The words payments people use. Defined in fifty words or fewer.

Interchange, settlement, KYB, mandates, split payments, payouts. Each term is a short definition first, then what it means for a software platform or a business, with the guide that goes deeper.

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41 terms, A to Z

Each one is a definition of fifty words or fewer first, then what it means for a software platform or a business.

3

3-D Secure (3DS): 3-D Secure (3DS) is a protocol, maintained by EMVCo, under which the card issuer authenticates the cardholder during an online card payment, using data from the merchant and, where needed, a challenge such as a bank app approval. It is how most UK online card payments meet strong customer authentication.

A

acquirer: An acquirer is the regulated firm, licensed by the card schemes, that contracts with a business to accept card payments, routes each transaction to the cardholder's bank, settles the proceeds to the business and carries the obligations to the schemes, including chargebacks and merchant underwriting.
AUDDIS: AUDDIS, the Automated Direct Debit Instruction Service, is the Bacs service that lets an organisation send new Direct Debit Instructions to payers' banks electronically instead of on paper. Bacs makes it mandatory for all new service users that submit directly, and it is a precondition for paperless Direct Debit.
authorisation: Authorisation is the step in a card payment where the cardholder's bank confirms the card is valid, the funds or credit are available and the payment is approved. It places a hold on the amount. The money does not move until the payment is captured and settled.

B

Bacs: Bacs is the UK interbank payment scheme that runs Direct Debit (pulling agreed amounts from a payer's account) and Bacs Direct Credit (pushing payments such as salaries and supplier payments). It is operated by Pay.UK and processes payments on a three working day cycle.
basis point (bps, bips): A basis point, written bps and said "bips", is one hundredth of one percent: 100 basis points is 1%. Payments pricing is quoted in basis points because the margins are small. 50bps of £1m a month in volume is £5,000 a month.
blended pricing: Blended pricing is a card pricing model in which the business pays one flat rate, or a small number of rates, on every transaction, with interchange, scheme fees and the acquirer's margin rolled into it. It is simple to understand and hides what each part costs.

C

capture: Capture is the step after authorisation in which the business instructs its acquirer to collect the payment. It can happen at once or later, for the full authorised amount or part of it. Capture triggers settlement; until it happens, the money is only reserved.
chargeback: A chargeback is the reversal of a card payment by the cardholder's bank under card scheme rules, after the cardholder disputes the transaction. The acquirer debits the business, which can contest the chargeback by submitting evidence. It is a scheme process, not a legal judgment.

D

Direct Debit mandate: A Direct Debit mandate, formally a Direct Debit Instruction (DDI), is the authority a payer gives their bank allowing a named organisation to collect varying amounts from their account on agreed dates, with advance notice. It is lodged with the payer's bank and protected by the Direct Debit Guarantee.
dispute: A dispute is a cardholder's challenge to a card payment, raised through their bank under scheme rules. It may begin as a request for information and become a chargeback if the business does not resolve it. Providers use "dispute" for the whole process from first challenge to final decision.

E

effective rate: The effective rate is the total a business paid for card acceptance in a period, including all fees and charges, divided by its card turnover in that period, expressed as a percentage. It is the one figure that lets two different pricing structures be compared honestly.
embedded payments: Embedded payments means card, online and Direct Debit payments built into a software product, so the platform's customers accept payments inside the software they already use rather than through a separate provider. The platform sets up its customers, usually sets a fee, and earns on the payment volume.
existing payment volume: Existing payment volume is everything a software platform's customers already take in payments, across every provider they use today. It covers every customer taking payments through or beside the platform's product, whoever processes them now, and is the starting point for working out what built-in payments could earn.

I

interchange: Interchange is the fee paid on each card payment by the merchant's acquirer to the bank that issued the card. The schemes set it; the acquirer passes it on. In the UK, consumer debit is capped at 0.2% of the transaction and consumer credit at 0.3%.
interchange-plus: Interchange-plus is a card pricing model in which the business pays the actual interchange on each transaction, passed through at cost, plus a fixed acquirer margin. Interchange-plus-plus (IC++) also passes scheme fees through at cost. The margin is the only negotiated part.

K

KYB (know your business): KYB (know your business) is the due diligence a regulated firm carries out on a business customer before providing payment services: confirming the company exists, identifying its directors and beneficial owners, and assessing its risk. In the UK it follows the Money Laundering Regulations 2017.

M

marketplace payments: Marketplace payments are payments in which a buyer pays once through the marketplace and the amount is divided at that moment between the seller and the marketplace's fee, with each seller verified and paid out to their own bank account by a regulated party. The marketplace never holds the money.
merchant category code (MCC): A merchant category code (MCC) is a four-digit number assigned to a business when its card acceptance is set up, classifying what it sells. The card schemes publish the list. The code affects interchange rates, scheme rules, risk treatment and whether some card products work at all.
merchant service charge: The merchant service charge (MSC) is the fee a business pays its acquirer for accepting card payments. It bundles interchange, scheme fees and the acquirer's own margin, usually expressed as a percentage of each transaction, sometimes with a pence-per-transaction element on top.
moving existing customers: Moving existing customers means getting the customers a software platform already has onto its own built-in payments, in planned groups, at moments that suit them, without forcing anyone. It is the work that turns a payments feature into payments revenue, and most of a platform's payments earnings come from it.

