UK card-payment glossary

33 UK card-payment terms in plain English. Card machine vs card terminal vs card reader, acquirer vs merchant account vs gateway, interchange vs scheme fee vs acquirer markup, SCA vs 3DS2, chargeback vs refund, MATCH vs TMF. Marked up as DefinedTermSet so AI search and Google can extract individual definitions.

Acquirer: The bank or company that contracts with a merchant and with Visa or Mastercard to process card transactions, manage chargebacks, and pay the merchant. UK examples: Worldpay, Adyen, Stripe UK, Tyl by NatWest, Lloyds Cardnet, Elavon.
AVS (Address Verification Service): A fraud-check on card-not-present transactions where the cardholder's billing address numbers (house number and postcode digits) are matched against the issuer's records. UK e-commerce typically requires Full AVS Match for higher-ticket transactions.
Bacs Direct Debit: UK bank-to-bank recurring payment scheme. Customer authorises a mandate once; subsequent payments pull from their bank account on the agreed schedule. Cheaper than card on recurring above £30/payment. Operated by Pay.UK.
BIN (Bank Identification Number): The first 6 to 8 digits of a card number that identify the issuing bank, card type and country. Used by acquirers for routing, fraud-check and dynamic-currency-conversion logic. Also called IIN (Issuer Identification Number).
Card machine: Physical device used by a customer to pay in person, by tapping their contactless card, inserting their chip card, or holding their phone (Apple Pay, Google Pay) against it. Also called a card terminal, card reader, or PDQ machine.
Card-not-present (CNP): A transaction where the cardholder is not physically in front of the merchant: online checkout, phone order, mail order. Higher fraud risk than card-present; UK SCA / 3DS2 rules apply to most CNP transactions.
Card-present (CP): A transaction where the cardholder is physically in front of the merchant and uses their card or phone at a card machine. Lower fraud risk than CNP; in-person UK SCA is delivered through chip-and-PIN or contactless-with-device-auth.
Chargeback: A forced reversal of a card transaction initiated by the customer's card issuer, usually after the customer disputes the transaction. UK chargeback fees run £15 to £35 per case in 2026.
Chip-and-PIN: EMV card-payment standard where the chip on the card is read and the cardholder enters a 4-digit PIN to authorise. Required in the UK for card transactions above the £100 contactless cap.
Contactless: Wireless card-payment standard where the customer holds their card or phone near the card machine to pay. UK contactless transactions are capped at £100 per transaction; above £100, chip-and-PIN.
CVV2: The 3 or 4-digit security code printed on the back of Visa and Mastercard cards (4 digits on the front for AMEX). Used in card-not-present transactions as a fraud check. Never stored by merchants under PCI DSS.
Dynamic Currency Conversion (DCC): A point-of-sale option where the customer pays in their home currency rather than the merchant's currency. The conversion rate is set by the acquirer or DCC provider, usually with a 3-6% markup over interbank. Optional under UK rules; customer must be given the choice.
EMV: Europay-Mastercard-Visa: the global chip-card standard underpinning chip-and-PIN, contactless, and Tap to Pay. EMV replaced magnetic-stripe authentication in the UK and most of the world.
Gift Aid: UK tax-relief scheme allowing registered charities and CICs to reclaim 25p on every £1 donated by a UK taxpayer. Requires a Gift Aid declaration from the donor. Most UK charity acquirers (Stripe, SumUp, GoCardless) integrate Gift Aid declaration capture at donation.
Interchange: The fee paid by the merchant's acquirer to the customer's card issuer on every card transaction. UK consumer-debit interchange is capped at 0.2%; consumer-credit at 0.3%; commercial cards uncapped at 1.0% to 2.5%.
Interchange-plus pricing: A pricing model where the merchant pays the actual interchange fee plus a fixed acquirer markup. Compares against "blended" pricing where the acquirer hides interchange in a single rate. Above £25k monthly volume, interchange-plus usually wins on TCA.
KYC (Know Your Customer): Identity-verification process the acquirer runs on new merchants before activating their card-acceptance account. Includes Companies House check, beneficial-ownership disclosure, director ID, business address verification.
