Resources

KOMOJU Glossary

This glossary defines common terms you might see on our website or platform.

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A

Acquirer

An acquirer, also called an acquiring bank, is a financial institution that processes card payments on behalf of a merchant. When a customer pays with a credit or debit card, the acquirer communicates with the card networks (like Visa or Mastercard) and the issuing bank to authorise and settle the transaction.

  • The merchant’s bank in a card transaction
  • Connected to card networks and issuing banks to process payments
  • Responsible for moving funds into the merchant account after settlement
  • Working closely with payment service providers (PSPs) like KOMOJU to support merchants

Think of the acquirer as the backbone of card payments. When a customer enters their card details at checkout, the request is sent to the acquirer, who passes it through the card network to the issuing bank for approval. If the transaction is authorised, the acquirer ensures the money is transferred from the customer’s bank to the merchant’s account.

Acquirers also handle chargebacks, fraud monitoring, and compliance with standards like PCI DSS. Because of this, they’re a critical part of keeping transactions secure and reliable.

Merchants rarely deal directly with acquirers. Instead, they work through a PSP like KOMOJU’s payment platform, which manages the connection to multiple acquirers, local payment methods, and currencies in one integration. This makes it easier for businesses to scale without managing complex banking relationships.

Why it matters: Acquirers make it possible for merchants to accept card payments, manage risk, and ensure funds are settled quickly and securely. Without them, ecommerce as we know it wouldn’t function.

Acquiring bank

An acquiring bank, sometimes just called an acquirer, is a financial institution that enables a merchant to accept card payments from customers. It connects with the card networks (like Visa or Mastercard) and the issuing bank to authorise, process, and settle transactions on behalf of the merchant.

  • Acting as the merchant’s bank in card transactions
  • Connecting with card networks and issuing banks to approve payments
  • Depositing funds into the merchant account after settlement
  • Managing chargebacks, fraud checks, and compliance with standards like PCI DSS

Acquiring banks are essential in the card payments ecosystem. Whenever a customer uses their card at checkout, the acquiring bank passes the transaction request through the card network to the issuing bank for approval. Once authorised, it ensures the money is moved from the customer’s account to the merchant’s.

Most merchants don’t work with acquiring banks directly. Instead, they use a payment service provider (PSP) such as KOMOJU, which connects them to multiple acquirers and local payment methods through one integration. This way, merchants can scale internationally without needing to manage multiple banking relationships.

Why it matters: Acquiring banks make it possible for merchants to accept card payments securely and reliably, providing the foundation for global ecommerce.

Acquirer Reference Number (ARN)

An Acquirer Reference Number (ARN) is a unique number assigned to a card transaction as it moves from the acquiring bank through the card network (like Visa or Mastercard) to the issuing bank. It acts as a tracking ID, allowing merchants, banks, and customers to trace where a payment is in the settlement process.

An ARN is used to:

  • Track a card payment from the acquirer to the issuer
  • Help merchants confirm the status of a transaction or refund
  • Provide proof of processing if a payment is delayed or disputed
  • Assist in resolving chargebacks and reconciliation issues

Think of the ARN like a parcel tracking number, but for card payments. If a customer is waiting on a refund and it hasn’t yet appeared in their bank account, the ARN lets the issuing bank trace the refund through the system to confirm its progress.

ARNS are particularly useful in resolving disputes and speeding up customer service, since both merchants and banks can point to the exact stage of a transaction.

Most merchants won’t see or use ARNs directly. Instead, they’ll rely on their payment service provider (PSP), such as KOMOJU, to supply this information when needed.

Why it matters: ARNs provide transparency and traceability in card payments, helping merchants and customers confirm where a transaction stands and reducing uncertainty around refunds or disputes.

Acquirer net revenue

Acquirer net revenue is the amount of money an acquiring bank earns from processing card payments after covering the costs it pays to other parties in the payment chain, such as the card networks and issuing banks. It’s essentially the acquirer’s profit from handling a merchant’s transactions.

Acquirer net revenue is calculated by:

  • Starting with the merchant service charge (the fee paid by the merchant)
  • Subtracting the interchange fee (paid to the issuing bank)
  • Subtracting the scheme fee (paid to the card network)
  • The remainder is the acquirer’s net revenue

For example, if a merchant pays a 2.5% fee on a transaction, and 1.8% of that is split between the issuing bank and the card network, the acquirer’s net revenue would be 0.7%.

While this is a behind-the-scenes calculation, it’s important for merchants to understand because it explains why processing fees vary. Different card types, regions, and risk levels can increase interchange and scheme fees, reducing what the acquirer keeps.

Merchants don’t interact with acquirer net revenue directly, since they pay a single fee to their payment service provider (PSP). With a PSP like KOMOJU, those costs are bundled into one transparent fee, making it simpler to accept payments without worrying about the individual revenue splits.

Acquirer’s markup

An acquirer’s markup is the fee an acquiring bank adds on top of the base costs of processing a card payment. It’s part of the merchant service charge, which also includes the interchange fee (paid to the issuing bank) and the scheme fee (paid to the card network).

An acquirer’s markup covers:

  • The acquirer’s own operating costs
  • Risk management and fraud prevention
  • Customer service and dispute handling
  • Profit for processing the transaction

For example, if a merchant pays a 2.2% fee on a transaction, around 1.5% might go to the issuing bank as the interchange fee, 0.2% to the card network as a scheme fee, and the remaining 0.5% would be the acquirer’s markup.

While merchants don’t usually see this breakdown, it explains why fees can differ between acquirers or across regions. Higher-risk transactions often come with a larger markup to cover the acquirer’s exposure to chargebacks and fraud.

Merchants typically work with a payment service provider (PSP) such as KOMOJU, which bundles the acquirer’s markup and other costs into one transparent transaction fee. This way, businesses don’t need to negotiate directly with acquirers or worry about hidden costs.

Why it matters: The acquirer’s markup is how acquiring banks generate revenue from processing payments. Understanding it helps merchants see how their fees are structured and why rates vary depending on card type, risk, and region.

Account updater

An account updater is a service that automatically refreshes stored card details when a customer’s card changes. If a card expires, is lost, or reissued, the account updater ensures the merchant always has the latest information on file.

An account updater helps merchants to:

  • Keep stored payment credentials valid without customer action
  • Reduce failed recurring transactions and subscription cancellations
  • Improve customer experience by keeping services uninterrupted
  • Lower operational costs tied to chasing declined payments

     

For example, if a customer’s credit card expires while paying for a monthly subscription, the account updater communicates with the issuing bank to update the card number or expiry date. The next payment is processed without interruption, and the customer doesn’t need to re-enter their details.

This service is especially valuable for recurring payments and subscription billing, where failed transactions directly impact revenue. By keeping card details up to date, merchants can significantly reduce payment failures and improve retention.

Merchants often access account updater services through their payment service provider (PSP). With KOMOJU, subscription businesses can rely on up-to-date payment details without needing to manage card expiries manually.

Why it matters: Account updaters keep payment details current, reduce failed payments, and improve customer retention, essential for merchants running subscription models or repeat billing.

Alternative payment method (APM)

An alternative payment method (APM) is any form of payment that isn’t a traditional credit or debit card. APMs include digital wallets, bank transfers, buy now pay later (BNPL) services, and local payment methods like Konbini payments in Japan.

Examples of APMs include:

  • Digital wallets such as Apple Pay or Google Pay
  • Bank transfers and real-time payments
  • BNPL services that spread the cost of a purchase
  • Local methods like Konbini in Japan or iDEAL in the Netherlands

     

APMs have grown rapidly in recent years and the trend looks to continue with nearly 50% of global ecommerce spending predicted to be made using digital wallets by 2027. This trend is particularly strong in Asia, where methods like Konbini and PayPay dominate online checkouts.

For merchants, offering APMs is no longer optional. Customers expect to pay using the methods they trust most, and if their preferred option isn’t available, they’re likely to abandon the purchase.

A payment service provider (PSP) like KOMOJU makes it easy for businesses to support APMs. Through a single integration, merchants can offer dozens of local payment methods and digital wallets, removing the need to build individual connections.

Why it matters: APMs give customers flexibility and trust at checkout, while helping merchants reach more markets and reduce cart abandonment.

Authorization

Authorization is the process of verifying that a customer has enough funds or credit available to complete a card payment. It happens in real time during checkout, before the money is actually transferred from the issuing bank to the merchant account.

Authorization involves:

  • The merchant sending a payment request through their payment gateway
  • The acquirer passing the request to the card network
  • The issuing bank checking funds, account status, and fraud risk
  • An approval or decline being sent back within seconds

For example, when a customer enters their card details online, the transaction doesn’t immediately move money. Instead, the issuing bank puts a temporary hold on the funds and confirms to the merchant that the payment can go ahead. The money is only moved later in the settlement stage.

Authorizations are crucial in preventing fraud and protecting merchants. Declines may occur if the customer doesn’t have sufficient funds, if the card is blocked, or if fraud checks raise concerns. In ecommerce, authorization rates are a key performance metric, even a 1% drop can mean significant lost revenue for merchants.

Merchants typically rely on a payment service provider (PSP) like KOMOJU, which manages the authorization process across multiple acquirers, card networks, and local payment methods. This ensures that payments are fast, secure, and more likely to be approved.

Why it matters: Authorization is the first safeguard in a card payment, ensuring funds are available, fraud risks are checked, and merchants get reliable confirmation before a transaction moves to settlement.

Automatic clearing house (ACH)

The Automatic Clearing House (ACH) is an electronic payment network used in the United States for moving money between bank accounts. It processes large volumes of transactions in batches, including direct debits, payroll, bill payments, and online transfers.

ACH payments are commonly used for:

  • Direct deposit of salaries
  • Utility bills and subscription payments
  • Peer-to-peer transfers
  • Online purchases funded by bank accounts

While ACH is specific to the US, it’s often compared with other local bank transfer systems around the world. For example, furikomi bank transfers are widely used in Japan, and SEPA transfers serve a similar role in Europe. For international merchants, understanding these local equivalents is important when expanding globally.

The ACH network is regulated by NACHA in the US, and it typically takes one to two business days for transactions to clear, though same-day ACH has become more common in recent years. In 2023 alone, the ACH network processed over 30 billion payments worth over $80 trillion (NACHA).

Merchants outside the US won’t accept ACH directly, but they may encounter it when selling to American customers. A payment service provider (PSP) like KOMOJU enables merchants to accept local payment methods in each market, so US shoppers can pay with ACH, while Japanese customers use Konbini payments or PayPay.

Why it matters: ACH is the backbone of US bank transfers. For merchants expanding into the American market, offering ACH can increase reach and reduce costs compared to card payments.

B

Bank identification number (BIN)

A Bank Identification Number (BIN) is the first six to eight digits of a payment card number. It identifies the issuing bank or financial institution that issued the card and helps route the transaction during authorization and settlement.

A BIN helps to:

  • Identify the issuer of a card (e.g. bank or credit union)
  • Detect the type of card, such as credit card, debit card, or prepaid card
  • Determine the card’s country of origin, supporting cross-border ecommerce
  • Assist with fraud detection by flagging unusual combinations of card type, location, and merchant

For example, when a customer enters their card number at checkout, the payment gateway sends the details to the acquirer, which uses the BIN to forward the transaction to the correct issuing bank. This process happens in seconds, allowing merchants to accept payments securely worldwide.

BINs are especially important in cross-border transactions. They help identify when a card issued in one country is being used to make a purchase in another, which can trigger extra checks to prevent fraud.

