50 Payment Terms Every Restaurant Should Know

Running a restaurant is hard enough without getting lost in a maze of payment processing jargon. Between managing rising food costs, training staff, and delivering an exceptional guest experience, the last thing you need is confusion over interchange fees, chargebacks, or PCI compliance.

Understanding common payment terms isn’t just helpful—it’s essential to protecting your bottom line.

Payment literacy ensures you can manage cash flow, avoid unexpected fees, negotiate better terms with payment processors, accurately forecast revenue, and prevent financial surprises. It can also enable you to build trust with guests via transparent pricing, seamless transactions, and fewer disputes.

We’ve put together this restaurant payment glossary to help you navigate the lingo so you feel confident vetting payment providers, analyzing transaction fees, or troubleshooting chargebacks. (Tip: Bookmark this blog post so you can easily refer back to it.)

Restaurant payment glossary: 50 terms to know

3D secure (3DS): An authentication method that provides an additional layer of authentication for credit card transactions, protecting against scammers. 3DS asks your guests to verify their identity with the card issuer during payment.

Account takeover (ATO): When cybercriminals take ownership of online accounts using stolen passwords and usernames. They often purchase a list of credentials and test password and username combinations to log in.

Acquirer: A financial institution that processes credit and debit card payments on behalf of a merchant.

AML laws / Monitoring (Anti-money laundering): Regulations and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.

Authentication: The payment authentication process validates the identity and legitimacy of a transaction to ensure the person or business initiating the payment is the authorized account/card holder. This protects merchants from fraud and chargeback abuse.

Authorization fees: Authorization is the process of verifying a guest's payment method has sufficient funds or credit to complete a transaction. A flat authorization fee is charged every time a credit card is swiped or manually keyed in by a business for goods or services. It can also show up as a monthly fee.

Authorization rate: The percentage of submitted transactions accepted by the card networks. It’s important to maximize your authorization rate without sacrificing fraud and dispute rates. 

BIN attack: Similar to an enumeration attack, a BIN attack involves guessing an accurate combination of a debit or credit card number, card verification value (CVV), and expiry date using brute-force computing.

Block rate: The percentage of transactions blocked by the payment processor or gateway due to suspected fraudulent activity or other security concerns.

Card-not-present transaction: A transaction where a credit card isn’t physically presented (swiped, chip inserted, tapped, etc.) to the merchant at checkout.

Card-present transaction: A payment transaction that occurs when the cardholder and the payment card are physically present.

Chargeback: A charge returned to a payment card after a guest successfully disputes an item on their account statement or transactions report.

Consumer-initiated transactions (CIT): A transaction where the guest is present and provides their payment credentials. This can be through a terminal in-store, or online through a checkout experience.

Contactless payment: A fast and secure way to pay by tapping a credit card, debit card, or mobile device on a payment terminal, using technologies like NFC (Near field communication).

Credential stuffing: Credential stuffing is the automated injection of stolen username and password pairs (“credentials”) into website login forms to fraudulently gain access to user accounts. When guests reuse passwords and emails, exposed credentials from breaches or phishing can let attackers access multiple accounts by testing them across other sites.

Decline rate: The percentage of attempted transactions declined by the payment processor or card issuer.

Dispute: Cardholders can dispute a credit or debit card transaction if it is unauthorized or illegitimate. If a transaction is disputed, the cardholder is no longer required to make payment.  Instead, funds are removed from the merchant’s account and returned to the cardholder.

EMV: This term stands for Europay, Mastercard, and Visa. It’s a technology and payment method designed to limit fraud using embedded computer chips on credit and debit cards.

Enumeration attack: These fraudulent attacks (a.k.a brute force) attempt to submit payment information through a merchant’s website. The goal is to find a combination of payment values, such as a card's expiration date, primary account number (PAN), verification value (CVV2), and postal code, that will result in an approval response.

Fixed acquirer network fees: FANF is a Visa-imposed fee on businesses accepting Visa cards. The cost of this fee is calculated based on several factors, including sales volume, business location, and processing methods.

Fraud prevention: Proactive measures and controls aimed at deterring, detecting, and mitigating fraudulent activities within an organization.

Gateway: A service that authorizes and processes payments for online and in-person transactions, acting as an intermediary between your restaurant’s point-of-sale system and the payment processor.

House account: A house account is a line of credit that enables VIP guests to charge purchases, like catering orders, to their account and pay later. It gives repeat guests flexibility in payment options and helps restaurants retain high-value guests.

