# Payments & SaaS Glossary

> 600+ payments and SaaS terms explained -- from churn rate to merchant of record.

- **URL**: https://dodopayments.com/glossary

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- [3D Secure](https://dodopayments.com/glossary/3d-secure): What is 3D Secure (3DS)? 3D Secure (3DS) is an online card payment authentication protocol that adds an extra step by verifying the cardholder's identity with the issuing bank during checkout to reduce fraud.
- [A/B Testing](https://dodopayments.com/glossary/a-b-testing): What is A/B Testing? A/B Testing, a.k.a.
- [Abandoned Carts](https://dodopayments.com/glossary/abandoned-carts): An Abandoned Cart is an online shopping cart where a potential customer adds items but doesn't complete the purchase.
- [ACH Transfer](https://dodopayments.com/glossary/ach-transfer): Automated Clearing House (ACH) transfers are electronic bank-to-bank payments within the United States.
- [Acquirer](https://dodopayments.com/glossary/acquirer): An acquirer is a financial institution that maintains a merchant's bank account and processes credit or debit card transactions on their behalf.
- [Activation Rate](https://dodopayments.com/glossary/activation-rate): Activation Rate measures the percentage of users who reach a specific milestone or perform a key action within your product that signals they are getting value.
- [Adaptive Pricing](https://dodopayments.com/glossary/adaptive-pricing): Adaptive Pricing is a dynamic pricing strategy where prices change based on market conditions, demand, competition, or customer behavior.
- [Alternative Payment Method](https://dodopayments.com/glossary/alternative-payment-method): Alternative Payment Methods (APMs) refer to any way of paying for goods or services that does not involve a major card network like Visa or Mastercard.
- [Annual Contract Value (ACV)](https://dodopayments.com/glossary/annual-contract-value): Annual Contract Value (ACV) is the average annualized revenue amount from a single customer contract.
- [Annual Plan](https://dodopayments.com/glossary/annual-plan): An annual plan is a subscription model where a customer commits to and pays for a full year of service upfront.
- [Annual Recurring Revenue (ARR)](https://dodopayments.com/glossary/annual-recurring-revenue-arr): Annual recurring revenue (ARR) is the annualized value of recurring subscription revenue, calculated as MRR multiplied by 12.
- [API (Application Programming Interface)](https://dodopayments.com/glossary/api-application-programming-interface): An API (Application Programming Interface) is a set of protocols and tools that allows different software applications to communicate and exchange data with each other.
- [Apple Pay](https://dodopayments.com/glossary/apple-pay): Apple Pay is a mobile payment and digital wallet service that allows users to make payments using an iPhone, Apple Watch, or Mac.
- [Billing](https://dodopayments.com/glossary/billing): Billing is the process of issuing invoices and collecting payments from customers.
- [Billing Automation](https://dodopayments.com/glossary/billing-automation): Billing automation is the use of software to automatically generate invoices, collect payments, manage subscriptions, and handle dunning without manual intervention.
- [Bookings](https://dodopayments.com/glossary/bookings): Bookings represent the total value of all signed contracts between a company and its customers during a specific period.
- [Buy Now Pay Later (BNPL)](https://dodopayments.com/glossary/bnpl-buy-now-pay-later): Buy Now Pay Later is a type of short-term financing that allows consumers to make purchases and pay for them in installments over time.
- [Cancellation Flow](https://dodopayments.com/glossary/cancellation-flow): A cancellation flow is the series of steps and screens a user goes through when they attempt to end their subscription.
- [Cart Abandonment Rate](https://dodopayments.com/glossary/cart-abandonment-rate): Cart Abandonment Rate is the percentage of online shoppers who add items to a virtual shopping cart but leave the site without completing the purchase.
- [Chargeback Fraud](https://dodopayments.com/glossary/chargeback-fraud): Chargeback fraud occurs when a consumer makes an online purchase and then requests a refund from their bank by claiming the transaction was unauthorized or the goods were never received.
