How This Glossary Is Organized
Every cross-border payment moves through the same broad stages. Money is collected, held or converted, and paid out, with compliance checks running alongside and banking infrastructure working underneath. The terms below are grouped by those five stages. This glossary explains the same ideas in plain language, with a focus on how they affect businesses and fintechs. Terms specific to stablecoin settlement, such as on-ramps, payment blockchains and OFIs, are covered in our stablecoin infrastructure glossary.
Collecting Payments
Payment gateway. The technology that captures a customer's payment details at checkout and passes them securely to be processed. A payment gateway is usually the first piece of payment infrastructure a business touches.
Payment service provider (PSP). A company that lets businesses accept and process payments, often bundling the gateway, acquiring and settlement into one service.
Merchant. The business selling goods or services and receiving the payment.
Merchant of record. The legal entity responsible for a sale, including tax, refunds and chargebacks. It is not always the brand the customer sees.
Acquirer. The bank or licensed institution that processes card payments for a merchant and deposits the funds into the merchant's account. Also called the acquiring bank.
Issuer. The bank or institution that issued the customer's card and approves or declines each transaction. Also called the issuing bank.
Card scheme. The network that sets the rules and connects issuers with acquirers, such as Visa or Mastercard.
Local acquiring. Processing a card payment through an acquirer in the same country as the customer's card issuer. It often raises approval rates and lowers fees compared with cross-border processing.
Authorization. The issuer's approval of a transaction at the moment of purchase. An authorization confirms funds are available, but money has not moved yet.
Capture. The step where an authorized payment is confirmed for settlement, so funds actually move to the merchant.
Authorization rate. The share of attempted payments that the issuer approves. Small changes in this rate can have a large effect on revenue.
Decline. A transaction refused by the issuer, the gateway or a fraud system. Declines can be hard, such as a closed account, or soft, such as a temporary block that may succeed on retry.
Interchange fee. The fee the acquirer pays the issuer on each card transaction. It is usually the largest part of card processing costs.
Scheme fee. The fee charged by the card network for using its rails, on top of interchange.
Merchant discount rate (MDR). The total percentage a merchant pays to accept a card payment, combining interchange, scheme fees and the acquirer's margin. Our breakdown of what using a payment gateway actually costs walks through each layer.
3-D Secure. An authentication step for online card payments, run under standards set by EMVCo, that checks the cardholder is genuine. It shifts liability for certain fraud from the merchant to the issuer.
Tokenization. Replacing sensitive card details with a random token, so the real card number is not stored or exposed in the merchant's systems.
Alternative payment methods (APMs). Ways to pay other than international cards, such as bank transfers, digital wallets and local real-time payment schemes. Tazapay's country and payment method coverage shows which APMs are available by market.
Digital wallet. An app that stores payment credentials or a balance, letting customers pay without entering card details each time.
Account-to-account (A2A) payment. A payment that moves directly from the payer's bank account to the payee's, without a card network in between.
Collections. The process of receiving money from customers or business clients, through any method.
Virtual account. An account number issued to a business, often in a local currency, that routes incoming payments into a main account. Virtual accounts let a business receive local transfers in markets where it has no bank branch.
Collection on behalf of (COBO). A model where a licensed provider collects funds for a platform's underlying merchants, with each merchant identified in the payment.
Refund. Money returned to a customer by the merchant, usually at the merchant's choice.
Chargeback. A forced reversal of a card payment, started by the cardholder through their issuer. Chargebacks come with fees and, if they become frequent, scheme penalties.
Dispute. The process of contesting a chargeback by submitting evidence that the payment was valid.
Holding and Converting Money
Multi-currency account. An account that holds balances in several currencies at once, so a business can receive, hold and pay out without converting every time.
Global collection account. A set of local account details in different markets, linked to one balance. Tazapay's global collection accounts let businesses collect like a local in multiple currencies.
Settlement currency. The currency in which a business receives its funds after a payment is processed.
Presentment currency. The currency a customer sees and pays in at checkout. It can differ from the settlement currency.
Exchange rate. The price of one currency in terms of another.
Mid-market rate. The midpoint between the buy and sell prices of a currency pair on the wholesale market. It is the fairest reference point for judging any quoted rate.
FX spread. The gap between the rate a provider quotes and the mid-market rate. Spreads are often the largest hidden cost in cross-border payments because they are built into the rate rather than shown as a fee.
FX markup. Another name for the margin a provider adds on top of the mid-market rate.
Dynamic currency conversion (DCC). Offering a card customer the option to pay in their home currency at checkout. The conversion rate is set by the merchant's provider, not the card issuer.
Liquidity. Having the right amount of money in the right currency and place to meet payments when they are due.
Treasury. The function that manages a company's cash, currency exposure and liquidity. Many treasury teams are now looking at new settlement options, as covered in our stablecoin treasury playbook for CFOs.
Working capital. The cash a business has available for day-to-day operations. Money stuck in transit or parked in payout accounts reduces it.
Paying Out
Payout. Money sent from a business to a supplier, seller, employee or other beneficiary. Tazapay's global payouts cover same-day local payouts in many markets.
Disbursement. Another word for payout, often used for large volumes of payments such as insurance claims or loan funding.
Mass payouts. Sending many payouts at once, usually through a file upload or API. Also called batch payouts.
Beneficiary. The person or business receiving a payment.
Remitter. The person or business sending a payment. In on-behalf-of models, the actual remitter is the underlying merchant, not the platform.
Payment on behalf of (POBO). A model where a licensed provider pays third parties on a platform's instructions, with the platform's merchant shown as the remitter. Our white-label POBO infrastructure guide covers how it works, and the POBO vs COBO comparison explains when to use each.
