A rolling reserve is a risk management tool used by payment processors for businesses that are considered high-risk. The processor withholds a certain percentage of the merchant's daily transaction revenue in a non-interest-bearing account (the reserve) for a set period. This reserve fund is used to cover potential losses from chargebacks or fraud. After the [...]

Batch processing (or "batching") is the process of collecting all the approved card transactions from a single day into a group, or "batch," and sending them to the payment processor for settlement in one go. This is usually done automatically at a set time each day, often called the "batch-out" or "settlement" time. Frequently Asked [...]

A void is the cancellation of a transaction after it has been authorized but before it has been settled. Because the funds have not yet actually moved between banks, a void simply cancels the approved transaction as if it never happened. The pending charge will disappear from the customer's statement within a few days, and [...]

A refund is the process of sending money back to a customer for a previously completed transaction. When a refund is issued, the funds are taken from the merchant's account balance and credited back to the customer's original payment method. Most processors, including Stripe, do not return the original transaction processing fees when a merchant [...]

Settlement is the final stage of a transaction where the funds are actually moved from the customer's issuing bank to the merchant's acquiring bank. Transactions are typically authorized individually in real-time, but they are often settled together in a group or "batch" at the end of the business day. Once settled, the funds appear in [...]

These terms cover the flow of money and daily management of your transactions. Authorization Authorization (or "auth") is the first step in a card transaction. It's a real-time request sent from the merchant's terminal, through the payment processor and card networks, to the customer's issuing bank to confirm that the card is valid and has [...]

Strong Customer Authentication (SCA) is a security requirement for authenticating online payments in the European Economic Area (EEA). It is part of the second Payment Services Directive (PSD2). SCA requires that customers authenticate themselves with at least two of the following three factors: Knowledge (something they know, like a password or PIN), Possession (something they [...]

Fraud prevention involves the strategies, tools, and processes a business uses to stop fraudulent payment transactions before they happen. This is especially critical for Card-Not-Present (CNP) transactions. Payment processors like Stripe have sophisticated, machine-learning-based fraud prevention systems (like Stripe Radar) that analyze every transaction for signs of risk. Frequently Asked questions (FAQs) How does Stripe [...]

A chargeback is a forced reversal of a transaction that is initiated by the cardholder's bank (the issuing bank). It occurs when a customer disputes a charge on their statement and asks their bank to reverse it. Chargebacks were created to protect consumers from fraudulent transactions, but they can be a significant problem for merchants, [...]

Encryption is the process of scrambling data into an unreadable format (called ciphertext) using an algorithm and a secret "key." Only someone with the correct key can unscramble (or decrypt) the data back into its original, readable form. In payment processing, encryption is used to protect sensitive card information as it travels from the merchant's [...]