- [Chargeback Prevention](https://dodopayments.com/glossary/chargeback-prevention): Chargeback prevention refers to the strategies and tools used by merchants to stop disputes before they are officially filed with a bank.
- [Chargebacks](https://dodopayments.com/glossary/chargebacks): A chargeback is a forced transaction reversal initiated by a cardholder's bank, typically due to a disputed charge, fraud, or undelivered goods.
- [Checkout Conversion](https://dodopayments.com/glossary/checkout-conversion): Checkout Conversion is the percentage of users who successfully complete a purchase after reaching the checkout page.
- [Checkout Flow](https://dodopayments.com/glossary/checkout-flow): A checkout flow is the sequence of steps a customer follows to complete a purchase, from cart review through payment information entry to order confirmation.
- [Checkout Page](https://dodopayments.com/glossary/checkout-page): A Checkout Page is the final area of an e-commerce site where customers provide payment, shipping, and billing information to complete their order.
- [Churn Rate](https://dodopayments.com/glossary/churn-rate): Churn rate is the percentage of customers or subscribers who stop using a service during a given time period, typically measured monthly or annually.
- [Churned MRR](https://dodopayments.com/glossary/churned-mrr): Churned MRR is the total amount of monthly recurring revenue lost when customers cancel their subscriptions entirely.
- [Compliance](https://dodopayments.com/glossary/compliance): Compliance refers to the adherence to laws, regulations, and industry standards governing financial transactions, data protection, and business operations.
- [Contraction MRR](https://dodopayments.com/glossary/contraction-mrr): Contraction MRR is the amount of monthly recurring revenue lost when existing customers downgrade to lower-priced plans or reduce their usage.
- [Conversion Rate](https://dodopayments.com/glossary/conversion-rate): Conversion rate is the percentage of visitors or users who complete a desired action, such as making a purchase, signing up, or upgrading from a free plan.
- [Coupon Code](https://dodopayments.com/glossary/coupon-code): A coupon code is a unique string of characters that a customer can enter during checkout to receive a specific discount or offer.
- [Credit Card](https://dodopayments.com/glossary/credit-card): A credit card is a payment card issued by a bank that allows the holder to borrow funds to pay for goods and services.
- [Cross-Border Payment](https://dodopayments.com/glossary/cross-border-payment): A cross-border payment is a financial transaction where the payer and the recipient are located in different countries, often involving currency conversion and international regulations.
- [Currency Conversion](https://dodopayments.com/glossary/currency-conversion): Currency conversion is the process of exchanging one country's currency for another at a specific exchange rate.
- [Customer Acquisition Cost (CAC)](https://dodopayments.com/glossary/customer-acquisition-cost-cac): Customer acquisition cost (CAC) is the total cost of acquiring a new customer, including marketing, sales, and onboarding expenses divided by the number of new customers.
- [Customer Lifetime Value (CLV)](https://dodopayments.com/glossary/customer-lifetime-value-clv): Customer lifetime value (CLV) is the total revenue a business expects to earn from a single customer account throughout their entire relationship.
- [Customer Relationship Management](https://dodopayments.com/glossary/customer-relationship-management): A Customer Relationship Management (CRM) is a software that allows businesses to organize, track, and manage their interactions with customers.
- [Customer Retention](https://dodopayments.com/glossary/customer-retention): Customer retention refers to the ability of a company to keep its customers over a specific period.
- [Debit Card](https://dodopayments.com/glossary/debit-card): A debit card is a payment card that deducts funds directly from a customer's checking or savings account.
- [Deferred Revenue](https://dodopayments.com/glossary/deferred-revenue): Deferred revenue is income received by a company for goods or services not yet delivered, recorded as a liability on the balance sheet until the obligation is fulfilled.
- [Digital Delivery](https://dodopayments.com/glossary/digital-delivery): Digital Delivery is the automated process of providing digital products or services to a customer immediately after a purchase.
- [Digital Goods](https://dodopayments.com/glossary/digital-goods): Digital Goods are intangible products that are stored, delivered, and used in electronic format.
