Payment Terms Glossary

A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z

Automated Clearing House (ACH)

The ACH network is an electronic funds transfer system overseen by Nacha since 1974. This payment system enables ACH transactions for use with payroll, direct deposit, tax refunds and payments, consumer bill payments, and many more payment services within the United States. Nacha maintains its own strict rules. For more information, visit .



A term used by the payment facilitator or acquirer to refer to processing disputes and discrepancies on behalf of a merchant.


Acquiring Banks

An acquiring bank, sometimes referred to as an "acquirer" or a "credit card bank," is an institution that is approved by the card brands to process, or "acquire," merchant transactions. Contracting with the acquiring bank allows a merchant to process card brand-based credit and debit card transactions.


A debit or credit card transaction that is reversed by the cardholder's bank after the cardholder disputes a charge on their account. Chargebacks may also be referred to as payment disputes. A chargeback reverses the original purchase by withdrawing funds that were deposited into the merchant's bank account and returning them to the cardholder until the outcome of the chargeback has been decided.

Enhanced Due Diligence (EDD)

The process of performing additional underwriting checks to provide a more thorough review of a merchant and mitigate concern and/or risk. Typically, this is performed when certain red flags are raised during standard due diligence or due to certain risk elements (volumes, delivery method, business segment) presented in the merchant application.

For the Benefit of Account (FBO Account)

A bank account owned by the sponsoring institution on behalf of the payment facilitator that provides FDIC coverage of funds. This account is funded upon settlement of the transactions. The funds are then disbursed from this account to the merchant or operating account at the discretion of the Payfac or processor. The use of an FBO account is typical among Payfacs as a method to avoid being viewed as a money transmitter and a way for the sponsor to ensure the payment facilitator does not "take possession" of merchant funds, thereby increasing relationship risk.


Financial Crimes Enforcement Network (FinCEN)

A bureau of the United States Department of the Treasury that combats domestic and international money laundering, terrorist financing, and other financial crimes to safeguard the financial system and promote national security. For more information on FinCEN and their mission, visit


Federal Deposit Insurance Corporation (FDIC)

Created in 1933, the FDIC is one of two agencies that insures deposits in American financial institutions, which protects depositors in the event of bank failure and ensures a level of trust in the American banking system. For more information on the FDIC, visit


A connection point within the payment processing life cycle between the merchant and processors. It captures and encrypts card and transactional data and submits it on the merchant's behalf to the processor for routing of the transaction to the card networks and issuing bank. Gateways can be an internal platform, a third party, or processor-owned.


Gross Funding

A funding type that provides merchants with the full amount of funds for their transaction without any fees deducted. Fees are then calculated and assessed to the merchant at a later date.

Hard Credit Inquiry

A hard credit inquiry, or hard credit check, describes when a lender or other company requests to review an individual's credit history report from one of the major reporting agencies (TransUnion, Equifax, Experian), typically to approve them for a loan. The hard credit inquiry is recorded on the credit report and will in most instances impact the individual's credit score, unlike the soft credit inquiry. Infinicept does not perform hard credit inquiries on submerchants as part of Infinicept's New Accounts Underwriting Service.  

Independent Sales Organization (ISO)

A third-party payment processing company that partners with processors to facilitate handling merchant accounts. An ISO at its most basic level may simply be a referral business to a processor, earning residuals on the volume forwarded to its processing partners. These entities may be called "retail ISOs" (not a formal card brand definition). Some ISOs may perform underwriting, risk, and other management functions for the merchants referred to the processor. These may be called "wholesale ISOs" (not a formal card brand definition).


Instructional Based Funding

A processor funding and payout model that allows payment facilitators to provide money movement instructions to the processor, giving the payment facilitator total control of how submerchants and sellers are paid.



IT integration, or systems integration, is the connection of data, applications, APIs, and devices across an IT organization to be more efficient, productive, and agile. Continuous integration is a developer practice where working copies of code are merged into a shared central repository multiple times a day.


Integrated Software Vendor (ISV)

Software providers that make and sell software as a service (SaaS) products. ISVs provide software solutions that aid in managing different functions of a business operation. Generally, ISVs specialize their solution for a specific merchant vertical, often at a granular level (example, restaurants, fitness centers, etc.). ISVs are prime candidates for adding integrated payment solutions to their business strategy by becoming a payment facilitator.

Merchant Monitoring Service Provider (MMSP)

A third-party service provider that continuously monitors e-commerce merchants and their associated URLs for activity that is illegal, deceptive, against terms and conditions, or could result in card brand fees or regulatory scrutiny. Infinicept does not provide these services; however, clients may independently reach out to third-party companies for more information on MMSP services.

For a list of vendors certified by Mastercard, visit the Merchant Monitoring Vendor List.

For a list of vendors certified by Visa, visit the Visa Global Registry of Service Providers.


Merchant Processing Agreement (MPA)

A legal contract between a client, an acquiring bank, and the submerchants served. The contract provides submerchants with details regarding the full range of electronic payment services the processor will supply, and provides means for accepting credit cards, debit cards, or other forms of payment from customers.

Net Funding

A funding type that provides merchants with the remainder of their funds after fees have been assessed and collected by the Payfac.

Payment Facilitator (Payfac)

A service provider that reduces the complexity of online payments by enabling merchants to begin accepting card payments more quickly using its infrastructure. Payfacs work closely with acquiring banks, payment processors, sponsors, and merchants to provide underwriting services, transaction monitoring, funding, and chargeback management for their customers. To learn more about the benefits and process to becoming a payment facilitator, visit


Payment Processor

A vendor that handles the transactional logistics of accepting credit card payments. The role of a payment processor is to manage authorization and settlement of card transactions. When a consumer uses a card to pay for their purchase, the processor receives the request and sends it to the card network. Once the network returns the authorization response, the processor routes that response back to the merchant. After transactions are authorized, they must be settled, which means that the funds must be moved from the consumer's bank to the merchant's bank. The processor manages this process as well.

Regulatory Technology (RegTech)

Technology that uses data sources to enhance regulatory and compliance processes across multiple industries, including financial services, banking, retail, healthcare and more. Infinicept has a dedicated RegTech Team of representatives to assist with RegTech needs and services.

Soft Credit Inquiry

A soft credit inquiry, or soft credit check, describes when a lender or other company performs an inquiry to establish an individual's credit standing as part of a background investigation, using the services of vendors and resources other than full Equifax, Experian, and TransUnion reporting. Soft inquiries do not impact credit scores, unlike hard credit inquiries. Infinicept performs soft credit inquiries on merchants as part of Infinicept's New Accounts Underwriting service.


An entity or entities that approve and enable a Payfac's entry into the payment system. The acquiring bank and processor are often collectively referred to as the sponsor.


Specialized Due Diligence (SpDD)

The process of performing additional underwriting checks for a particular subset of merchants based on their business type.

Example: Clients may request that restaurant merchants provide documentation of their food permit and licensing before approval.



The submerchant, or merchant, is a payment facilitator's customer. The Payfac onboards the submerchant to enable them to accept electronic payments. Submerchants can be online businesses accepting card-not-present transactions or physical storefronts accepting card-present transactions.


The process through which a payment facilitator performs due diligence and risk analysis, including verifying and validating a merchant's identity, to facilitate safe and reliable partnerships.