Most merchants don’t work with BINs directly. Instead, their payment service provider (PSP), such as KOMOJU, manages BIN lookups in the background to ensure fast, accurate, and secure processing. 

Why it matters: BINs make global card payments possible by routing transactions to the correct issuing bank and supporting fraud prevention in ecommerce.

Batch processing

Batch processing is the practice of collecting multiple payment transactions and submitting them together to the acquiring bank or payment processor for settlement. Instead of sending each transaction individually in real time, merchants or processors group them into a “batch” that’s processed at set times during the day.

Batch processing is used to:

  • Send groups of card payments or direct debits for settlement
  • Reduce operational costs by processing payments together
  • Simplify reconciliation for merchants and acquirers
  • Improve efficiency in high-volume retail or ecommerce environments

For example, a retailer might accept hundreds of card payments throughout the day. At the end of business hours, those transactions are bundled into one file and sent to the acquirer. The acquirer then works with the card networks and issuing banks to complete settlement.

While real-time payments are becoming more common, batch processing remains standard in card payments and bank transfers worldwide. In Japan, many bank transfers (furikomi) and corporate payments are still processed in daily batches, showing how the method continues to underpin global commerce.

Merchants don’t have to manage batching manually. A payment service provider (PSP) like KOMOJU automates the process, ensuring that transactions are sent for settlement reliably and funds reach the merchant account without delay.

Why it matters: Batch processing remains a core part of how payments flow behind the scenes, keeping costs low and enabling merchants to handle large volumes of transactions efficiently.

C

Card not present transaction (CNP)

A card not present (CNP) transaction is a payment made when the customer and their card are not physically present at the point of sale. Instead, the card details are entered remotely, such as during an online purchase, over the phone, or through a mail order.

CNP transactions include:

  • Ecommerce purchases on a website or mobile app
  • Payments made over the phone (telephone orders)
  • Mail order payments where details are manually keyed in
  • Subscription renewals using stored card details

CNP transactions are the backbone of ecommerce, but they also carry higher risks than card present transactions, where a customer taps or inserts their card in person. Since the merchant cannot physically verify the card, fraud rates are higher. According to Juniper Research, global online payment fraud losses are expected to exceed $362 billion between 2023 and 2028.

To reduce risk, merchants rely on security tools like 3D Secure (3DS), address verification system (AVS), and fraud detection powered by machine learning. Many of these protections are built into modern payment gateways and managed by payment service providers (PSPs) like KOMOJU.

Why it matters: CNP transactions make ecommerce possible but come with higher fraud risk. By working with a PSP that offers advanced fraud prevention and compliance tools, merchants can protect revenue and keep customer trust.

Card present transaction (CP)

A card present (CP) transaction is a payment made when the customer and their card are physically present at the point of sale. These transactions take place in person, usually when a card is inserted, swiped, or tapped on a point of sale (POS) terminal.

CP transactions include:

  • In-store purchases using chip-and-PIN or contactless
  • Tap-to-pay payments via NFC on a smartphone or wearable
  • Swiped transactions on magnetic stripe cards
  • Payments accepted through mobile POS devices at events or pop-ups

Because the cardholder and card are physically present, CP transactions are generally considered more secure than card not present (CNP) transactions. Fraud rates are lower thanks to protections like chip technology (EMV) and PIN verification.

For merchants, CP transactions also come with lower processing costs. Acquirers and card networks typically charge lower fees for CP transactions compared to CNP, since the risk of fraud and chargebacks is reduced.

In Japan, CP transactions dominate traditional retail, particularly through contactless payments and local methods integrated into physical checkout experiences. However, as ecommerce grows, merchants are increasingly balancing both CP and CNP transactions.

With a payment service provider (PSP) like KOMOJU, merchants can accept CP payments alongside online transactions, giving them a unified way to manage sales across channels.

Why it matters: CP transactions remain the most secure and cost-effective way for merchants to accept card payments in person, providing a trusted foundation for physical retail.

Chargeback

A chargeback is a reversal of a card payment that is initiated by the issuing bank at the request of the cardholder. It occurs when a customer disputes a transaction, often claiming it was fraudulent, unauthorised, or that goods or services weren’t delivered as promised.

Common reasons for chargebacks include:

  • Fraudulent use of a card in a card not present (CNP) transaction
  • Goods not received or services not provided
  • Duplicate billing or incorrect transaction amounts
  • Customer dissatisfaction leading to disputes

When a chargeback happens, the acquirer pulls funds back from the merchant account and returns them to the customer via the issuing bank. The merchant is then left to challenge the claim with evidence such as delivery confirmations or proof of service.

Chargebacks are costly for merchants. Not only do they lose the sale, but they also face chargeback fees from the acquirer. High chargeback ratios can even lead to penalties or being classified as a high-risk merchant. 

To minimise risk, merchants use tools like 3D Secure (3DS), address verification system (AVS), and real-time fraud detection. Many of these protections are included with payment service providers (PSPs) like KOMOJU, which handle disputes and provide data to help merchants challenge chargebacks effectively.

Why it matters: Chargebacks protect customers but create risk and cost for merchants. Managing them effectively is essential to protecting revenue and maintaining good standing with acquirers and card networks.

Chargeback fee

A chargeback fee is a penalty charged to a merchant by their acquirer or payment service provider (PSP) when a chargeback occurs. It’s applied on top of the reversed transaction amount to cover the administrative costs of handling the dispute.

Chargeback fees cover:

  • Processing costs for the acquiring bank
  • Investigation and dispute management
  • Costs passed down from card networks like Visa or Mastercard
  • Risk of merchants with frequent chargebacks

For example, if a customer disputes a $100 transaction, the merchant not only loses the $100 but may also pay a $20–$50 chargeback fee depending on their provider and region. These fees apply whether the merchant wins or loses the dispute.

High chargeback rates can be especially damaging. Merchants with frequent disputes risk higher fees, stricter monitoring, or even termination of their merchant account. 

Working with a PSP like KOMOJU helps reduce exposure to chargeback fees. KOMOJU provides built-in fraud prevention tools, 3D Secure (3DS), and transaction data to support merchants in defending against disputes.

Why it matters: Chargeback fees add significant costs for merchants, making dispute prevention and strong fraud protection essential to safeguarding revenue.

Clearing

Clearing is the stage in the payment process where transaction details are exchanged between the acquirer, the card networks (such as Visa or Mastercard), and the issuing bank to prepare for settlement. It ensures that the right amounts are calculated, recorded, and ready to be transferred from the customer’s account to the merchant account.

Clearing involves:

  • The acquirer sending transaction data to the card network
  • The card network routing information to the issuing bank
  • Fees such as the interchange fee and scheme fee being calculated
  • Preparing funds to be settled into the merchant’s account

Clearing happens after authorization. While authorization checks that a customer has funds available, clearing confirms the details of the transaction and sets up the actual transfer of money. In most cases, clearing and settlement take one to two business days, though some networks and regions support faster processing.

For merchants, clearing is invisible, it’s handled by their payment service provider (PSP) or acquiring bank. Providers like KOMOJU manage clearing and settlement in the background, ensuring that merchants get paid quickly and accurately without having to deal with complex bank processes.

Why it matters: Clearing is the bridge between authorization and settlement. It ensures accurate record-keeping, correct fee distribution, and smooth transfer of funds in global payment systems.

Contactless payments

Contactless payments are transactions made by tapping a card, smartphone, or wearable device on a point of sale (POS) terminal that supports near field communication (NFC). Instead of inserting or swiping a card, customers simply hold their device near the reader to pay.

Examples of contactless payments include:

  • Tapping a debit or credit card with NFC
  • Using a smartphone wallet like Apple Pay or Google Pay
  • Paying with a smartwatch or wearable device
  • Transit and ticketing systems with tap-to-pay technology

Contactless payments are designed for speed and convenience. They’re widely used for everyday purchases such as groceries, transport, and dining. In Japan, they’re often integrated with IC cards like Suica and Pasmo, making them part of daily life.

Globally, contactless adoption has surged. For merchants, this means customers increasingly expect tap-to-pay as a standard checkout option.

Security is a key feature. Contactless transactions use encryption and dynamic data, and many are authenticated with biometric authentication (such as fingerprint or face recognition) on mobile wallets. Combined with chip technology (EMV), this makes contactless payments more secure than traditional magnetic stripe transactions.

With a payment service provider (PSP) like KOMOJU, merchants can accept contactless payments alongside online and mobile methods, creating a unified experience across sales channels.

Why it matters: Contactless payments give customers a fast, secure, and convenient way to pay in person, and have become a global standard for everyday transactions.

Cross border ecommerce

Cross-border ecommerce is when a customer buys a product online from a merchant based in another country. Instead of only selling to shoppers in your home market, you open your store to international customers who can browse, purchase, and pay in their local currency and with their preferred payment method.

  • Selling to customers outside your home country
  • Accepting multiple currencies and local payment methods
  • Handling challenges like foreign exchange, shipping, and customs
  • Working with a payment service provider (PSP) like KOMOJU to simplify global payments

It’s one of the fastest-growing areas of online retail. Cross-border sales account for 18.8% of all global ecommerce transactions, and the share keeps rising as shoppers grow more confident buying from overseas brands. For businesses, this creates a huge opportunity to expand without opening physical stores abroad.

Selling internationally does bring complexity. You need to deal with foreign exchange, international shipping, customs duties, and fraud prevention. A major factor is checkout: customers expect to see familiar options like Konbini payments in Japan, iDEAL in the Netherlands, or buy now pay later (BNPL) in Europe. If those options aren’t available, many will abandon the purchase.

This is where a PSP like KOMOJU’s cross-border payments solution makes a difference. With a single integration, you can accept dozens of local payment methods, settle in your chosen currency, and let KOMOJU handle the complexity of compliance and security behind the scenes.

Why it matters: Cross-border ecommerce opens up new revenue streams, helps merchants tap into fast-growing international markets, and gives customers worldwide the confidence to shop with your store as easily as if it were local.

Cross currency settlement

Cross currency settlement is the process of completing a payment transaction when the customer pays in one currency and the merchant receives funds in another. It’s common in cross-border ecommerce, where international shoppers expect to pay in their local currency while merchants prefer to settle in their home currency.

Cross currency settlement involves:

  • Converting the customer’s payment into the merchant’s preferred currency
  • Applying foreign exchange (FX) fees and conversion rates
  • Routing the transaction through the acquirer and card network
  • Depositing the settled funds into the merchant account

For example, if a shopper in the US pays in dollars at a Japanese store, the payment service provider (PSP) will convert the USD into JPY before settling it with the merchant. The customer sees a familiar currency at checkout, while the merchant avoids managing multiple currency accounts.

This process is critical in global ecommerce. Without cross currency settlement, merchants risk abandoned carts and lower international sales.

Working with a PSP like KOMOJU makes settlement seamless. KOMOJU supports multi-currency payments, localises checkout for customers, and handles conversion behind the scenes, so merchants can expand internationally without managing FX complexity themselves.

Why it matters: Cross currency settlement allows merchants to sell globally while getting paid in their preferred currency, improving customer trust and reducing friction in international transactions.

Cryptocurrency payments

Cryptocurrency payments are transactions where customers use digital currencies like Bitcoin, Ethereum, or stablecoins to pay for goods and services. Instead of relying on card networks or banks, these payments are verified on a blockchain, a decentralised ledger that records each transaction.

