Glossary
Paymentpedia
Discover the intricacies of payments with Paymentpedia, our comprehensive glossary. Delve into key terms and concepts prevalent in the payment sector. With just a click, unlock insightful information and broaden your understanding of the dynamics of the payments landscape.
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3DS (3-D Secure)
An additional security layer for online card transactions.
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A
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A2A (account-to-account)
A2A payments allow for money to be moved from one account to another, without the need for third-parties.
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Acquirer
A financial institution that authorizes and settles payments for merchants. (See also Merchant of Record)
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API (Application Programming Interface)
A set of programming tools that allows software to interact with other services or applications.
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APM (alternative payment method)
Refers to any form of payment that isn’t a major international credit card brand.
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ARN (Acquirer Reference Number)
A unique number assigned to a transaction during payment processing.
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Auth/Capture
A two-step authorization process for credit card payments:
- Authorization: verifies the cardholder's ability to pay and reserves the funds.
- Capture: confirms the transaction and collects the funds from the cardholder.
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BIN (Bank Identification Number)
The first six digits of the PAN, which identifies the issuing bank.
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BNPL (buy now pay later)
BNPL differentiates itself from installment loans by primarily offering zero-interest payment installments, without the need for a credit card.
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Card Networks (Card Schemes)
Organizations that set rules and provide infrastructure for processing card payments (e.g., Visa, Mastercard).
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Cardholder
The person who uses a credit or debit card to make a payment.
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Conversion Rate (CR)
The percentage of transactions successfully completed compared to the total number of transactions processed.
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Credit Card Payments
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Cross-border
A term describing payments made between entities in different countries, often involving currency exchange and additional regulatory or processing complexities.
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CVV (Card Verification Value)
A security code (usually 3 or 4 digits) on the back of the card used for online transactions.
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Descriptors
Text appearing on the cardholder's statement describing the transaction.
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Digital wallet/eWallet
Digital wallets allow users to instantly transfer funds through several linked routes. The user will transfer the funds from an existing bank account, or credit/debit card information must be uploaded to transact.
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Fallback
An alternative processing channel used if the primary channel experiences an error.
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FX (Foreign Exchange)
The rate at which one currency is converted to another.
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Gateway vs Processors
- Payment Gateway: Transfers transaction data to processors or acquirers.
- Payment Processor: Provides complete payment processing services, including data transfer, authorization, settlement, and fund collection.
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Installments
Prevalent in Latin America, installment credit refers to credit card-based small or micro-loans designed to purchase consumer goods.
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Interchange Fee (IC)
A fee paid between banks for the acceptance of card-based transactions, typically paid by the merchant’s bank (acquirer) to the cardholder’s bank (issuer).
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IPN (Instant Payment Notification)
A real-time notification sent after a transaction is complete.
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Issuer
The financial institution that issues a credit or debit card to a cardholder.
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KYC (Know Your Customer)
Regulations requiring businesses to verify the identity of their customers.
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Marketplace
An online platform where multiple vendors sell products or services.
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MCC (Merchant Category Codes)
Codes that classify businesses by industry type.
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Merchant Discount Rate (MDR)
A fee charged to merchants by acquiring banks for processing debit and credit card transactions. It is typically a percentage of the transaction amount.
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Merchant of Record (MoR)
The entity legally responsible for processing customer credit card transactions. dLocal acts as a local MoR in each market
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Message Authentication Code (MAC Code)
A Message Authentication Code (MAC) is a security feature used to authenticate messages and ensure data integrity during payment transactions.
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Mobile money
Mobile money is a local payment method prevalent in emerging markets. Users can deposit cash at registered agents, and send funds using an account linked to their mobile number without internet access.
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PAN (Primary Account Number)
The main card number displayed on the front of the card.
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Payment Service Provider (PSP)
A third-party company that facilitates the processing of online payments for merchants, offering services like payment gateways, transaction processing, and security.
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Payment Split
The process of dividing a payment transaction into different amounts to be sent to multiple recipients, commonly used in marketplaces or platforms with multiple sellers.
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Payment Types
Different methods for making online payments (e.g., credit cards, bank transfers, cash tickets, eWallets, etc.).
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PISP (Payment Initiation Service Provider - ITP)
A third-party service provider that initiates payments directly from a consumer’s bank account with their consent, typically used in Open Banking frameworks.
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PIX
A real-time payment system developed by the Central Bank of Brazil, enabling instant bank transfers between individuals and businesses 24/7.
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Refunds and Chargebacks
- Refund: A credit issued to a customer by the merchant.
- Chargeback: A credit issued to a customer by their bank, typically due to unrecognized charges.
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Return Code
A return code provided by payment processors indicating the status or outcome of a payment transaction, such as success, failure, or rejection.
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RTP (real-time payment)
A payment method that links up and pulls money straight from a bank account and into a customer’s, in real time.
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Sale
A single-step transaction where the card is charged immediately.
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Save
Tokenization of cardholder information for recurring payments.
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Settlement Types
Different options payments are settled between dLocal and merchants:
- Cross-border: dLocal collects payments locally and settles in USD abroad.
- Local-to-local: dLocal collects and settles payments in the same local currency.
- FX@Transfer: dLocal collects payments locally, and converts to USD/EUR for settlement with the merchant.
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Smart chaining
Recover failed and rejected card payments with the alternative that better fits the transaction.
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Smart routing
AI-driven transaction routing to the best-converting processor.
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dLocal Specific Terms
Smartfields
Customizable payment fields hosted by dLocal but embedded in the merchant
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Sub-acquirer
A third-party entity that processes payments on behalf of a payment acquirer. It operates under the acquirer’s agreement and is responsible for processing transactions.
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Tokenization
Replacing sensitive data (like credit card numbers) with a secure token for future use.
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Verification / Zero Dollar Authorization
A method used to verify the validity of a payment card by performing an authorization request with a zero-dollar amount.
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