- [Digital Products](https://dodopayments.com/glossary/digital-products): Digital products are non-physical goods delivered electronically, including software, ebooks, courses, templates, APIs, and digital licenses.
- [Digital Storefront](https://dodopayments.com/glossary/digital-storefront): A Digital Storefront is the online presence of a retail business, encompassing all the digital touchpoints where a customer can view and buy products.
- [Digital Wallets](https://dodopayments.com/glossary/digital-wallets): A digital wallet is a software application that stores payment information and enables users to make electronic transactions via mobile devices or computers.
- [Discount Code](https://dodopayments.com/glossary/discount-code): A discount code is a promotional tool that reduces the price of a product or service by a fixed amount or a percentage.
- [Dunning Management](https://dodopayments.com/glossary/dunning-management): Dunning management is the automated process of communicating with customers about failed payments and retrying charges to recover revenue from declined transactions.
- [Dynamic Currency Conversion](https://dodopayments.com/glossary/dynamic-currency-conversion): Dynamic Currency Conversion (DCC) is a service that allows international travelers to pay for goods or services in their home currency rather than the local currency at the point of sale.
- [Embedded Checkout](https://dodopayments.com/glossary/embedded-checkout): Embedded Checkout is a payment interface that is integrated directly into a merchant's existing website rather than redirecting to a third party page.
- [Embedded Payments](https://dodopayments.com/glossary/embedded-payments): Embedded payments is the integration of payment processing capabilities directly into a non-financial software platform, enabling seamless transactions within the application experience.
- [EU VAT Rules](https://dodopayments.com/glossary/eu-vat-rules): EU VAT rules are the regulations governing Value Added Tax on goods and services within the European Union.
- [Expansion MRR](https://dodopayments.com/glossary/expansion-mrr): Expansion MRR is the additional monthly recurring revenue generated from existing customers through plan upgrades or the purchase of add-ons.
- [Flat-Rate Pricing](https://dodopayments.com/glossary/flat-rate-pricing): Flat-rate pricing is a simple model where a customer pays a single fixed fee for access to a product or service, regardless of usage or the number of users.
- [Fraud Detection](https://dodopayments.com/glossary/fraud-detection): Fraud detection is the use of rules, machine learning, and behavioral analysis to identify and prevent unauthorized or fraudulent payment transactions.
- [Free Plan](https://dodopayments.com/glossary/free-plan): A free plan is a subscription tier that offers basic product functionality at no cost to the user, indefinitely.
- [Free Trial](https://dodopayments.com/glossary/what-is-free-trial): A free trial is a limited-time offer allowing users to try a product or service at no cost.
- [Free-to-Paid Conversion](https://dodopayments.com/glossary/free-to-paid-conversion): Free-to-Paid Conversion is the percentage of users on a free tier or trial who upgrade to a paid subscription.
- [Friendly Fraud](https://dodopayments.com/glossary/friendly-fraud): Friendly fraud occurs when a legitimate customer makes a purchase and then disputes the charge with their bank, claiming they did not authorize the transaction or receive the goods.
- [Fulfillment](https://dodopayments.com/glossary/fulfillment): Fulfillment is the entire process of receiving, processing, and delivering orders to end customers.
- [GDPR (General Data Protection Regulation)](https://dodopayments.com/glossary/gdpr): GDPR is a comprehensive data privacy law in the European Union that regulates how organizations collect, use, and protect personal data.
- [Global Tax Compliance](https://dodopayments.com/glossary/global-tax-compliance): Global tax compliance is the process of ensuring that businesses and individuals adhere to tax laws and regulations in all countries where they operate.
- [Google Pay](https://dodopayments.com/glossary/google-pay): Google Pay is a digital wallet platform and online payment system developed by Google.
- [Graduated Pricing](https://dodopayments.com/glossary/graduated-pricing): Graduated pricing is a model where the cost per unit changes as the customer reaches different usage thresholds.