Cryptocurrency payments can be made through:

  • Direct transfers from a crypto wallet
  • Payment processors that convert crypto into local currency
  • Stablecoins pegged to fiat currencies for lower volatility
  • QR code checkouts that link directly to blockchain addresses

While still a niche compared to card payments or alternative payment methods (APMs), crypto is growing in ecommerce. For merchants, the appeal of cryptocurrency payments includes faster settlement, lower fees, and access to customers who prefer decentralised payment options. However, they also come with challenges such as price volatility, regulatory uncertainty, and the need for fraud and compliance safeguards.

A payment service provider (PSP) can bridge the gap by offering crypto as an option at checkout while settling in the merchant’s chosen fiat currency, removing the need for businesses to handle crypto directly.

Why it matters: Cryptocurrency payments offer a decentralised alternative to traditional methods, giving merchants access to a growing customer base while providing flexibility in how payments are settled.

Currency conversion

Currency conversion is the process of changing one currency into another during a payment transaction. It allows international shoppers to pay in their local currency while ensuring that merchants receive settlement in their preferred currency.

Currency conversion is used to:

  • Show customers prices in their home currency
  • Convert payments during cross-border ecommerce
  • Apply exchange rates and foreign exchange (FX) fees)
  • Simplify settlement into the merchant’s merchant account

For example, if a shopper in Europe buys from a Japanese store and pays in euros, the payment is converted into yen before settlement. The customer gets the convenience of paying in a familiar currency, while the merchant receives funds in their domestic currency.

Conversion can be handled in different ways:

  • Dynamic currency conversion (DCC): The customer pays in their local currency, but fees are often higher.
  • Cross currency settlement: The PSP converts payments at checkout and settles them in the merchant’s chosen currency.

With a payment service provider (PSP) like KOMOJU, merchants can automatically localise checkout, accept multiple currencies, and settle seamlessly without having to manage multiple bank accounts.

Why it matters: Currency conversion makes global commerce possible, boosting customer trust and helping merchants increase international sales by reducing friction at checkout.

D

Digital wallet

A digital wallet is an app or online service that stores a customer’s payment information, such as card details or bank credentials, so they can make secure payments with just a tap or click. Instead of entering card details manually, customers use a digital wallet to speed up checkout online or in store.

Examples of digital wallets include:

  • Apple Pay and Google Pay for mobile devices
  • PayPay and LINE Pay in Japan
  • PayPal and similar online wallet services
  • Prepaid wallet apps tied to transit or retail systems

Digital wallets are one of the fastest-growing alternative payment methods (APMs) worldwide. In Japan, wallets like PayPay and Rakuten Pay dominate mobile payments, while IC card-based wallets remain common in daily life.

For merchants, digital wallets offer benefits such as faster checkout, lower cart abandonment, and added security through tokenization and biometric authentication (like fingerprint or face ID).

Through a payment service provider (PSP) like KOMOJU, merchants can accept dozens of digital wallets globally without needing to integrate each one separately. This is especially valuable for cross-border ecommerce, where customers expect to see local wallet options.

Why it matters: Digital wallets are the leading way customers pay online and in-store, combining convenience, speed, and security. Supporting them is essential for merchants who want to meet customer expectations worldwide.

Direct debit (DD)

A direct debit (DD) is a payment method where a merchant or service provider is authorised to take money directly from a customer’s bank account on agreed dates. Instead of the customer initiating each payment, the merchant “pulls” the funds automatically.

Direct debits are commonly used for:

  • Utility bills and household services

  • Subscription services like streaming or gyms

  • Loan repayments and insurance premiums

  • Membership fees and recurring invoices

Direct debit is especially important for recurring payments, as it reduces the risk of missed or late payments. Once authorised, payments continue automatically until the agreement is cancelled.

The rules around DDs vary by region. In the UK, they are managed under the Direct Debit Guarantee scheme, which protects consumers against unauthorised withdrawals. In Japan, a similar system known as kōza furikae is widely used for utilities and subscriptions. Across Europe, SEPA Direct Debit provides a standardised way to pull funds across borders.

For merchants, offering direct debit improves customer retention and reduces churn in subscription models. However, payments may take several days to clear, and there is a higher risk of payment failures if the customer’s account has insufficient funds.

A payment service provider (PSP) like KOMOJU allows merchants to integrate local bank debit options, ensuring they can support recurring billing models across multiple regions.

Why it matters: Direct debit is a trusted, low-effort way for customers to pay, making it ideal for subscriptions and recurring billing. For merchants, it provides predictable revenue and stronger customer loyalty.

Dynamic currency conversion (DCC)

Dynamic currency conversion (DCC) is a service that lets international shoppers pay in their home currency at checkout, even when buying from a foreign merchant. Instead of seeing prices only in the merchant’s local currency, the customer can choose to view and settle the payment on their own.

DCC works by:

  • Detecting the customer’s card and identifying its home currency via the bank identification number (BIN)
  • Offering the option to pay in that currency at the point of sale (POS) or online checkout
  • Applying a foreign exchange (FX) fee and conversion rate at the time of purchase
  • Passing the converted funds to the acquirer for settlement with the merchant

For example, a US shopper buying from a Japanese ecommerce store might be offered the option to pay in USD rather than JPY. The price is converted instantly, and the customer knows exactly what they’ll be charged in their home currency.

While DCC provides transparency for customers, it often comes with higher fees compared to standard cross currency settlement. Merchants may also see lower conversion rates if customers perceive the markup as unfavourable.

With a payment service provider (PSP) like KOMOJU, merchants can support localised checkout experiences through both DCC, multi-currency settlement and localised payment options, ensuring customers feel comfortable completing their purchase.

Why it matters: DCC gives customers clarity and trust at checkout by showing prices in their own currency, but merchants should balance this with transparent fees to maintain conversions.

E

Embedded payments

Embedded payments are payment experiences built directly into a platform, app, or service so that customers can pay without being redirected to a separate checkout page. Instead of sending users to an external site, the payment process happens seamlessly within the product they’re already using.

Examples of embedded payments include:

  • Ordering and paying within a ride-hailing app
  • Checking out inside a social media app without leaving the platform
  • Subscription platforms where payment happens during onboarding
  • In-app purchases powered by an integrated payment gateway

For customers, embedded payments reduce friction and make checkout faster. They also build trust because the payment feels like a natural part of the service, rather than a handoff to a third party.

For merchants and platforms, embedded payments open up new revenue streams. According to Accenture, embedded finance could generate over $230 billion in global revenues by 2025. Payments are often combined with other embedded services like lending, insurance, or buy now pay later (BNPL).

A payment service provider (PSP) like KOMOJU enables embedded payments by offering API integration and SDKs, allowing businesses to build payments natively into their customer journeys while still relying on PSP infrastructure for security, fraud detection, and compliance.

Why it matters: Embedded payments give customers a seamless experience, reduce cart abandonment, and help businesses monetise services by keeping checkout fully integrated within their platform.

Escrow service

An escrow service is a financial arrangement where a trusted third party holds funds from a customer until the merchant fulfils agreed conditions, such as delivering goods or services. Once the terms are met, the money is released to the merchant.

Escrow services are commonly used for:

  • High-value transactions such as property or vehicles
  • Online marketplaces connecting buyers and sellers
  • Freelance platforms where milestones need to be verified
  • Cross-border deals where trust between parties is limited

For example, in an online marketplace transaction, a buyer’s payment may be held in escrow until they confirm receipt of the product. If the product never arrives, the funds are returned to the buyer instead of being paid to the seller.

Escrow services increase trust in ecommerce, especially in cross-border transactions where fraud risk is higher. According to Juniper Research, online payment fraud losses are expected to exceed $362 billion between 2023 and 2028, making protective services like escrow increasingly important.

Merchants don’t typically manage escrow accounts directly. Instead, escrow is built into certain platforms or offered through a payment service provider (PSP). With KOMOJU, merchants gain access to secure payment flows that prioritise trust, fraud prevention, and compliance without needing to set up separate escrow arrangements.

Why it matters: Escrow services protect both customers and merchants in high-risk or high-value transactions, building trust and reducing fraud in global commerce.

F

Foreign exchange fee (FX fee)

A foreign exchange fee (FX fee) is a charge applied when a payment involves converting one currency into another. It often appears in cross-border ecommerce when customers pay in their local currency and the merchant receives settlement in a different one.

FX fees are applied to cover:

  • The cost of converting between currencies
  • Risks linked to fluctuating exchange rates
  • Handling by the acquirer, card network, or payment service provider (PSP)
  • Additional processing overhead for international transactions

For example, if a shopper in Europe pays €100 at a Japanese online store, the payment might be converted into yen before reaching the merchant. The provider applies an FX fee (often between 1% and 3%) to cover the cost of that conversion.

FX fees can vary depending on the payment method and provider. Some digital wallets and alternative payment methods (APMs) offer lower or no FX fees, while others add extra markups. According to the World Bank, the average global cost of cross-border currency conversion and remittances is still around 6% of the transaction value.

With a PSP like KOMOJU, merchants can reduce friction by letting customers pay in their local currency while still receiving settlement in their preferred currency. KOMOJU manages the conversion process and fees transparently, helping merchants sell internationally with fewer surprises.

Why it matters: FX fees are a hidden cost of global commerce. Understanding them helps merchants set pricing strategies, manage margins, and deliver a smooth cross-border checkout experience.

Fraud detection

Fraud detection is the process of identifying and preventing suspicious or unauthorised payment transactions before they result in losses for merchants or customers. It combines rules-based checks, data analysis, and advanced technologies like machine learning to flag high-risk activity in real time.

Fraud detection tools look at:

  • Unusual purchasing patterns (e.g. multiple high-value orders in minutes)
  • Mismatches between billing and shipping addresses
  • Device or IP address anomalies in card not present (CNP) transactions
  • Repeated failed login or payment attempts
  • High-risk geographies or cross-border activity

Fraud is a major issue for ecommerce. Global online payment fraud is expected to exceed $362 billion between 2023 and 2028, making fraud detection a top priority for merchants. Without strong systems, businesses risk not only losing revenue but also facing chargebacks, damaged reputation, and penalties from acquirers or card networks.

Modern payment service providers (PSPs) like KOMOJU use AI-driven fraud detection, 3D Secure (3DS), and network-wide data to spot patterns across millions of transactions. This helps prevent fraud before it happens, without adding unnecessary friction to genuine customers.

Why it matters: Fraud detection protects merchants from revenue loss, reduces the risk of chargebacks, and helps maintain customer trust by ensuring every transaction is legitimate.

Fraud prevention tools

Fraud prevention tools are technologies and processes designed to stop fraudulent payment transactions before they cause losses. While fraud detection identifies suspicious activity, fraud prevention focuses on actively blocking it and reducing risk for merchants and customers.

Examples of fraud prevention tools include:

  • 3D Secure (3DS): Adds an extra authentication step at checkout
  • Address verification system (AVS): Checks billing details against bank records
  • Tokenization: Replaces sensitive card data with secure tokens
  • Device fingerprinting: Identifies unusual or risky devices
  • Machine learning models: Analyse large transaction datasets for patterns
  • Blacklist/whitelist systems: Block known fraudulent accounts or reward trusted ones

Ecommerce fraud is a growing problem, with global losses of $48 billion in 2023 alone. Fraud prevention tools are critical for keeping these losses under control while maintaining a smooth customer experience.

Merchants rarely build these systems themselves. Instead, they rely on a payment service provider (PSP) like KOMOJU, which bundles fraud prevention into the payment flow. By using shared data from thousands of merchants, KOMOJU strengthens fraud prevention across its network while reducing false declines for legitimate customers.

Why it matters: Fraud prevention tools protect revenue, reduce chargebacks, and build customer trust by stopping fraud before it happens, all without adding unnecessary friction at checkout.

