Short answer
This glossary explains 79 card payment and merchant statement terms in plain English, grouped by topic. Use it to decode a statement, a quote or a contract: who is who in a payment, the fees, the pricing models, the statement lines, the contract terms, the security rules and the market rules.
Part of How payments work. Start with the main guide: How a card payment works: authorisation, clearing and settlement
Key takeaways
- Terms are grouped by topic so you can find them fast: players, fees, pricing, statements, contracts, security and rules.
- The same fee can have several names, so the glossary lists common alternatives.
- Knowing the layers of a card payment (interchange, scheme fees, markup) explains most of the rest.
- Rules and rates differ by country, so use the glossary for meaning and check local detail separately.
- Each entry links to a fuller guide where one exists.
Merchant services has its own language. Statements, quotes and contracts use terms that look familiar and mean something precise, and different providers use different names for the same thing. This glossary explains 79 of them in plain English, grouped by topic so you can find what you need. Where a fuller guide exists, there is a link.
The terms are general. Rates, rules and names vary between countries, so use this for meaning and check the local detail with your provider or regulator.
What are the layers of a card payment?
Every card payment carries the same three layers of cost, and most terms below belong to one of them.
- InterchangePaid to the customer's bank (the issuer).
- Scheme feesPaid to the card network.
- Provider markupKept by the provider that sells you the service.
Most statement terms belong to one of these.
Who is who in a card payment?
| Term | Meaning |
|---|---|
| Acquirer | The bank or institution that holds the merchant account and settles funds to the business |
| Issuer | The cardholder's bank, which approves the payment and funds it |
| Cardholder | The customer paying with a card |
| Merchant | The business accepting card payments |
| Card network or scheme | Visa, Mastercard and others that carry payments and set rules |
| ISO | An independent sales organisation that sells an acquirer's services |
| Payfac | A payment facilitator that signs up many merchants under its own master account |
| PSP | A payment service provider that bundles services such as gateway and merchant account |
| Gateway | A service that securely passes card details from a website or terminal to the processor |
| Processor | The technical engine that routes transactions |
| Reseller | A company that sells another's payment services under its own brand |
| Agent or consultant | A person who sells or refers merchant services |
See acquirer, ISO, payfac and gateway for how they fit together.
Fees
| Term | Meaning |
|---|---|
| Interchange | A fee paid to the issuer on each payment, set by the schemes or regulators |
| Scheme fee, assessment or network fee | A charge by the card network for using its system |
| Markup | The provider's own margin on top of pass-through costs |
| Merchant service charge (MSC) | In the UK, the total fees for processing card payments |
| Minimum monthly service charge | A floor that tops up your fees if they are low |
| Per-transaction fee | A fixed charge on each payment |
| Authorisation fee | A charge for each request to the issuer, sometimes including declines |
| Terminal rental | A monthly charge for the card machine |
| Gateway fee | A charge for online or virtual terminal processing |
| Statement fee or account fee | A monthly charge for the account or its statement |
| PCI fee | A monthly charge for the compliance programme |
| Non-compliance fee | A higher charge if compliance is not validated |
| Refund fee | A charge each time a payment is refunded |
| Chargeback fee | A charge each time a payment is disputed |
| Cross-border fee | An extra charge for cards issued abroad |
| Currency conversion fee | A charge for changing currency |
| Set-up fee | A one-off charge to open an account |
| Early termination fee | A charge for ending a contract early |
| Surcharge | An extra fee added to a card payment |
| Batch fee | A charge each time a day's payments are settled |
Our guides cover the main ones: interchange fees, scheme fees, acquirer markup, minimum monthly charge, PCI fees and early termination fees.
Pricing models
| Term | Meaning |
|---|---|
| Interchange plus (IC+) | Real interchange plus a fixed markup, shown separately |
| Interchange plus plus (IC++) | Interchange, scheme fees and markup all shown separately |
| Blended or bundled | One rate for most cards, higher for others |
| Tiered | Qualified, mid-qualified and non-qualified rates set by the provider |
| Flat rate | One percentage for every payment |
| Subscription or membership pricing | A monthly fee with a low markup over interchange |
| Qualified, mid-qualified, non-qualified | The tiers in tiered pricing |
| Downgrade | A payment charged at a higher tier than expected |
| Unblended pricing | Pricing that shows each cost separately |
| Basis point (bp) | One hundredth of one percent, so 25bp is 0.25% |
See interchange plus, blended and flat rate and tiered pricing.
