regulations, manage dispute processes, and run the infrastructure connecting issuers and acquirers. Amex and Discover operate as both network and issuer for their cards.

I

Issuer

Infrastructure

The bank or financial institution that issues payment cards to consumers and maintains the cardholder relationship. Also called issuing bank. The issuer receives interchange fees, handles cardholder disputes, makes authorization decisions, and bears fraud risk on the cardholder side. Major issuers include Chase, Bank of America, Capital One, and Barclays.

ISO (Independent Sales Organization)

Infrastructure

A third-party company authorized to resell payment processing services on behalf of acquirers. ISOs find merchants, handle sales, and often provide support, while the acquirer provides the actual merchant account. Unlike PayFacs, ISOs don't aggregate merchants - each merchant gets their own MID. ISOs earn residual income on processing volume and may specialize in specific verticals or risk profiles.

M

Merchant Account

Infrastructure

A bank account that enables a business to accept card payments. The merchant account holds funds from card transactions before settlement to the merchant's business bank account. Obtaining a merchant account requires underwriting by an acquirer. High-risk merchants face more scrutiny and may require specialized acquirers. Terms include processing limits, reserve requirements, and fee structures.

MID (Merchant Identification Number)

Infrastructure

A unique identifier assigned to a merchant account, used to identify the merchant in card network transactions. The MID appears in transaction records and is used for routing, reporting, and dispute management. PayFac sub-merchants typically share their PayFac's MID rather than having their own. Having your own MID provides more control but requires direct underwriting.

P

Payment Processor

Infrastructure

A company that handles the technical aspects of processing card transactions, including routing authorizations, managing connections to card networks, and facilitating settlement. Some processors are also acquirers; others process on behalf of acquirers. The processor handles the technical plumbing while the acquirer handles the banking relationship and merchant underwriting.

Payment Service Provider (PSP)

Infrastructure

A company that provides payment processing services to merchants, typically bundling acquiring, processing, and gateway services into a single offering. PSPs like Stripe, Adyen, and Checkout.com handle the entire payment stack, simplifying integration for merchants. PSPs may operate as PayFacs (aggregating merchants under their own MID) or facilitate direct merchant accounts with acquirers.

Payment Facilitator (PayFac)

Infrastructure

A payment model where a master merchant (the PayFac) aggregates sub-merchants under its own merchant account. PayFacs like Stripe, Square, and PayPal perform underwriting, onboarding, and risk management on behalf of their acquirers. This enables fast merchant onboarding but means sub-merchants don't have their own MIDs. PayFac model works well for smaller merchants but creates single-point-of-failure risk.

Payment Gateway

Infrastructure

The technology that securely transmits transaction data between a merchant's website/application and the payment processor. The gateway encrypts sensitive card data, routes transactions for authorization, and returns responses. Can be provided by the PSP (integrated) or operated separately (standalone). Examples include Authorize.net, Braintree, and NMI.

Payment Orchestrator

Infrastructure

A platform that sits between merchants and multiple PSPs/acquirers, providing intelligent routing, unified integration, and centralized management. Orchestrators enable routing by geography, card type, or performance; automatic failover; and token portability between processors. Examples include Spreedly, Primer, and Gr4vy. Makes sense for merchants using multiple processors at scale.

T

TID (Terminal Identification Number)

Infrastructure

A unique identifier for a specific payment terminal or point-of-sale device. Each physical terminal or virtual terminal has its own TID. A single MID can have multiple TIDs for different locations or channels. TIDs help with transaction routing, reporting, and terminal-specific configurations.

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