G

Gateway (Payment gateway)

A payment gateway is the technology that securely transmits payment information between the merchant, the acquirer, and the issuing bank during an online or in-store transaction. It acts like a digital bridge, ensuring sensitive details such as card numbers are encrypted and safely passed through the payment chain.

A payment gateway is responsible for:

  • Capturing payment data from the customer at checkout
  • Encrypting sensitive details to meet PCI DSS standards
  • Sending the authorisation request to the acquirer and card network
  • Returning an approval or decline message in seconds
  • Supporting multiple methods, from card payments to digital wallets and local payment methods

For example, when a shopper enters their card details on an ecommerce site, the payment gateway captures that data, encrypts it, and securely sends it through the card network for approval. Without a gateway, merchants couldn’t safely process online or remote transactions.

Payment gateways are also evolving to support alternative payment methods (APMs), such as Konbini payments in Japan or buy now pay later (BNPL) options in Europe. According to research, nearly 70% of ecommerce transactions globally will be made using APMs instead of cards by 2029, which makes flexible gateway support essential.

Merchants don’t usually manage gateways directly. Instead, they work with a payment service provider (PSP) like KOMOJU, which integrates the gateway along with fraud prevention, settlement, and support for dozens of local payment options.

Why it matters: A payment gateway is the foundation of secure digital payments, enabling merchants to accept cards and APMs worldwide while keeping sensitive data safe.

I

Interchange fee

An interchange fee is a fee paid by the acquirer (the merchant’s bank) to the issuing bank (the customer’s bank) every time a card payment is processed. It’s set by the card networks (like Visa or Mastercard) and is one of the main costs included in the merchant service charge.

Interchange fees cover:

  • The issuing bank’s cost of handling the transaction
  • Fraud prevention and risk management
  • Credit provision in the case of card payments
  • Network infrastructure provided by the card scheme

For example, if a customer pays ¥10,000 at a Japanese ecommerce store, the issuing bank may receive a small percentage of that payment (often between 0.2% and 2% depending on the card type and region) as the interchange fee. The acquirer then recoups this cost by charging the merchant.

Interchange fees vary widely. Credit cards generally have higher fees than debit cards, and cross-border or card not present (CNP) transactions often attract higher rates due to increased fraud risk. In the EU, interchange fees are capped at 0.3% for credit cards and 0.2% for debit cards, while in other markets, rates can be significantly higher (European Commission).

Merchants rarely see interchange fees broken out separately. Instead, they’re bundled into the total processing cost by a payment service provider (PSP) like KOMOJU, which simplifies pricing while still covering network and bank charges.

Why it matters: Interchange fees are a key part of the cost of accepting card payments. Understanding them helps merchants see how their fees are structured and why rates differ across cards and regions.

Issuer

An issuer, or issuing bank, is the financial institution that provides customers with payment cards like credit, debit, or prepaid cards. The issuer manages the customer’s account, extends credit (in the case of credit cards), and approves or declines transactions during authorization.

An issuer is responsible for:

  • Issuing cards to customers on behalf of the card networks (Visa, Mastercard, etc.)
  • Approving or declining payments in real time
  • Managing customer balances, limits, and credit risk
  • Handling disputes, chargebacks, and fraud claims
  • Communicating with the acquirer during payment processing

For example, when a customer pays online with a Mastercard, the request is routed via the payment gateway and acquirer to the issuing bank. The issuer checks the account balance, verifies the transaction for fraud, and either approves or declines the payment.

Issuers are central to the global payments ecosystem. With more than 26 billion credit, debit, and prepaid cards in circulation worldwide, issuing banks play a critical role in enabling everyday commerce.

For merchants, the issuer is mostly invisible, meaning they don’t interact with them directly. Instead, issuers work behind the scenes, while a payment service provider (PSP) like KOMOJU handles integrations with multiple issuers, acquirers, and local payment methods to ensure high authorization rates and fast settlement.

Why it matters: Issuers make it possible for customers to use cards for payments. They manage credit, fraud prevention, and approvals, forming a vital link between shoppers and merchants in the payments chain.

Integrated payment

An integrated payment is a payment solution that connects directly to a merchant’s point of sale (POS) system, ecommerce platform, or business software. Instead of processing payments separately and reconciling them manually, integrated payments sync transactions automatically with sales, inventory, and accounting systems.

Integrated payments are used to:

  • Accept card payments, digital wallets, and alternative payment methods (APMs) within the same system
  • Reduce manual reconciliation between sales and accounting records
  • Speed up checkout for customers both online and in store
  • Provide merchants with unified reporting across all sales channels

For example, in a retail store, an integrated POS system records the sale, processes the card present transaction, updates inventory, and sends data to the accounting platform. all in one workflow. Similarly, an online store with integrated payments can process transactions and update order management instantly.

Integrated payments improve both efficiency and customer experience. According to PYMNTS, 51% of businesses cite excessive manual data entry and 47% face data errors and process delays. By automating these processes, integrated payment systems cut down on admin burdens and reduce errors, freeing up time to focus on growth. 

A payment service provider (PSP) like KOMOJU offers integration through API integration, plugins, and SDKs, allowing merchants to embed payments seamlessly into their existing systems without needing complex setups.

Why it matters: Integrated payments streamline operations, reduce errors, and create a seamless experience for customers and merchants alike, making them essential for scaling both online and offline businesses.

M

Merchant account

A merchant account is a special type of bank account that allows businesses to accept card payments and other electronic transactions. When a customer makes a payment, funds first pass into the merchant account before being settled into the business’s standard bank account.

A merchant account is used to:

  • Hold funds temporarily during authorization, clearing, and settlement
  • Enable acceptance of credit cards, debit cards, and digital wallets
    Manage chargebacks and refunds
  • Comply with payment industry regulations such as PCI DSS

For example, if a shopper pays ¥5,000 online using a Visa card, the funds don’t immediately arrive in the business’s current account. Instead, they’re routed through the merchant account, where fees like the interchange fee, scheme fee, and acquirer’s markup are deducted before final settlement.

Traditionally, merchants had to apply directly with an acquiring bank to open a merchant account. This process could be complex, requiring financial checks and detailed business information. Today, most businesses rely on a payment service provider (PSP) like KOMOJU, which provides access to merchant account functionality without needing a direct bank relationship.

Why it matters: A merchant account is the backbone of accepting electronic payments, ensuring funds are securely processed, fees are managed, and businesses get paid on time.

Merchant agreement

A merchant agreement is the contract between a merchant and their acquiring bank or payment service provider (PSP) that sets out the terms for accepting card payments and other electronic transactions. It defines responsibilities, fees, and compliance requirements for both parties.

A merchant agreement typically covers:

  • The fees applied to each transaction, such as the interchange fee, scheme fee, and acquirer’s markup
  • Rules around chargebacks, refunds, and disputes
  • Compliance obligations like PCI DSS data security standards
  • Settlement schedules, reserves, and payout timelines
  • Termination conditions and penalties for non-compliance

For example, when a business signs up with a PSP like KOMOJU, they agree to the provider’s merchant agreement. This sets expectations around costs, supported payment methods, fraud prevention tools, and how quickly funds will be settled into the merchant account.

Merchant agreements are important because they outline how risks and responsibilities are shared. For instance, if a business has a high rate of chargebacks, the agreement may allow the acquirer to apply rolling reserves or even terminate the account.

While the details may vary, merchant agreements are a standard requirement across the global payments industry. For smaller merchants, PSPs simplify this process by offering a single, accessible agreement instead of requiring direct contracts with multiple banks and card networks.

Why it matters: A merchant agreement defines the rules of payment acceptance. Understanding it helps businesses manage costs, stay compliant, and build a reliable foundation for accepting digital payments.

Merchant service charge (MSC)

The merchant service charge (MSC) is the fee a merchant pays for every card payment processed. It’s collected by the acquirer or the payment service provider (PSP) and covers all the costs involved in moving funds from the customer’s issuing bank to the merchant’s account.

The MSC is made up of:

  • The interchange fee paid to the issuing bank
  • The scheme fee paid to the card network (Visa, Mastercard, etc.)
  • The acquirer’s markup, which covers the acquirer’s costs and profit

For example, if a merchant pays a 2.5% fee on a transaction, part of that goes to the issuing bank as an interchange fee, part to the card network as a scheme fee, and the remainder is the acquirer’s markup. Together, these costs form the MSC.

The MSC can vary depending on card type, region, and transaction method. Card not present (CNP) transactions usually carry higher fees than card present (CP) transactions, since the risk of fraud and chargebacks is greater. Cross-border payments may also add extra costs due to foreign exchange fees (FX fees).

Merchants don’t negotiate each component directly. Instead, they usually pay a blended MSC through their PSP. With KOMOJU, businesses get transparent, predictable pricing that bundles these costs into a single transaction fee.

Why it matters: The MSC is one of the main costs of accepting card payments. Understanding it helps merchants see how fees are structured and why they can vary between cards, regions, and transaction types.

Merchant ID Number (MID)

A Merchant ID Number (MID) is a unique identifier assigned to a merchant by their acquiring bank or payment service provider (PSP). It’s used to track the merchant’s payment activity within the wider payments network.

An MID is used to:

  • Identify the merchant in transactions processed through the acquirer and card networks
  • Route funds to the correct merchant account after settlement
  • Monitor transaction history, refunds, and chargebacks
  • Support compliance checks like Know Your Business (KYB) and fraud prevention

For example, when a customer makes a payment online, the transaction data includes the merchant’s MID. This ensures that after the payment is authorised by the issuer, funds are settled into the right merchant account.

MIDs are essential for back-end processes, but merchants typically don’t need to interact with them directly. If a business operates in multiple regions or under different brands, they may be assigned multiple MIDs. Some PSPs also provide a shared MID model, where smaller merchants use the PSP’s master MID instead of having their own.

With a provider like KOMOJU, merchants can accept payments without worrying about MID management, since KOMOJU handles identification, settlement, and reporting behind the scenes.

Why it matters: The MID is like a digital fingerprint for merchants in the payments ecosystem, ensuring that transactions are tracked accurately and funds are routed securely.

Mobile payments

Mobile payments are transactions made using a smartphone, tablet, or wearable device instead of a physical card or cash. Customers pay through apps, digital wallets, or built-in features like near field communication (NFC), which enable tap-to-pay at a point of sale (POS) terminal.

Examples of mobile payments include:

  • Apple Pay and Google Pay for tap-to-pay in stores
  • QR code-based systems like PayPay in Japan or Alipay in China
  • In-app purchases for games, streaming, or ecommerce
  • Carrier billing, where charges are added to a mobile phone bill

Mobile payments have become a dominant alternative payment method (APM) worldwide. According to industry data, global mobile payment transaction volume is estimated to be in the trillions, with sources reporting $7.39 trillion in 2023. In Japan, services like PayPay, Rakuten Pay, and LINE Pay have seen widespread adoption, particularly for retail and everyday purchases.

For merchants, mobile payments mean faster checkout, reduced reliance on cash, and increased security. Features like tokenization and biometric authentication (fingerprint or face ID) help protect customers against fraud while keeping the experience seamless.

A payment service provider (PSP) like KOMOJU enables merchants to support mobile payments globally. From NFC-based wallets to local QR code systems like Konbini payments, KOMOJU helps businesses accept the methods their customers prefer.

Why it matters: Mobile payments give customers speed, security, and convenience while opening new revenue opportunities for merchants. Supporting them is essential for any business operating in today’s digital-first economy.

