High-Risk Payments Glossary

ACH (Automated Clearing House)

A US network for moving money directly between bank accounts, rather than over the card rails. Because ACH is typically priced as a flat or capped fee instead of a percentage, it's far cheaper than card processing for large or recurring payments, which is why high-risk merchants use it to lower their blended cost. See Credit card & ACH processing.

Acquirer (Acquiring Bank)

The bank that holds a merchant's account and processes card transactions on its behalf, settling funds from the card networks. For high-risk merchants, the willingness of an acquirer (and its sponsor relationships) to accept a given category is what determines whether the business can be boarded at all.

AVS (Address Verification Service)

A fraud check that compares the billing address a customer enters against the address on file with the card issuer. A mismatch is one of the signals fraud screening weighs when deciding whether a card-not-present transaction is risky.

Chargeback

A reversal of a card transaction initiated by the cardholder's bank, usually because the customer disputes the charge. Chargebacks can be genuine fraud or “friendly fraud” (a real customer disputing a charge they made). Too many push your ratio toward the card-brand thresholds that can terminate an account. See Chargeback management.

Chargeback Ratio

The share of your transactions that become chargebacks (or, under Visa's VAMP, combined fraud and dispute items), expressed as a percentage. Staying comfortably under 1% is the safe operating target. See Chargeback thresholds explained.

CNP (Card Not Present)

A transaction where the card isn't physically swiped, dipped, or tapped, online, phone, mail, or keyed payments. Because the cardholder isn't authenticated at the point of sale, CNP carries more fraud risk and is a common reason a business is classified high-risk.

Concurrence (Sponsor Concurrence)

Pre-approval by the sponsor bank of a specific merchant before boarding, required for certain restricted categories (negative-option billing, pure-CNP nutraceuticals, marketplaces, PayFac models, commercial crowdfunding, MLM, MSBs, online gaming). It adds a review step and is what lets these categories be boarded stably. See Compliance.

Continuity Billing

A subscription model where a customer is billed automatically on a recurring schedule until they cancel, often starting from a free or discounted trial. It's effective but dispute-prone, which is why it draws both high-risk classification and regulatory attention. See Subscription & continuity billing.

Descriptor (Billing Descriptor)

The text that appears on a customer's card statement for a charge. A clear, recognizable descriptor prevents the “I don't recognize this charge” dispute, one of the easiest chargebacks to avoid.

Dunning

The process of recovering failed subscription payments, retrying declines on an optimized schedule, refreshing expired cards with an account updater, and prompting the customer when needed. Good dunning recovers revenue that would otherwise be lost to involuntary churn. See Recurring billing.

Interchange

The fee the card networks set that an acquirer pays to a card's issuing bank on each transaction. It's the largest wholesale component of your processing cost, and it varies by card type, commercial cards carry higher interchange, which Level 2/3 data can reduce.

ISO (Independent Sales Organization)

A company that resells and refers merchant accounts to a processor, where each merchant gets their own account and the processor holds the risk. Lighter and lower-liability than the PayFac model. See PayFac vs. ISO.

KYC / AML

“Know Your Customer” and “Anti-Money-Laundering”, the identity-verification and monitoring procedures a business (and its processor) must perform to prevent financial crime. Especially central to boarding MSBs and other regulated categories.

Level 2 / Level 3 Data

Enhanced transaction data (tax and customer codes for Level 2; full line-item detail, product codes, and freight for Level 3) that qualifies eligible commercial cards for lower interchange. Valuable for B2B and keyed transactions. See Virtual terminal.

MATCH List

The card networks' database (formerly the Terminated Merchant File) of merchants terminated for cause. Landing on it makes getting boarded elsewhere very difficult, a key reason to manage chargebacks before they reach termination territory.

MCC (Merchant Category Code)

A four-digit code that classifies a business by what it sells. Some MCCs are on processors' high-risk lists by category alone, which can trigger high-risk classification regardless of how the business operates. See MCC code lookup.

MOTO (Mail Order / Telephone Order)

Card-not-present transactions where details are taken remotely and keyed in rather than swiped. Processed through a virtual terminal and priced differently by the networks because the cardholder isn't authenticated at the point of sale.

MSB (Money Services Business)

A business that transmits or converts money, money transmitters, check cashers, currency dealers. Registered with FinCEN and heavily scrutinized under BSA/AML rules, which is why most processors decline the category. See MSB merchant accounts.

Negative-Option Billing

A model where a customer's inaction (not cancelling) is treated as consent to continue being billed, common in free-trial and continuity offers. It's a restricted category requiring concurrence and careful disclosure compliance.

PayFac (Payment Facilitator)

A company that holds a master merchant account and boards other businesses as sub-merchants under it, owning their underwriting and risk. Gives more control and economics than an ISO but requires registration and a compliance build. See What is a payment facilitator.

PCI DSS

The Payment Card Industry Data Security Standard, the rules governing how card data must be stored, processed, and transmitted. Using hosted pages and tokenization reduces a merchant's PCI scope. See PCI compliance for high-risk merchants.

Reserve (Rolling Reserve)

A portion of your funds the processor holds temporarily to cover potential chargebacks, your money, not a fee, typically a percentage of each batch held for around 180 days and released on a rolling basis. A fair reserve is disclosed up front and tapers. See Rolling reserves explained.

Representment

The process of contesting a chargeback by submitting evidence (proof of delivery, accepted terms, transaction records) that the charge was legitimate, to win the funds back. Only works when the evidence exists and is filed within the network's deadline.

Tokenization

Replacing a real card number with a randomly generated token that's worthless if stolen, so a merchant can bill a card without ever storing the actual details. Reduces both breach risk and PCI scope. See Payment security.

Underwriting

The review a processor performs before boarding a merchant, assessing volume, chargeback history, business model, and compliance to decide whether and how to approve the account. Done properly up front, it's what keeps an account stable. See How our underwriting works.

VAMP (Visa Acquirer Monitoring Program)

Visa's consolidated program for monitoring fraud and disputes. A merchant is flagged “excessive” at a 1.50% ratio with 1,500+ combined dispute-and-fraud items a month, in force since April 1, 2026. See Visa VAMP & Mastercard BRAM 2026.

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