Statement terms
| Term | Meaning |
|---|---|
| Merchant statement | The monthly summary of turnover, fees and totals |
| Turnover or volume | Total value of card payments in the period |
| Gross and net turnover | Before and after refunds |
| Transaction count | The number of payments |
| Average transaction value (ATV) | Turnover divided by transactions |
| Effective rate | Total fees divided by turnover, as a percentage |
| Headline rate | The advertised percentage, which leaves out other fees |
| Card mix | The share of turnover from each card type |
| Settlement | Moving money to the merchant's bank |
| Merchant ID (MID) | The number that identifies the merchant account |
| Bill check | Comparing the statement total with the amount actually charged |
See how to read a merchant statement, effective rate explained and the bill check.
Card types
| Term | Meaning |
|---|---|
| Debit card | Draws on the cardholder's account directly |
| Credit card | Lends to the cardholder, who repays later |
| Prepaid card | A card loaded with funds in advance |
| Consumer card | Issued to an individual |
| Commercial or corporate card | Issued to a business or its staff |
| Premium or rewards card | A card with perks funded partly by higher interchange |
| Card present | The card is physically used at the terminal |
| Card not present (CNP) | Online, phone or mail order payments |
| Contactless | A tap-to-pay payment |
| Chip and PIN | A payment authenticated by an inserted chip and a PIN |
See debit, credit and commercial card fees.
Contracts
| Term | Meaning |
|---|---|
| Minimum term | The period before you can leave without an exit fee |
| Notice period | How long before the end you must give notice |
| Auto-renewal | The contract continues for a new term unless you give notice |
| Exit fee | The cost of leaving early |
| Lease or finance agreement | A separate agreement to pay for the terminal over time |
| Double contract | Processing and terminal on two separate agreements |
| Buy-out | A lump sum to end an agreement |
| Pay-as-you-go | No minimum term and usually no monthly fee |
See contract length, auto-renewal and notice periods and double contracts.
Security and rules
| Term | Meaning |
|---|---|
| PCI DSS | The card industry security standard |
| SAQ | The self-assessment questionnaire used to validate compliance |
| Chargeback | A disputed payment reversed by the issuer |
| Strong customer authentication | An extra identity check on some online payments |
| 3-D Secure | A common method for authenticating online payments |
| Durbin Amendment | US rule capping debit interchange for large issuers |
| Interchange Fee Regulation | The EU rules capping consumer card interchange |
| Least-cost routing | Sending eligible payments over the cheaper network |
| Honor all cards | A network rule requiring merchants to accept all cards of a brand |
- Is it a rate or an amount?Rates sit in the pricing terms. Amounts are fees.
- Which layer does it belong to?Interchange, scheme fee or provider markup.
- Is it fixed or variable?Fixed fees repeat monthly. Variable fees move with sales.
- Is it in the contract?If you cannot find it, ask the provider in writing.
A quick way to place any line.
How do you use the glossary?
- When you see an unfamiliar line on a statement, look it up here, then check the linked guide.
- When a provider uses a term differently, ask for their definition in writing.
- When you compare quotes, make sure the same words mean the same things on both.
The checkmyrates calculator uses these terms in its fields, so you can enter a statement line by line.
Frequently asked questions
What is interchange?
A fee paid on each card payment to the cardholder's bank (the issuer). It is set by the card schemes or by regulators and passed on to the merchant.
What is the difference between a headline rate and an effective rate?
A headline rate is the advertised percentage. The effective rate is total fees divided by turnover, so it includes every charge.
What does MSC mean?
In the UK, merchant service charge often means the total fees for card processing. Minimum monthly service charge is a different thing: a floor on the monthly bill.
What is a basis point?
One hundredth of one percent. 25 basis points is 0.25%.
What is PCI DSS?
The Payment Card Industry Data Security Standard, a set of security requirements for businesses that accept cards.
Where can I learn more about a term?
Follow the links in this glossary to the fuller guides, or ask your provider for their definition in writing.
Sources and further reading
Figures in this guide are examples to show the method. Fees, rules and rates change, so check your own statement, contract and current rules before you decide. This is general information, not financial or legal advice.