Mobile point of sale (mPOS)

A mobile point of sale (mPOS) is a portable device, usually a smartphone or tablet paired with a card reader, that allows merchants to accept card payments and digital wallets anywhere. Instead of relying on a fixed POS terminal, mPOS systems connect wirelessly to process transactions.

mPOS systems are commonly used by:

  • Small retailers and pop-up shops
  • Food trucks and market stalls
  • Service providers like delivery drivers or repair technicians
  • Event organisers selling tickets or merchandise on-site

For example, a vendor at a festival can use an mPOS device to accept contactless payments, chip-and-PIN, or QR code payments without needing a traditional checkout counter. The mPOS app syncs sales, updates inventory, and routes funds to the merchant account.

The global mPOS market is growing fast, with estimates suggesting that mobile POS terminals market could expand from about USD 36 billion in 2022 to USD 85 billion by 2030. In Japan, mPOS solutions are increasingly used by small businesses and independent sellers looking to accept card and Konbini payments without investing in expensive hardware

Through a payment service provider (PSP) like KOMOJU, merchants can integrate mPOS with their wider payment system. This creates a unified view of both card present (CP) and card not present (CNP) transactions, helping businesses reconcile payments seamlessly across channels.

Why it matters: mPOS gives merchants the freedom to accept payments anywhere, offering flexibility for small businesses and scalability for larger retailers looking to expand beyond fixed checkouts.

N

Near field communication (NFC)

Near field communication (NFC) is a short-range wireless technology that allows two devices to exchange data when they’re close together, typically within a few centimetres. In payments, NFC enables contactless transactions by letting a card, smartphone, or wearable communicate with a point of sale (POS) terminal.

NFC payments include:

  • Tap-to-pay with credit or debit cards
  • Mobile wallets like Apple Pay, Google Pay, PayPay, or Rakuten Pay
  • Smartwatches and wearables with built-in payment features
  • Transit cards and ticketing systems like Suica or Pasmo in Japan

Contactless payments,  mostly enabled by NFC, have become the norm at the point of sale in many markets. In Europe, 79% of all in-person card transactions were contactless in the first half of 2024 (62 % by value), according to the European Central Bank. 

In Australia, adoption is even higher with around 95 % of in-person card payments were contactless in 2022, according to the Reserve Bank of Australia. Globally, contactless payments are projected to exceed $10 trillion by 2027.

For merchants, NFC makes checkout faster and more secure. Transactions are protected by encryption and dynamic authentication methods like tokenization and biometric authentication, reducing fraud compared to magnetic stripe payments.

A payment service provider (PSP) like KOMOJU ensures merchants can accept NFC payments seamlessly, whether through tap-to-pay cards, digital wallets, or transit-linked systems common in Japan.

Why it matters: NFC is the technology behind contactless payments, making checkout faster, safer, and more convenient for both customers and merchants.

Next day funding

Next day funding is a payout option where merchants receive money from processed payment transactions in their merchant account the day after the sale. Instead of waiting several business days for settlement, funds are transferred quickly, improving cash flow for businesses.

Next day funding provides:

  • Faster access to sales revenue
  • Improved cash flow management for merchants
  • Reduced reliance on credit or short-term financing
  • Predictable payout schedules for easier planning

For example, if a retailer processes ¥100,000 in card payments on Monday, with next day funding the money is deposited into their account on Tuesday (minus transaction fees such as the interchange fee, scheme fee, and acquirer’s markup).

Next day funding is especially valuable for small businesses or high-volume merchants that need quick access to working capital. While some acquirers and payment service providers (PSPs) may offer same-day funding, next day is the more common fast-payout option.

Availability depends on the provider and region. In Japan, payout schedules for Konbini payments, bank transfers (furikomi), and other local payment methods may vary, but PSPs like KOMOJU streamline settlement so merchants get paid as quickly and reliably as possible.

Why it matters: Next day funding improves liquidity for merchants, helping them reinvest in inventory, pay suppliers, and manage day-to-day expenses without waiting days for payments to clear.

Non sufficient funds fee (NSF fee)

A non sufficient funds fee (NSF fee) is a penalty charged when a customer’s bank account doesn’t have enough money to cover a payment. Instead of completing the transaction, the bank declines it and applies an NSF fee to the account holder.

NSF fees occur in situations like:

  • A failed direct debit (DD) for a subscription or utility bill
  • Insufficient funds during an ACH or SEPA transfer
  • Automatic recurring payments when the account balance is too low
  • Returned cheques or bounced payments

For example, if a customer sets up a monthly direct debit of ¥10,000 but only has ¥5,000 in their account, the bank will reject the payment and charge an NSF fee.

NSF fees are different from overdraft fees. An overdraft fee is charged when the bank covers the shortfall temporarily, while an NSF fee applies when the payment is simply declined.

For merchants, NSF fees can mean missed revenue, failed subscriptions, and increased payment failures. A payment service provider (PSP) like KOMOJU helps reduce these risks by offering alternatives such as account updaters, retry logic, and alternative payment methods (APMs) like Konbini payments, which don’t depend on bank balances in the same way.

Why it matters: NSF fees create friction for customers and lost revenue for merchants. Minimising failed payments through smarter billing tools and flexible payment options helps protect both sides.

O

Omnichannel payments

Omnichannel payments refer to a unified approach where a merchant accepts payments across multiple sales channels (online, in-store, mobile, and even through social platforms) with all transactions connected in a single system. Instead of treating each channel separately, omnichannel payments bring them together for a seamless customer and merchant experience.

Examples of omnichannel payments include:

  • Buying online and returning in store with automatic reconciliation
  • Using the same digital wallet (e.g. Apple Pay, PayPay) online and in-store
  • Subscriptions managed online but billed through an in-app purchase
    Customers earning loyalty points whether they shop online or offline

For customers, omnichannel payments make shopping consistent and convenient. For merchants, it means unified reporting, better fraud prevention, and a clearer view of customer behaviour. 

Industry research shows that omnichannel shoppers spend 15–30% more than single-channel customers. In apparel, omnichannel customers purchase 70% more frequently and spend around 34% more annually compared to offline-only shoppers.

Omnichannel solutions rely on a payment service provider (PSP) like KOMOJU, which integrates card payments, digital wallets, alternative payment methods (APMs), and point of sale (POS) systems into one platform. This allows merchants to manage all payments in one place, whether they’re accepting card present (CP) or card not present (CNP) transactions.

Why it matters: Omnichannel payments give customers flexibility and create a seamless experience across online and offline touchpoints, while helping merchants boost revenue and simplify operations.

One click checkout

One click checkout is a feature that lets customers complete an online purchase with a single click, without re-entering their payment details or shipping information. It works by securely storing this data after the first purchase, then using it automatically for future transactions.

One click checkout helps to:

  • Speed up the checkout process for repeat customers
  • Reduce cart abandonment caused by long forms
  • Improve customer experience with convenience and simplicity
  • Support faster conversions, especially on mobile devices

For example, a shopper who has previously saved their details can click “Buy Now” and complete the purchase instantly. Behind the scenes, the payment gateway securely submits the stored details for authorization and settlement.

This checkout model is especially powerful in ecommerce. Studies show that 18% of cart abandonments happen because the checkout is too long or complicated. One click checkout addresses this by making payment nearly invisible.

Security is maintained through tools like tokenization, PCI DSS compliance, and sometimes biometric authentication for extra protection.

With a payment service provider (PSP) like KOMOJU, merchants can offer one click checkout across cards, digital wallets, and alternative payment methods (APMs), ensuring a seamless experience for local and international customers.

Why it matters: One click checkout removes friction from the buying journey, increasing conversions and improving customer loyalty in competitive ecommerce markets.

Operator of a card payment system

An operator of a card payment system is the organisation that runs and maintains a card network such as Visa, Mastercard, JCB, or American Express. These operators set the rules, manage the infrastructure, and ensure that issuers, acquirers, and merchants can process card transactions reliably and securely.

Operators of card payment systems are responsible for:

  • Running the network that connects issuing banks and acquiring banks
  • Setting interchange rates, scheme fees, and network rules
  • Overseeing dispute resolution and chargeback processes
  • Maintaining compliance and global security standards like PCI DSS
  • Supporting new technologies such as contactless payments and tokenization

For example, when a customer uses a Visa card to make a purchase, the payment request passes through Visa’s global network. Visa acts as the operator, ensuring that the request is routed correctly between the acquirer and the issuer, applying the right rules and fees.

Operators are central to the payments ecosystem, handling vast volumes of transactions each year. In 2022, Visa alone processed over $14 trillion in total payments and cash volume worldwide.

Merchants don’t contract directly with operators. Instead, they work with acquirers or payment service providers (PSPs) like KOMOJU, which connect them to multiple card networks and local alternative payment methods (APMs) through a single integration.

Why it matters: Operators of card payment systems ensure that global card payments run smoothly, securely, and at scale, making them a critical backbone of international commerce.

Open banking

Open banking is a system that allows customers to securely share their banking data with third-party providers through APIs (application programming interfaces). With consent, these providers can access account information or initiate payments directly from a customer’s bank account, bypassing traditional card payments.

Open banking is used for:

  • Instant bank-to-bank payments for ecommerce
  • Personal finance apps that analyse spending or savings
  • Faster loan approvals using verified bank data
  • Alternative to credit cards for secure online checkout

For example, instead of entering card details at checkout, a customer can pay directly from their bank account through an open banking-enabled payment option. The transaction is authorised in their banking app, providing security with biometric authentication or strong customer authentication (SCA).

Open banking is spreading rapidly. In Europe, it’s driven by PSD2 regulation, while in Japan, the Financial Services Agency required banks to open APIs by 2020. Globally, the market is worth around USD 31 billion (2024) and is projected to reach USD 135 billion by 2030.

For merchants, open banking payments offer lower fees than card networks, instant settlement, and reduced fraud risk. With a payment service provider (PSP) like KOMOJU, businesses can integrate open banking alongside digital wallets, Konbini payments, and other alternative payment methods (APMs), creating a seamless global checkout.

Why it matters: Open banking empowers customers with more control over their data and payments, while giving merchants faster, cheaper, and more secure alternatives to traditional card transactions.

Over the counter payments (OTC)

Over the counter payments (OTC) are payments made in cash at a physical location, such as a convenience store, bank branch, or authorised payment centre. Customers generate a payment slip or barcode online, then take it to a store to complete the purchase with cash.

OTC payments are commonly used for:

  • Ecommerce purchases where customers prefer or only have access to cash
  • Bill payments such as utilities or mobile phone top-ups
  • Ticketing for transport, events, or travel
  • Markets where credit cards and digital wallets are less common

For example, in Japan, customers can pay online orders at local convenience stores through Konbini payments, one of the most popular OTC methods in the region. Similar systems exist globally, such as Boleto Bancário in Brazil and OXXO in Mexico.

OTC payments are critical for financial inclusion. According to the World Bank, 1.4 billion people worldwide remain unbanked, making cash-based methods a vital part of ecommerce in emerging markets.

Merchants offering OTC payments can reach customers who don’t have cards or bank accounts, expanding their customer base. A payment service provider (PSP) like KOMOJU allows merchants to integrate OTC methods like Konbini directly into their checkout flow, while still receiving settlement in their bank account.

Why it matters: OTC payments bridge the gap between online shopping and cash-based economies, giving customers more choice and helping merchants access wider audiences in global markets.

P

Payment Aggregator (Third party processor)

A payment aggregator, also called a third party processor, is a type of payment service provider (PSP) that allows multiple merchants to process payments through a single master merchant account. Instead of setting up their own direct account with an acquiring bank, smaller businesses are onboarded under the aggregator’s account and can start accepting payments quickly.

