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LearnPayments & high-risk processing, explained.
Plain-English guides to payments and high-risk processing: MIDs, payment gateways, alternative payment methods, decline cascading, chargebacks and 3-D Secure.
MID (Merchant ID)
A MID, or Merchant ID, is a unique identifier assigned to a business so the card networks and acquiring bank can route and settle its card transactions.
Payment gateway
A payment gateway is the technology that securely captures a customer's payment details at checkout and transmits them to the acquirer and card networks for authorisation.
Alternative payment methods (APMs)
Alternative payment methods, or APMs, are any way to pay other than the major international credit cards - including bank transfers, e-wallets, prepaid vouchers, real-time payments and local schemes.
Decline cascading
Decline cascading - also called payment cascading - is the automatic retrying of a soft-declined transaction across other MIDs or acquirers, in milliseconds, to recover a sale that would otherwise be lost.
Chargeback management
A chargeback is a forced reversal of a card payment initiated by the cardholder's bank, usually after a dispute. Too many chargebacks raise costs and can put a merchant account at risk.
3-D Secure (3DS2)
3-D Secure (3DS), now 3DS2, is an authentication layer that verifies the cardholder during an online card payment - reducing fraud and, in many cases, shifting chargeback liability to the issuer.
IBAN
An IBAN, or International Bank Account Number, is a standardised international format that uniquely identifies a bank account so payments can be routed correctly across borders.
SEPA
SEPA, the Single Euro Payments Area, is a European payments scheme that lets you send and receive euro transfers across participating countries as easily as a domestic payment.
On-ramp vs off-ramp
An on-ramp converts traditional currency (fiat) into crypto; an off-ramp converts crypto back into fiat. Together they connect the banking system and digital assets.
Stablecoins
Stablecoins are digital tokens designed to hold a steady value by tracking a reference asset - usually a fiat currency such as the US dollar. Common examples include USDT and USDC.
Acquiring bank
An acquiring bank, or acquirer, is the financial institution that holds a merchant's account, processes card transactions on their behalf and settles the funds to them.
Payment service provider (PSP)
A payment service provider (PSP) enables a business to accept card and alternative payments by bundling the technology and banking relationships - often the gateway, processing and acquiring - into one service.
Merchant category code (MCC)
A merchant category code (MCC) is a four-digit number the card networks use to classify a business by the type of goods or services it sells.
Interchange fees
Interchange is the fee paid to the cardholder's issuing bank on every card transaction. It's set by the card networks and forms the largest part of most processing costs.