SWIFT. The global messaging network banks use to send cross-border payment instructions. SWIFT carries the message. The money itself moves through accounts between banks.
Wire transfer. A bank-to-bank electronic transfer, often sent over SWIFT for international payments.
Local rail. A domestic payment system that moves money within one country, such as FAST in Singapore, SEPA in Europe or ACH in the United States. Paying out on local rails is usually faster and cheaper than an international wire.
Real-time payments. Domestic systems that settle individual payments within seconds, around the clock. Examples include FedNow in the United States, InstaPay in the Philippines and the UK's Faster Payments.
Cut-off time. The latest time a payment can be submitted to be processed on the same day. Miss it and the payment waits for the next business day.
Value date. The date on which funds are available to the beneficiary.
T+1, T+2. Shorthand for settlement one or two business days after the transaction date.
Charge codes (OUR, SHA, BEN). Instructions on a SWIFT payment that say who pays the bank fees. OUR means the sender pays all fees. SHA means fees are shared. BEN means the beneficiary pays, so they receive less than was sent.
Payout return. A payment sent back because it could not be delivered, often due to wrong beneficiary details or a closed account.
Remittance. Money sent across borders, most often by individuals to family. The World Bank tracks the cost of these transfers in its Remittance Prices Worldwide database.
Corridor. A specific sending and receiving market pair, such as Singapore to Indonesia. Costs and speed vary widely by corridor, especially across emerging market corridors.
Compliance and Risk
KYC. Know Your Customer checks that verify the identity of an individual before they can use a financial service.
KYB. Know Your Business checks that verify a company's registration, ownership and activity.
Ultimate beneficial owner (UBO). The real person who ultimately owns or controls a company. Identifying UBOs is a core part of KYB.
AML. Anti-money laundering rules and controls that detect and prevent criminal money from entering the financial system.
CTF. Counter-terrorist financing controls, usually run alongside AML.
Sanctions screening. Checking customers and payments against government sanctions lists before any money moves.
Politically exposed person (PEP). Someone in a prominent public role, or close to one, who needs extra checks because of a higher risk of corruption.
Transaction monitoring. Ongoing review of payments to spot unusual or suspicious activity after onboarding.
Suspicious activity report. A report a regulated firm must file with authorities when it suspects a transaction may be linked to crime.
Travel Rule. The requirement under FATF Recommendation 16 that sender and recipient information travels with a payment. FATF revised the standard in June 2025, with the changes due to take effect by the end of 2030.
Payment licence. Permission from a regulator to provide payment services. Licence types differ by country, and a provider's licensing footprint decides where it can legally operate.
Major Payment Institution (MPI). A licence category from the Monetary Authority of Singapore for firms handling larger volumes of payment services. Tazapay Pte. Ltd. holds an MPI licence for fiat payment services.
Money services business (MSB). A registration category for firms that transmit or exchange money, used in Canada by FINTRAC and in the United States by FinCEN.
Money transmitter licence (MTL). A state-level licence in the United States required to transmit money on behalf of others.
Electronic money institution (EMI). A licence category in Europe and the UK for firms that issue electronic money and provide payment services.
Safeguarding. Keeping customer funds separate from a payment company's own money, so they are protected if the company fails.
PCI DSS. The Payment Card Industry Data Security Standard, which sets security rules for any business that stores, processes or sends card data. Tazapay is PCI DSS certified.
Fraud screening. Automated checks that score each payment for fraud risk before it is approved.
Behind the Scenes: Banking Infrastructure
Payment rail. The underlying system a payment travels on, such as a card network, a local bank transfer scheme or SWIFT.
Clearing. Exchanging and confirming payment details between institutions before money moves.
Settlement. The final transfer of funds between institutions that completes a payment.
Real-time gross settlement (RTGS). A system, usually run by a central bank, that settles each payment individually and immediately. Most countries use an RTGS system for high-value payments.
Net settlement. Settling the net difference between institutions at set times, rather than each payment one by one.
Correspondent bank. A bank that holds accounts for other banks and processes cross-border payments on their behalf. One international payment can pass through two or three correspondents.
Intermediary bank. A correspondent bank that sits in the middle of a payment chain and may deduct its own fee.
Nostro account. An account a bank or payment company holds with another bank in a foreign currency. From the holder's point of view, it is our money held with you.
Vostro account. The same account seen from the other side. From the holding bank's point of view, it is your money held with us.
Prefunding. Placing money in payout accounts in advance so payments can go out quickly. It ties up working capital, which is one reason fintechs weigh the pros and cons of stablecoin rails.
ISO 20022. The global data standard for payment messages, carrying richer and more structured information than older formats. According to SWIFT, the coexistence period for older MT messages on cross-border bank-to-bank payment instructions ended on 22 November 2025.
MT and MX messages. MT is SWIFT's older message format. MX refers to messages in the newer ISO 20022 format.
Straight-through processing (STP). A payment that moves from start to finish with no manual intervention. Better data quality means higher STP rates.
Reconciliation. Matching payments in bank and payment records against invoices and the general ledger, so every transaction is accounted for.
Payment orchestration. A layer that routes payments across multiple providers, acquirers or rails to improve cost, approval rates or resilience.
Sources
- Bank for International Settlements, CPMI Glossary of Payments and Market Infrastructure Terminology. https://www.bis.org/cpmi/publ/d00b.htm
- FATF, Changes to FATF Standards: Recommendation 16 on Payment Transparency (June 2025, updated October 2025). https://www.fatf-gafi.org/en/publications/Fatfrecommendations/update-Recommendation-16-payment-transparency-june-2025.html
- SWIFT, ISO 20022 Programme (2025). https://swift.com/standards/iso-20022/iso-20022-programme
- World Bank, Remittance Prices Worldwide (2025). https://remittanceprices.worldbank.org/