Payment aggregators are responsible for:

  • Onboarding merchants under their own master merchant ID
  • Managing compliance, fraud detection, and chargebacks
  • Offering access to multiple payment methods (cards, digital wallets, alternative payment methods (APMs))
  • Distributing settled funds to each merchant after fees are deducted

For example, a small ecommerce seller may not have the transaction volume to open a direct merchant account with an acquirer. By working with a payment aggregator, they can accept card payments, Konbini payments, or bank transfers almost instantly, without the overhead of bank approval.

Payment aggregators are especially common in emerging markets, where they enable millions of micro and small businesses to take payments online. According to McKinsey, aggregators are a key driver of digital payments growth in regions with large unbanked populations (McKinsey).

KOMOJU acts as a PSP, offering merchants the benefits of aggregation (simplified onboarding, compliance, and access to dozens of payment methods) while also supporting cross-border ecommerce and scaling to enterprise-level needs.

Why it matters: Payment aggregators lower the barrier to entry for merchants, enabling fast access to global payment networks without requiring complex bank relationships.

Payment facilitator (PayFac)

A payment facilitator (PayFac) is a company that simplifies payment acceptance by allowing smaller merchants to process transactions under its own master merchant account. Instead of each business applying for a direct relationship with an acquiring bank, the PayFac handles the setup, compliance, and infrastructure, making it faster and easier to start taking payments.

A PayFac is responsible for:

  • Onboarding merchants quickly using streamlined Know Your Business (KYB) checks
  • Managing a shared merchant ID number (MID) across multiple sub-merchants
  • Handling compliance, fraud prevention tools, and chargebacks
  • Settling funds into each merchant’s account after fees are deducted

For example, a small online seller that wants to accept card payments might struggle with the paperwork and approval process required by an acquirer. By working with a PayFac, they can start accepting payments almost instantly, with the PayFac managing the complexity in the background.

PayFacs have become popular as ecommerce has expanded globally. According to research from Statista, the number of payment facilitators worldwide has grown rapidly, supporting millions of merchants with simplified onboarding and integrated solutions (Statista).

A payment service provider (PSP) like KOMOJU plays a similar role, offering a single integration for merchants of all sizes to access multiple payment methods, acquirers, and currencies without needing direct bank relationships.

Why it matters: PayFacs lower the barrier to entry for merchants, making it easier to accept payments quickly, stay compliant, and scale without the overhead of managing a direct acquiring relationship.

Payment gateway tokenization

Payment gateway tokenization is a security process where sensitive payment data, like a customer’s card number, is replaced with a randomly generated token during a transaction. The payment gateway uses this token to process the payment without exposing the original card details to the merchant.

Tokenization helps to:

  • Protect sensitive cardholder data by storing only tokens, not card numbers
  • Reduce the risk of data breaches and fraud
  • Ensure compliance with PCI DSS security standards
  • Support one click checkout and recurring billing safely

For example, when a shopper saves their card details for future purchases, the gateway replaces the card number with a token. That token can be used for future transactions, but if intercepted, it’s useless to fraudsters because it can’t be reverse-engineered back into the original data.

Tokenization is different from encryption. While encryption scrambles data and requires a key to decode it, tokenization removes sensitive data entirely from the merchant’s systems and replaces it with a non-sensitive substitute.

This technology underpins secure digital wallets, subscription billing, and stored card payments. According to Statista, over half of global ecommerce transactions now rely on tokenization for added security (Statista).

With a payment service provider (PSP) like KOMOJU, merchants get tokenization built in, protecting customer data while enabling features like recurring payments, refunds, and fast checkout.

Why it matters: Payment gateway tokenization reduces fraud risk, keeps merchants compliant, and enables convenient checkout experiences without compromising on security.

Payment processor

A payment processor is a company that handles the technical side of moving money between the merchant, the acquirer, the card networks, and the issuing bank during a payment transaction. It ensures that payment data is transmitted securely, authorisations are confirmed, and funds are routed correctly.

A payment processor is responsible for:

  • Transmitting transaction data securely from the payment gateway to the acquirer
  • Communicating with card networks and issuing banks to confirm authorisation
  • Supporting multiple payment methods, from cards to digital wallets and alternative payment methods (APMs)
  • Ensuring compliance with PCI DSS and other global security standards
  • Managing settlement and reporting for merchants

For example, when a customer pays with a credit card online, the gateway captures the details, and the processor handles the behind-the-scenes communication between the networks and banks. Within seconds, the merchant receives approval, and funds move later in the settlement stage.

Payment processors are a key part of the payments chain, but merchants rarely work with them directly. Instead, they access processors through a payment service provider (PSP) like KOMOJU, which bundles processing, fraud prevention, and support for multiple payment methods into one solution.

According to Nasdaq, the total transaction value in the global digital payments market is expected to reach $11.55 trillion in 2024, much of which flows behind the scenes through processors.

Why it matters: Payment processors are the engine that makes digital transactions possible, ensuring payments move securely and efficiently between customers, banks, and merchants.

Payment service provider (PSP)

A payment service provider (PSP) is a company that enables merchants to accept electronic payments, including credit cards, debit cards, digital wallets, bank transfers, and alternative payment methods (APMs). A PSP acts as the bridge between merchants, acquirers, issuers, and card networks, handling the technical, financial, and compliance aspects of payment processing.

A PSP typically provides:

  • Access to multiple payment methods through a single integration
  • A payment gateway to securely capture and transmit data
  • Fraud detection and fraud prevention tools
  • Settlement of funds into the merchant account
  • Reporting, analytics, and dispute management tools

For example, instead of a Japanese merchant signing contracts with multiple acquirers and card networks to support Visa, Mastercard, JCB, and local methods like Konbini payments, they can use a PSP such as KOMOJU. With one integration, they gain access to 65+ payment methods, including local and cross-border options.

PSPs are vital for merchants operating internationally. They handle currency conversion, cross-border ecommerce, and local compliance rules, making it easier to expand globally without managing multiple complex relationships.

Why it matters: A PSP simplifies payment acceptance, reduces complexity, and helps merchants expand globally by offering customers the payment methods they trust.

Payee

A payee is the individual or business that receives money in a payment transaction. In ecommerce, the payee is typically the merchant, while the customer making the payment is known as the payer.

The payee is responsible for:

  • Providing goods or services in exchange for payment
  • Ensuring the checkout supports relevant payment methods
  • Managing refunds, chargebacks, and disputes
  • Maintaining compliance with payment regulations and scheme rules

For example, when a customer purchases a product online, the merchant (payee) receives the funds once the transaction is authorised, cleared, and settled by the acquirer, card network, and issuer.

Payees don’t interact directly with all parts of the payment chain. Instead, they rely on a payment service provider (PSP) like KOMOJU, which handles the technical processing, settlement, and fraud prevention while ensuring the payee receives their funds securely.

In cross-border commerce, the role of the payee becomes more complex due to currency conversion, foreign exchange fees (FX fees), and local compliance rules. PSPs simplify this by managing cross-currency settlement, so the payee can be funded in their chosen currency, regardless of where the customer pays from.

Why it matters: The payee is the endpoint of every payment transaction. Understanding this role highlights how merchants fit into the payments ecosystem and why reliable settlement is critical for business growth.

Peer to peer payments (P2P)

Peer to peer payments (P2P) are transactions where money is transferred directly between individuals, without going through a traditional merchant or business. They’re usually facilitated by mobile apps, digital wallets, or online banking platforms.

Examples of P2P payments include:

  • Sending money to a friend via PayPay or LINE Pay in Japan
  • Splitting a restaurant bill with Venmo in the US
  • Bank-to-bank transfers using real-time payment apps
  • Mobile remittances across borders

P2P payments prioritize convenience, speed, and accessibility—vital in markets with high smartphone usage and growing demand for cashless options. Recent estimates place the global P2P payments market at around USD 3.09 trillion in 2023, and forecast it to grow to nearly USD 9.72 trillion by 2030.

While P2P is typically used between individuals, it’s increasingly blurring into ecommerce. Many customers expect to use the same P2P apps to pay small merchants or make online purchases, making them part of the wider alternative payment method (APM) ecosystem.

Through a payment service provider (PSP) like KOMOJU, merchants can support P2P-like experiences at checkout by integrating popular digital wallets and local payment systems.

Why it matters: P2P payments make transferring money simple and fast for individuals, and they influence customer expectations in ecommerce, where seamless, mobile-first payment options are now standard.

PIN verification

PIN verification is a security step in card present (CP) transactions where a customer enters their personal identification number (PIN) to confirm a payment. The PIN is checked against the one stored by the issuing bank, helping to ensure that the person using the card is its rightful owner.

PIN verification is used for:

  • Chip-and-PIN card payments at a point of sale (POS) terminal
  • ATM withdrawals
  • High-value contactless payments that require extra authentication

For example, when a customer inserts their debit card into a POS terminal, they enter a 4-digit PIN. The terminal securely sends this PIN to the issuer, which verifies it before approving the transaction.

PIN verification significantly reduces fraud compared to magnetic-stripe and signature-based authentication. In the UK, the introduction of chip-and-PIN technology led to a 63% reduction in domestic counterfeit card fraud between 2004 and 2010.

In Japan and other Asian markets, PIN verification is widely used for debit and credit transactions, often alongside contactless payments and biometric authentication for extra security.

With a payment service provider (PSP) like KOMOJU, merchants can accept a full range of card payments with built-in PIN verification, ensuring compliance with EMV standards and customer trust.

Why it matters: PIN verification adds a critical layer of security to card transactions, protecting both merchants and customers from fraud in face-to-face payments.

Point of sale system (POS)

A point of sale system (POS) is the hardware and software that allows merchants to accept payments in person. It’s where a customer completes a purchase, whether by card, cash, digital wallet, or QR code payment.

A POS system typically includes:

  • Hardware: card readers, barcode scanners, receipt printers, and cash drawers
  • Software: checkout interface, inventory tracking, and reporting tools
  • Payment processing: integration with a payment gateway and acquirer
  • Omnichannel features: syncing with ecommerce platforms for unified reporting

For example, in a retail store, a POS terminal processes a card present (CP) transaction by capturing the customer’s card details, sending them through the payment processor, and updating the merchant’s sales records in real time.

POS systems are also evolving into mobile point of sale (mPOS) solutions, where smartphones or tablets act as checkout devices. In Japan, many POS systems support both IC card payments and Konbini payments, reflecting the diversity of local payment preferences.

The global POS market is expanding rapidly, making modern POS systems essential for merchants. Mobile POS transaction values are projected to reach approximately $24.6 trillion by 2027, driven by demand for flexibility and mobility.

A payment service provider (PSP) like KOMOJU helps merchants integrate POS payments with ecommerce and mobile, creating a unified omnichannel payments experience.

Why it matters: A POS system is more than just a checkout, it’s the hub of in-store payments, inventory, and customer experience, connecting physical and digital commerce.

Point to point encryption (P2PE)

Point to point encryption (P2PE) is a security standard that protects cardholder data by encrypting it from the moment it’s entered at a point of sale (POS) terminal until it reaches the secure payment processor. This ensures that sensitive details like card numbers never travel in plain text through a merchant’s systems.

P2PE provides:

  • End-to-end encryption of cardholder data
  • Reduced risk of fraud and data breaches
  • Simplified compliance with PCI DSS standards
  • Greater customer trust during card present (CP) transactions

For example, when a customer pays with a chip-and-PIN card at a retail store, the POS terminal encrypts the card details immediately. Only the secure payment processor can decrypt the information, meaning the merchant never stores or handles sensitive data.

