Payments glossary
37 plain-English, source-cited definitions: the parties and steps in a payment, and where each one sits on the money leg or the message leg.
3
A
- Acquirera partyThe merchant's bank, it brings the transaction into the network and pays the merchant for sales, typically net of fees.
- ACSS (Automated Clearing Settlement System)money legPayments Canada's retail batch system: the day's items net into one position per bank, settled next business day at the Bank of Canada.
- Alias Directorymessage legThe lookup that turns an email, phone number, or handle into the bank account it points to.
- Authorizationmessage legThe real-time check asking 'is this card good for this amount?' It places a hold, but no money moves yet.
C
- Chargebackmoney legA cardholder dispute that reverses a settled card payment through the network's rules.
- Clearingmessage legExchanging the transaction records that compute who owes whom. Still messages, not money.
- Correspondent Banka partyA bank that holds accounts for other banks so they can reach a currency or country they can't touch directly.
E
- EFT / AFT Filemessage legCanada's batch bank-to-bank files: credits like payroll and debits like PADs, formatted under CPA Standard 005 and cleared through ACSS.
- Escrowa partyMoney held by a neutral third party and released only once agreed conditions are met, so neither side has to trust the other directly.
F
I
- Interchangemoney legA fee set by the network that flows, economically, from the merchant's side to the issuer, typically netted inside settlement, not sent as a separate payment.
- ISO 20022message legA shared, structured messaging standard that lets payment systems carry richer, well-labeled data.
- Issuera partyThe cardholder's bank, it issues the card, approves the authorization, and funds its side of settlement so the purchase can be paid.
K
L
M
N
O
- ODFI (Originating Depository Financial Institution)a partyThe bank that submits an ACH payment into the network on behalf of the party starting it.
- Off-Rampmoney legConverting crypto or a stablecoin back into fiat that lands in a bank account.
- On-Rampmoney legConverting regular bank or card money (fiat) into crypto or a stablecoin.
P
- Payment Gatewaymessage legThe tech front door at checkout that captures payment details and hands them to the processor or acquirer.
- Payment Service Provider (PSP)a partyAn aggregator that typically lets a merchant accept payments under the PSP's own acquiring relationships, rather than setting up its own acquirer.
- Pre-Authorized Debit (PAD)money legA Canadian pull payment: with a signed agreement, a biller debits your bank account over the EFT batch rail under Payments Canada Rule H1.
- Processora partyThe technology that moves authorization and clearing messages for an issuer or an acquirer, not the bank of record.
- Program managera partyThe fintech that owns the user experience and the ledger of a card or account program, but is not the bank of record.
R
- RDFI (Receiving Depository Financial Institution)a partyThe bank that receives an ACH entry and posts it to the receiver's account.
- Real-Time Rail (RTR)money legCanada's instant payment system, still in delivery: real-time credit pushes settling in central bank money, launch targeted for Q4 2026.
- Reconciliationmessage legMatching your own records against what actually settled at the bank, so the money that moved and the messages about it agree.
- Remittancemoney legA cross-border transfer of money between people, often a worker sending funds home to family.
- Representmentmessage legThe merchant and acquirer re-presenting evidence to contest a chargeback.
- RTGS (Real-Time Gross Settlement)money legA central-bank system that settles large payments one by one, with final funds moving immediately.
S
- Settlementmoney legThe actual bank-to-bank money movement that discharges the obligation. This is when funds become final.
- Sponsor banka partyA chartered bank that lets a fintech reach the payment rails under its licence, acting as the issuer or acquirer of record.
- Stablecoinmoney legA digital token that aims to track a reference value (often the US dollar); it's a claim on an issuer, not a bank deposit.