Interchange fees: Transaction fees your brand must pay to the card-issuing bank—to cover handling, fraud, and bad debt costs, plus the risk of approving the payment—whenever a guest uses a credit/debit card to purchase from your restaurant.

ISO (Independent Sales Organization): A third-party organization or individual authorized to sell and manage merchant accounts on behalf of an acquiring bank.

Keyed entry: A transaction where a guest's card details are manually entered into a payment terminal or online platform instead of swiping the card.

KYB (Know Your Business): The process of verifying the legitimacy and credentials of a business entity, important for financial institutions and payment processors.

KYC (Know Your Customer): A regulatory requirement that mandates businesses to verify the identity of their guests to prevent fraud, money laundering, and other illegal activities.

Liability shift: A change in rules or regulations that affects who’s responsible for issuing a chargeback. Normally, it’s a shift in liability from the payment card issuer to the merchant, or vice-versa.

Merchant descriptor: The name or short description of a business that appears on a guest's bank or credit card statement to identify a transaction.

Merchant-initiated transactions (MIT): Transactions initiated by the merchant without the cardholder's direct involvement, based on a prior agreement with the guest. Examples include recurring subscription payments, installment payments, and account top-ups.

Near field communication: “NFC” payments are a contactless payment method where a mobile wallet or an enabled credit or debit card wirelessly communicates with a payment terminal to send encrypted payment information from the guest to the retailer.

Network fees: Payments made to card networks, like Visa or Mastercard, for using their systems. These fees cover transaction processing, fraud prevention, authorization, cross-border transactions, refunds, and more.

Payment Account Reference (PAR) value: A unique identifier that remains consistent for all cards issued for the same payment account—even if the card numbers change. This helps businesses track and manage payment data without compromising security.

PayFac (Payment facilitator): A type of PSP that allows sub-merchants to process payments under its master merchant account.

Payment fraud: When someone initiates a payment using a credit or debit card that does not belong to them.

Payments reseller: An entity that resells payment processing services from larger payment processors or acquirers to merchants.

PCI compliance: A set of 12 security standards businesses must use when accepting credit card payments and transmitting, processing, and storing the related data.

Pre-authorization: A temporary hold on a specific amount of the available balance on a credit or debit card to see if it’s valid and has sufficient funds for the transaction.

Processing fees: Expenses businesses must pay to their payment service provider every time they process an electronic payment for a card-present or card-not-present transaction.

PSP (Payment service provider): A company that offers merchants the ability to accept various payment methods through a single platform.

Quick sale / Full sale: A transaction where authorization and settlement occur simultaneously, common in retail and restaurant settings where goods or services are provided immediately.

Reconciliation: The process of verifying bank account balances are accurate and up-to-date by cross-checking bank statements with your accounting records.

Refund: The process of returning funds to a guest's account after a transaction has been settled, typically due to a return of goods or services.

Scheme fees: Unregulated charges merchant acquirers pay to the operators of card payment schemes such as Mastercard and Visa to use their services.

Settlement: The process of transferring funds from the guest's account to the merchant's account after a transaction has been authorized.

Tax-exempt: Transactions free from tax at the federal, state, or local levels. It may also refer to the status of an organization that has limits on the amount of income or gifts that are taxable, including religious and nonprofit organizations.

Tokenization: A way to protect payment data from fraud, cyber attacks, or data breaches by temporarily replacing it with non-sensitive data as it’s processed digitally.

Void: The action of canceling a transaction before it has been settled, preventing the transfer of funds from the guest's account to the merchant's account.

Win rate: The ratio of chargebacks won versus the number of cases lost.

How to streamline payment processing and drive restaurant revenue

Payment processing isn’t for the faint of heart. With countless terms to understand and things that can go awry within a single transaction, it’s never been more important to have a fully integrated, restaurant-specific payment system and a dedicated team of industry experts to help when needed.

With Olo Pay, Olo’s restaurant payment platform, you can focus on what matters most: delivering exceptional hospitality

Olo Pay consolidates online and in-store transactions into a single platform—easing the burden of payment processing for your teams while uncovering new levels of actionable guest data. Built to simplify payments, protect your brand against fraud, and drive more value for every transaction, it’s just one more way Olo is working to accelerate the future of restaurant technology.

Check out the Olo Pay Impact Calculator to see how much additional revenue your restaurant brand could generate from online orders with the fraud prevention and increased authorization rates of Olo Pay. Then, request a demo.

Photo by Jose Calsina