The benefits of P2PE go beyond security. Because sensitive data never touches the merchant’s systems, businesses often face lower compliance costs when undergoing PCI DSS audits.

Global adoption of point-to-point encryption (P2PE) is rising as cyber threats proliferate. According to IBM’s 2023 Cost of a Data Breach Report, the average cost of a data breach reached USD 4.45 million in 2023. By reducing plaintext data exposure at the point of capture, P2PE can significantly lower the risk and potential impact of such breaches, especially in scenarios where payment data handling is integrated end-to-end.

A payment service provider (PSP) like KOMOJU ensures merchants benefit from advanced encryption standards such as P2PE, along with other fraud prevention tools like tokenization and 3D Secure (3DS).

Why it matters: P2PE protects customers and merchants by securing card data at every stage of the transaction, lowering fraud risk and compliance costs.

Prepaid card

A prepaid card is a payment card that’s loaded with funds in advance and used until the balance runs out. Unlike a credit card, it doesn’t involve borrowing, and unlike a debit card, it isn’t linked to a bank account. Instead, customers top up the card with money before spending.

Prepaid cards are commonly used for:

  • Budgeting and limiting spending
  • Travel, where customers want to load a card with foreign currency
  • Gift cards for retail and ecommerce purchases
  • Financial inclusion for customers without access to traditional bank accounts

For example, a traveller might load ¥50,000 onto a prepaid travel card before visiting Japan. They can use it at any store that accepts Visa or Mastercard, but once the balance is spent, the card must be reloaded to continue making payments.

Prepaid cards play an important role in global payments. The market was valued at about USD 2.8 trillion in 2023, and is projected to grow to USD 5.8 trillion by 2033, according to Allied Market Research. In Japan, prepaid cards such as Suica and Pasmo are widely used for transport and retail purchases, offering a seamless, cashless experience—especially popular for their convenience in everyday transit and purchases.

For merchants, prepaid cards behave much like other card payments, with funds processed through the acquirer, issuer, and card networks. A payment service provider (PSP) like KOMOJU enables merchants to accept prepaid cards alongside other methods without extra integration.

Why it matters: Prepaid cards expand access to digital payments, support budgeting and gifting, and give merchants a way to serve customers who may not use traditional banking products.

Primary Account Number (PAN)

A Primary Account Number (PAN) is the long number printed or embossed on the front of a payment card (credit, debit, or prepaid). It uniquely identifies the cardholder’s account with the issuer and is used in every transaction to route payments correctly through the card network.

The PAN is made up of:

  • The Issuer Identification Number (IIN) or Bank Identification Number (BIN) (the first 6–8 digits), which identifies the issuing bank
  • The individual account number (the middle section)
  • A check digit (the last digit), which validates the number through the Luhn algorithm

For example, when a customer enters their card details online, the payment gateway captures the PAN and encrypts it before sending it through the payment processor to the issuer for approval. The PAN never travels in plain text if tokenization or point to point encryption (P2PE) is in place.

Because the PAN is sensitive cardholder data, it’s subject to strict compliance requirements under PCI DSS. Merchants are not allowed to store PANs unless they meet the highest security standards, which is why most rely on payment service providers (PSPs) like KOMOJU to handle this securely.

According to PCI Security Standards, unauthorised exposure of PANs is one of the most common causes of payment data breaches. This makes encryption and tokenization essential tools in modern payment processing.

Why it matters: The PAN is the core identifier of a payment card, but it also represents a key security risk. Protecting it is fundamental to safe and compliant payment acceptance.

Processor fee

A processor fee is the charge applied by a payment processor for handling a payment transaction. It covers the technical work of securely transmitting data between the merchant, the acquirer, the card networks, and the issuer.

Processor fees typically cover:

  • Secure transmission of payment data via the payment gateway
  • Authorisation, clearing, and settlement processes
  • Compliance with PCI DSS and global security standards
  • Support for multiple payment methods, such as digital wallets and QR code payments

For example, when a customer pays ¥10,000 at an online store, the processor handles the communication between the acquirer and the issuer to approve the payment. The merchant is then charged a processor fee, which may be a flat rate per transaction (e.g. ¥20) or a percentage of the sale (e.g. 0.5%).

Processor fees are just one part of the total merchant service charge (MSC), which also includes the interchange fee (paid to the issuer) and the scheme fee (paid to the card network).

Fees vary depending on transaction type, region, and volume. For instance, card not present (CNP) transactions often carry higher processor fees than card present (CP) transactions, due to increased fraud risk.

With a payment service provider (PSP) like KOMOJU, merchants don’t deal with processor fees separately, they’re bundled into a single, transparent transaction fee alongside other costs.

Why it matters: Processor fees are a key part of the cost of accepting payments. Understanding them helps merchants see how payment charges are structured and why they vary.

Q

QR code payments

QR code payments let customers pay by scanning a Quick Response (QR) code with their smartphone. The code links to a secure payment gateway or digital wallet, allowing funds to move directly from the customer’s account to the merchant without needing a physical card.

QR code payments work in two main ways:

  • Customer-presented QR: The customer shows their wallet app’s QR code for the merchant to scan
  • Merchant-presented QR: The merchant displays a QR code that the customer scans to complete payment

Examples include:

  • PayPay, LINE Pay, and Rakuten Pay in Japan
  • Alipay and WeChat Pay in China
  • QR-based Konbini payments for ecommerce orders

QR code payments are fast, secure, and particularly popular in regions with strong mobile and contactless adoption. Global spending via QR code payments reached $2.4 trillion in 2022 and is projected to increase to $3 trillion by 2025, with Asia leading the growth.

For merchants, QR code payments lower costs compared to card acceptance because they bypass some interchange fees and hardware requirements. Customers also appreciate the convenience, especially for in-person transactions, small purchases, and peer-to-peer payments.

A payment service provider (PSP) like KOMOJU makes it simple for merchants to accept QR code payments, alongside cards, digital wallets, and Konbini payments, in a single integration.

Why it matters: QR code payments give merchants an affordable, accessible way to accept mobile-first transactions while offering customers speed and convenience.

R

Real time payments (RTP)

Real time payments (RTP) are transactions where money is transferred instantly between bank accounts, 24/7 and 365 days a year. Unlike traditional transfers, which can take days to settle, RTP systems move funds within seconds, giving merchants and customers immediate confirmation.

RTP is commonly used for:

  • Paying bills instantly instead of waiting for bank processing
  • Ecommerce purchases where merchants want immediate settlement
  • Peer to peer payments (P2P) between individuals
  • Salary payouts or gig economy wages

For example, Japan’s Zengin System has enabled near-instant domestic transfers for decades, making real-time payments a standard for bank-to-bank transactions. In Europe, SEPA Instant Credit Transfer provides a similar service, while the US introduced the FedNow Service in 2023.

The global shift to real-time payments (RTP) is accelerating. In 2023, the world saw approximately 266 billion RTP transactions, and this is expected to grow to over 500 billion annually by 2027, representing more than one-quarter of all electronic payments globally.

For merchants, RTP reduces reliance on credit cards and helps with cash flow by eliminating settlement delays. It also lowers costs since transactions don’t go through card networks.

A payment service provider (PSP) like KOMOJU can connect merchants to local RTP schemes, giving them access to instant bank payments in multiple regions, alongside methods like Konbini payments and digital wallets.

Why it matters: Real time payments offer speed, security, and transparency, transforming the way money moves and giving merchants faster access to funds.

Recurring payments

Recurring payments are transactions where a customer authorises a merchant to automatically charge them regularly on a daily, weekly, monthly, or annual basis. Instead of entering payment details each time, the customer approves ongoing billing upfront, and the merchant collects payments on schedule.

Recurring payments are commonly used for:

  • Subscription services like streaming platforms or gyms
  • Utility bills such as electricity or mobile phone contracts
  • SaaS (software as a service) businesses
  • Membership fees and digital products

For example, when a customer signs up for a monthly subscription at ¥1,500, their card or bank account is charged automatically each month until they cancel. The merchant doesn’t need to request payment again, and the customer doesn’t need to re-enter details.

Recurring payments rely on technologies like tokenization to securely store card details, direct debit for automated bank pulls, and digital wallets for one-click reauthorization. Juniper Research estimates that the global recurring payments market is set to exceed $15.4 trillion by 2027, up from around $13.2 trillion in 2023—underscoring the growing importance of seamless, automated payment flows.

A payment service provider (PSP) like KOMOJU simplifies recurring billing by handling authorization retries, fraud detection, and support for multiple alternative payment methods (APMs), reducing failed payments and customer churn.

Why it matters: Recurring payments provide predictable revenue for merchants and convenience for customers, making them the backbone of subscription and membership-based businesses.

Reconciliation

Reconciliation is the process of comparing a merchant’s sales records with their payment processor or acquirer reports to ensure all transactions are accounted for and funds have been settled correctly. It’s a critical part of financial management in ecommerce.

Reconciliation involves:

  • Matching individual transactions with deposits in the merchant account
  • Checking that fees like the interchange fee, scheme fee, and processor fee have been applied correctly
  • Identifying missing or duplicate payments
  • Monitoring refunds and chargebacks

For example, if a merchant sells ¥100,000 worth of products in a day, their records should match the settlement reports provided by their PSP. If only ¥98,000 arrives after fees, reconciliation ensures the difference is understood and properly recorded.

Reconciliation can be manual, but most growing businesses rely on automated tools. Collection and reconciliation processes are a significant pain point for over 70% of corporate treasurers. Automating these workflows reduces errors and saves valuable time.

A payment service provider (PSP) like KOMOJU helps merchants with reconciliation by offering detailed transaction reporting, unified dashboards, and payout summaries across multiple payment methods, currencies, and regions.

Why it matters: Reconciliation gives merchants financial accuracy, ensures transparency, and helps identify issues quickly, all of which are essential for scaling a business with confidence.

Refund

A refund is the return of money to a customer after a completed payment transaction, usually because the customer returned a product, cancelled a service, or experienced an error. Refunds are processed through the same payment method the customer originally used, ensuring transparency and trust.

Refunds can occur in cases such as:

  • Product returns or cancellations
  • Service disruptions (e.g. cancelled flights)
  • Duplicate or mistaken payments
  • Customer dissatisfaction or disputes

For example, if a customer buys a pair of shoes online for ¥8,000 and later returns them, the merchant issues a refund. The acquirer and issuer process the transaction in reverse, returning funds to the customer’s account.

Refunds can be:

  • Full refunds: Returning the entire transaction amount
  • Partial refunds: Returning only part of the amount (e.g. minus shipping fees)

  • Instant refunds: Where funds are credited immediately, supported by certain real time payment (RTP) systems

Refunds are different from chargebacks. While a refund is initiated by the merchant, a chargeback is initiated by the customer through their issuer and can carry penalties for the merchant.

With a payment service provider (PSP) like KOMOJU, merchants can process refunds easily through a central dashboard, handling multiple payment methods, currencies, and regions without added complexity.

Why it matters: Refunds protect customer trust, support consumer rights, and ensure merchants remain compliant with payment rules, all while maintaining a positive brand reputation.

S

Scheduled payment

A scheduled payment is a transaction set to occur automatically on a future date or at regular intervals. Customers authorise the payment in advance, and the merchant or payment service provider (PSP) processes it on the agreed schedule.