N

native by default: Native by default means that every new customer of a software platform starts on the platform's own built-in payments as the standard path, and an outside provider is set up only if the customer asks for one. It is the first of the four levers for moving existing customers.

O

onboarding: Onboarding is the process by which a business is identified, verified, risk-assessed and set up to accept payments: collecting its details, running KYB and UBO checks, assigning a merchant category code and linking a bank account for payouts. In a software platform it can happen inside the product.

P

payment facilitator (payfac): A payment facilitator (payfac) is a business registered with the card schemes through an acquirer that signs up other businesses as sub-merchants under its own master account, prices them, and takes responsibility for onboarding, monitoring, funds and losses. Synapto is not a payment facilitator.
payment gateway: A payment gateway is the software layer that collects payment details from a website, app or terminal, encrypts them and sends them to the acquirer and card scheme for authorisation, returning the result. It carries the message, not the money. Many providers bundle gateway and acquiring together.
payment institution: A payment institution is a firm authorised by the FCA, or registered as a small payment institution, under the Payment Services Regulations 2017 to provide payment services such as acquiring card payments, executing transfers or remitting money. Authorised payment institutions must meet capital, safeguarding and conduct requirements.
payment products: Payment products are what Synapto builds with a software platform on top of the payment itself: onboarding, reconciliation, payouts and the value-layer features, such as deposits, pre-authorisation, refund controls and trade accounts, that make the platform's own payments worth more to its customers than a separate provider.
payment service provider (PSP): A payment service provider (PSP) is a firm that provides payment services to businesses or consumers. In UK law the term covers banks, e-money institutions and payment institutions. In everyday use it means the company a business takes card and online payments through, often combining gateway, acquiring and payouts.
payments review: A payments review is a 30 to 60 minute conversation with a software platform or marketplace about its customers and their payments: who processes what today, what the platform could earn from its own payments, and what would make its customers move. The platform leaves with a range, not a pitch.
payout: A payout is the transfer of settled funds from the regulated party holding them to the business's or seller's own bank account, on a schedule such as daily, weekly or on demand. In a marketplace, each seller receives their own payout; the platform's fee is paid out to the platform.

R

refund: A refund is a return of some or all of a payment to the payer, initiated by the business rather than the cardholder's bank. It goes back by the original payment method. It is not a chargeback, and the fees on the original payment are not always returned.
regulated acquiring partner: The regulated acquiring partner is the licensed party that holds the licences and the funds in the model Synapto sets up for a software platform. It acquires the card payments, holds each customer's balance under FCA safeguarding rules, divides each payment and runs the payouts. It is never Synapto.

S

safeguarding: Safeguarding is the FCA-supervised requirement, under the Payment Services Regulations 2017 and Electronic Money Regulations 2011, that payment and e-money institutions protect customer funds by segregating them in a designated account or covering them with insurance, so the money can be returned if the firm becomes insolvent.
scheme fee: A scheme fee is the charge a card scheme such as Visa or Mastercard makes to an acquirer for processing payments across its network. Acquirers pass it on to merchants, usually inside the merchant service charge. Unlike interchange, scheme fees are not capped in the UK.
settlement: Settlement is the stage at which money actually moves: after a payment is authorised and captured, the card scheme settles funds from the cardholder's bank to the acquirer, which then settles with the business, net of fees, on an agreed schedule. Authorisation reserves the money; settlement transfers it.
split payment: A split payment is a single payment that the regulated party divides at the moment it is processed, so that each portion is credited to a different recipient: for example, the seller's share and the platform's fee. The platform never holds its customer's money; only its own share reaches it.
strong customer authentication (SCA): Strong customer authentication (SCA) is the requirement under the UK Payment Services Regulations 2017 that a payer initiating an electronic payment, or accessing their account online, be authenticated using at least two independent factors: something they know, something they have or something they are. The FCA supervises it.
sub-merchant: A sub-merchant is a business that accepts card payments under a master account held by a payment facilitator or regulated acquiring partner, rather than under its own merchant agreement with an acquirer. It is onboarded and paid out by the master account holder, within scheme rules.

T

Tap to Pay: Tap to Pay is using a standard smartphone as a contactless card terminal: the customer taps a card, phone or watch on the business's phone in a supported app, and the payment is authorised like any other. No reader is needed. Available in the UK on iPhone and Android.
tokenisation: Tokenisation replaces a card number with a substitute value, the token, that the business or platform can store and use to charge the card again. The real card details stay with the regulated provider or the card scheme, so the business never holds them and its PCI scope shrinks.

U

ultimate beneficial owner (UBO): An ultimate beneficial owner (UBO) is the natural person who ultimately owns or controls a company. Under the UK Money Laundering Regulations 2017 that means anyone holding, directly or indirectly, more than 25% of the shares or voting rights, or who otherwise exercises control over its management.

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