MATCH list: Mastercard Member Alert to Control High-Risk: a database of merchants terminated by acquirers for reasons including chargebacks, fraud, illegal activity. Listing lasts 5 years; merchants on MATCH face severe restrictions on new acquirer applications.
MCC (Merchant Category Code): A 4-digit code that classifies a merchant's primary business activity. Used by acquirers for risk-pricing and by card issuers for cashback / rewards logic. Examples: MCC 5814 (fast food), MCC 5812 (eating places), MCC 4121 (taxicabs).
Merchant account: The bank account that receives the money from card transactions, after Visa, Mastercard or AMEX have processed them and the acquirer has taken its cut. Most modern UK providers bundle a merchant account into the card-machine product.
Merchant Initiated Transaction (MIT): A recurring or subsequent card transaction where the merchant pulls the payment without customer present (subscriptions, repeat billing). MIT is exempt from SCA / 3DS2 challenge under UK retained PSD2 rules, provided the initial transaction was SCA-authenticated.
MID (Merchant ID): A unique numeric identifier assigned to a merchant by their acquirer. Used to route transactions, reconcile settlements, and identify the merchant on chargeback paperwork. Different from the BIN; the MID is acquirer-issued.
NFC (Near-Field Communication): Radio technology that enables contactless card-payment and mobile-wallet (Apple Pay, Google Pay) at card machines. Operates at 13.56 MHz, range about 4 cm. Underpins all UK contactless card transactions.
PCI DSS: Payment Card Industry Data Security Standard. Compliance framework merchants must follow when accepting card payments. UK SMBs typically meet PCI DSS via Self-Assessment Questionnaire (SAQ-A for hosted-checkout, SAQ-B for hardware-only, SAQ-A-EP for direct-post).
PDQ (Process Data Quickly): Legacy term for card-machine, dating from a 1990s branded product line. Still used colloquially by some UK shop owners and in older bank-acquirer documentation. Functionally identical to "card terminal" or "card machine".
Refund: Voluntary reversal of a card transaction initiated by the merchant. The original interchange is usually not refunded by the acquirer (so refunds carry a small cost to the merchant). Different from a chargeback (which is forced by the issuer).
Scheme fees: Fees paid by acquirers to Visa or Mastercard themselves for running the rails. UK scheme fees in 2026 run 0.05% to 0.20% on domestic card volume. Separate from interchange (which goes to the issuer) and from the acquirer's own markup.
Settlement: The process of moving money from the customer's card issuer to the merchant's nominated bank account. Authorisation and settlement are separate events. UK settlement runs same-day (Dojo, Tide, Revolut, Tyl) or T+1 next business day (SumUp, Square, Zettle) or T+2 to 7-day rolling (Stripe new accounts).
SCA (Strong Customer Authentication): UK regulatory requirement under retained PSD2 mandating two-factor authentication on most online card payments. Delivered via 3D Secure 2. Two factors from: something the customer knows (password), has (phone), or is (biometric).
Tap to Pay on iPhone: Apple feature where the iPhone itself acts as the card machine, accepting contactless cards and Apple Pay directly. iPhone XS or newer running iOS 16.4+. Paired with a supporting acquirer (SumUp, Square, Zettle, Stripe, Tide, Revolut). No hardware terminal required.
TCA (Total Cost of Acquiring): The all-in 12-month cost of card acceptance for a merchant, expressed as a percentage of card volume or in pounds. Blends rate, monthly fee, hardware cost, contract length, exit fees, chargeback fees, and scheme fees. The right metric for comparing card-machine options.
3D Secure 2 (3DS2): The technical protocol delivering Strong Customer Authentication in online card payments. Runs frictionless for low-risk transactions, challenges customer (banking-app prompt, SMS code, biometric) for higher-risk. Liability shift to issuer on successful authentication.
TMF (Terminated Merchant File): Older name for the Mastercard MATCH list. Database of merchants terminated by an acquirer; listings last 5 years; severely restricts the merchant's ability to open a new acquirer relationship without specialist underwriting.

Last reviewed: 2026-05-11. Reviewed by Oliver Mackman.