Scheduled payments are commonly used for:

  • Subscription services and memberships
  • Loan repayments and instalments
  • Utility bills like gas, electricity, or mobile services
  • Ecommerce pre-orders with delayed billing

     

For example, a customer might schedule a monthly payment of ¥5,000 for their streaming subscription. The PSP processes the charge automatically each month without requiring the customer to re-enter details.

Scheduled payments can be:

  • Fixed: Same amount each time (e.g. subscriptions)
  • Variable: Amount changes depending on usage (e.g. utility bills)
  • One-off future payments: A single transaction scheduled for a specific date

These payments are often supported by direct debit (DD), credit cards, or digital wallets with stored payment credentials. Juniper Research estimates the global subscription economy will grow from about USD 722 billion in 2025 to USD 1.2 trillion by 2030, with scheduled and recurring payments playing a key role in this expansion.

With a PSP like KOMOJU, merchants can manage scheduled payments across multiple payment methods, automate retries for failed transactions, and provide customers with flexible billing options.

Why it matters: Scheduled payments give customers convenience and help merchants secure predictable revenue, making them vital for subscriptions, lending, and instalment-based commerce.

Scheduled fees

Scheduled fees are charges that occur on a recurring or pre-set schedule, rather than being triggered by a one-time purchase. They’re common in subscription models, service contracts, and financial products where customers expect regular billing.

Examples of scheduled fees include:

  • Monthly subscription charges for streaming, SaaS, or gyms
  • Annual membership renewals
  • Installment payments for loans or buy now pay later (BNPL) purchases
  • Service fees for utilities, mobile contracts, or insurance

For example, if a customer signs up for a cloud storage service at ¥1,200 per month, that recurring amount is a scheduled fee. The customer authorises ongoing billing, and the payment service provider (PSP) automatically processes the payment each cycle.

Scheduled fees are often managed through recurring payments or scheduled payments, which rely on secure storage methods like tokenization or direct debit (DD). In ecommerce, they help merchants secure predictable revenue and reduce churn.

The global payments ecosystem continues to grow, with revenues projected to exceed USD 3.1 trillion by 2028—fuelled in part by the increasing adoption of recurring and scheduled fee models, which are emerging as a significant share of the digital payments landscape.

A PSP like KOMOJU makes it simple for merchants to support scheduled fees across different payment methods, currencies, and regions, while automating retries for failed transactions and ensuring compliance.

Why it matters: Scheduled fees create stable, predictable income streams for merchants while offering customers the convenience of automated payments.

Settlement

Settlement is the process of transferring funds from a customer’s issuing bank to the merchant’s acquiring bank (and ultimately their merchant account) after a payment has been authorised and cleared. It’s the stage where the merchant actually receives the money from a completed transaction.

Settlement involves:

  • The issuer releasing funds after a successful authorization
  • The card network routing funds through the payment chain
  • The acquirer depositing funds into the merchant account
  • Deducting fees like the interchange fee, scheme fee, and processor fee before payout

For example, if a customer pays ¥10,000 at an ecommerce store, the payment is first authorised, then cleared, and finally settled. The merchant might receive ¥9,700 after all processing fees, with the funds arriving in their account within a few days, or faster if next day funding is enabled.

Settlement times vary depending on the region, payment method, and provider. Real time payments (RTP) can settle instantly, while methods like Konbini payments in Japan may take a few business days.

A payment service provider (PSP) like KOMOJU simplifies settlement by aggregating multiple payment methods, currencies, and regions into predictable payouts, so merchants don’t need to manage complex bank relationships.

Why it matters: Settlement is the final step of the payment lifecycle, ensuring merchants receive their funds securely and on schedule, making it essential for healthy cash flow.

Scheme rules

Scheme rules are the regulations set by card networks such as Visa, Mastercard, JCB, and American Express. They define how payments must be processed, how fees are applied, and how disputes like chargebacks are handled. All participants in the payment ecosystem (issuers, acquirers, merchants, and payment service providers) must follow them.

Scheme rules typically cover:

  • Transaction flow: how authorization, clearing, and settlement occur
  • Fee structures, including the interchange fee and scheme fee
  • Security standards such as PCI DSS and 3D Secure (3DS)
  • Dispute and chargeback procedures
  • Rules for cross-border and card not present (CNP) transactions

For example, when a customer disputes a transaction, the scheme rules determine the chargeback process, including deadlines, evidence requirements, and liability. Merchants and acquirers must follow these steps exactly, or risk losing the dispute by default.

Scheme rules also evolve to reflect changes in payments. For instance, card networks have introduced new rules around contactless payments and tokenization as these technologies have become mainstream.

While merchants don’t engage with scheme rules directly, they affect the fees merchants pay and how disputes are resolved. A PSP like KOMOJU helps merchants stay compliant by managing relationships with card networks and applying scheme rules automatically.

Why it matters: Scheme rules keep global card payments standardised, secure, and fair, making sure transactions flow smoothly across billions of cards and millions of merchants.

Standard pricing

Standard pricing is a common fee model used by payment service providers (PSPs) and acquirers, where all merchants are charged the same flat rate for processing transactions, regardless of card type, payment method, or transaction risk. It’s also known as a “blended rate.”

Standard pricing typically includes:

  • The interchange fee (paid to the issuer)
  • The scheme fee (paid to the card network)
  • The PSP or acquirer’s markup
  • All bundled together into one predictable transaction fee

For example, a PSP might charge merchants a flat 2.9% + ¥30 per transaction, whether the customer pays with a domestic debit card, an international credit card, or a digital wallet.

The benefit of standard pricing is simplicity. Merchants always know what they’ll be charged, making it easy to forecast costs and manage margins. However, it may be more expensive than interchange-plus pricing, since riskier or more expensive transactions are averaged into the flat rate.

With a PSP like KOMOJU, merchants can access transparent pricing with no hidden fees, making it easier to manage cash flow while scaling internationally.

Why it matters: Standard pricing gives merchants clarity and predictability, making it ideal for smaller businesses, but larger merchants may benefit from more flexible models as their volume grows.

Split payments

Split payments are transactions where the total payment amount is divided between two or more parties, accounts, or payment methods. They’re common in marketplaces, platforms, and shared-purchase scenarios where funds need to be routed to multiple recipients.

Split payments can be used for:

  • Marketplaces (e.g. splitting payment between a seller and the platform)
  • Shared bills or group purchases
  • Paying with multiple methods (e.g. part credit card, part digital wallet)
  • Commission-based services where fees are deducted automatically

For example, when a customer books a hotel through a travel platform, the payment might be split automatically: part going to the hotel, and part to the platform as commission. The customer sees only one transaction, but behind the scenes, the PSP routes the funds to different accounts.

Split payments can also be customer-driven. A shopper might split ¥20,000 between their credit card and loyalty points, or between a bank transfer and buy now pay later (BNPL) instalments.

A payment service provider (PSP) like KOMOJU enables split payments by managing complex fund flows, ensuring compliance, and handling settlement so merchants and platforms don’t need to build these systems themselves.

Why it matters: Split payments simplify complex transactions, support marketplaces and platforms, and give customers flexibility in how they pay.

T

Transaction fee

A transaction fee is the cost a merchant pays for each payment processed through a payment service provider (PSP), acquirer, or payment processor. It’s usually charged as a percentage of the transaction value, a fixed fee per transaction, or a combination of both.

Transaction fees typically cover:

  • The interchange fee (paid to the issuer)
  • The scheme fee (paid to the card network)
  • The PSP or acquirer’s markup and operational costs

For example, if a merchant sells an item for ¥10,000 and their PSP charges 2.9% + ¥30 per transaction, the total transaction fee would be ¥320. The merchant receives ¥9,680 after fees.

Transaction fees vary by payment method. Card not present (CNP) transactions usually cost more than card present (CP) transactions because of higher fraud risk. Alternative methods like Konbini payments, QR code payments, or real time payments (RTP) may have different fee structures.

A PSP like KOMOJU simplifies this by bundling all costs into one transparent fee, so merchants don’t need to calculate separate charges from issuers, networks, and processors.

Why it matters: Transaction fees are one of the biggest costs of payment acceptance. Understanding them helps merchants manage margins and choose the right PSP for their business.

Transaction ID

A Transaction ID is a unique identifier assigned to every payment processed through the payments system. It allows merchants, acquirers, issuers, and payment service providers (PSPs) to track and reference individual transactions for settlement, reporting, and dispute resolution.

Transaction IDs are used for:

  • Matching payments during reconciliation
  • Processing refunds and chargebacks
  • Tracking transaction history for reporting and auditing
    Linking transactions across multiple systems (e.g. ecommerce platform and PSP dashboard)

For example, when a customer pays ¥5,000 online, the PSP generates a Transaction ID. The merchant can use that ID to confirm the payment status, issue a refund, or investigate a customer dispute.

Transaction IDs are critical because payments pass through multiple parties (the payment gateway, processor, acquirer, card network, and issuer) before reaching the merchant. The ID ensures each transaction can be tracked reliably across this chain.

While the customer rarely sees a Transaction ID, merchants and PSPs use it daily for troubleshooting and financial accuracy. A PSP like KOMOJU provides merchants with Transaction IDs in their reporting dashboards, making it simple to manage and reference payments across all payment methods.

Why it matters: Transaction IDs provide a digital fingerprint for every payment, making it possible to trace, reconcile, and manage transactions securely and accurately.

V

Void

A void is the cancellation of a payment transaction before it is fully settled. Unlike a refund, which reverses a payment after funds have been transferred, a void stops the transaction before money leaves the customer’s issuing bank.

Voids are commonly used for:

  • Cancelling mistaken or duplicate transactions
  • Correcting order errors before fulfilment
  • Stopping fraudulent or unauthorised transactions caught early
  • Avoiding unnecessary refunds and chargebacks

For example, if a customer accidentally places the same ecommerce order twice, the merchant can void one of the transactions before settlement. The customer sees only the original authorisation drop off their account, with no money ever withdrawn.

The advantage of a void is speed and simplicity. Since the payment hasn’t been settled, the reversal is almost instant and usually free of extra fees. Refunds, on the other hand, take longer because funds have already moved through the acquirer and card network.

A payment service provider (PSP) like KOMOJU allows merchants to void transactions directly from their dashboard, giving them a quick way to resolve errors and protect both revenue and customer trust.

Why it matters: Voids help merchants correct mistakes and stop fraud before money moves, reducing costs and keeping customer experiences smooth.

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Wholesale fees

Wholesale fees are the base costs set by card networks and issuers that all acquirers and payment service providers (PSPs) must pay when processing card transactions. They include the interchange fee (paid to the issuer) and the scheme fee (paid to the card network). These fees are non-negotiable for acquirers and passed on to merchants as part of the overall merchant service charge (MSC).

Wholesale fees cover:

  • The issuer’s risk in approving transactions
  • Fraud prevention and security infrastructure
  • Card network operations, including global processing and compliance
  • Access to the network’s payment rails

For example, if a customer pays ¥10,000 with a Mastercard, wholesale fees might total 1.5% of the transaction. The acquirer pays this to the issuer and card network, then adds its own markup before charging the merchant.

Wholesale fees vary depending on the card type, region, and transaction channel. Credit cards typically carry higher wholesale fees than debit cards, and cross-border ecommerce transactions are usually more expensive than domestic ones.

Merchants cannot negotiate wholesale fees directly because they are set by the networks. Instead, they work with PSPs like KOMOJU, which simplify costs by bundling wholesale fees, processor fees, and markups into one transparent transaction fee.

Why it matters: Wholesale fees form the foundation of card payment costs. Understanding them helps merchants see why fees differ across cards and regions, and why PSP pricing models vary.

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