- [Gross Revenue Retention (GRR)](https://dodopayments.com/glossary/gross-revenue-retention-grr): Gross revenue retention (GRR) measures the percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue.
- [GST (Goods and Services Tax)](https://dodopayments.com/glossary/gst): GST is a value-added tax applied at each stage of the supply chain on the sale of goods and services.
- [Hosted Checkout](https://dodopayments.com/glossary/hosted-checkout): Hosted Checkout is a payment solution where the customer is redirected to a secure page managed by a payment service provider to complete their transaction.
- [Hybrid Billing](https://dodopayments.com/glossary/hybrid-billing): Hybrid billing combines multiple pricing models into a single customer invoice, such as a fixed subscription fee plus variable usage charges.
- [ICP (Ideal Customer Profile)](https://dodopayments.com/glossary/icp): What is Ideal Customer Profile (ICP)? An Ideal Customer Profile (ICP) is a detailed description of the type of company that would benefit most from your product or service.
- [Interchange Fee](https://dodopayments.com/glossary/interchange-fee): An interchange fee is a transaction fee paid by the acquiring bank to the issuing bank each time a card payment is processed, typically a percentage of the transaction amount.
- [Invoicing](https://dodopayments.com/glossary/invoicing): Invoicing is the process of creating and sending a commercial document that itemizes a transaction, specifying products or services provided, amounts owed, and payment terms.
- [Know Your Customer (KYC)](https://dodopayments.com/glossary/know-your-customer-kyc): Know your customer (KYC) is the regulatory process of verifying a customer's identity and assessing their risk profile before establishing a business relationship.
- [Local Payment Method](https://dodopayments.com/glossary/local-payment-method): A local payment method (LPM) is a way of paying for goods or services that is specific to a particular country or region.
- [Merchant of Record (MoR)](https://dodopayments.com/glossary/merchant-of-record-mor): A merchant of record is a legal entity that assumes responsibility for processing customer payments, handling tax compliance, and managing refunds and chargebacks on behalf of the seller.
- [Metered Billing](https://dodopayments.com/glossary/metered-billing): Metered billing is a usage-based pricing model where charges are calculated based on measured consumption of specific resources, reported at the end of each billing period.
- [Monthly Recurring Revenue (MRR)](https://dodopayments.com/glossary/monthly-recurring-revenue-mrr): Monthly recurring revenue (MRR) is the predictable, normalized monthly income from all active subscriptions, excluding one-time charges and variable fees.
- [Multi-currency Support](https://dodopayments.com/glossary/multi-currency-support): What is Multi-currency Support? Multi-currency support is a payment feature that allows businesses to accept and process payments in multiple currencies.
- [Net Dollar Retention (NDR)](https://dodopayments.com/glossary/net-dollar-retention): Net Dollar Retention (NDR) measures the percentage of recurring revenue retained from existing customers over a period, including expansion revenue and subtracting churn and contraction.
- [Net Revenue Retention (NRR)](https://dodopayments.com/glossary/net-revenue-retention-nrr): Net revenue retention (NRR) measures the percentage of recurring revenue retained from existing customers over a period, including expansions, contractions, and churn.
- [No-Code Checkout](https://dodopayments.com/glossary/no-code-checkout): A no-code checkout is a pre-built, embeddable payment interface that enables merchants to accept payments without writing any custom code or frontend development.
- [One-Click Checkout](https://dodopayments.com/glossary/one-click-checkout): One-Click Checkout is a technology that allows customers to complete a purchase with a single action, using stored payment and shipping details.
- [Pay-as-you-go Pricing](https://dodopayments.com/glossary/pay-as-you-go-pricing): The pay-as-you-go pricing model means customers pay based on how much they consume.
- [Payment Fraud](https://dodopayments.com/glossary/payment-fraud): Payment fraud is any type of illegal or unauthorized transaction carried out by a cybercriminal to gain money or property.
- [Payment Gateway](https://dodopayments.com/glossary/payment-gateway): A payment gateway is a technology service that authorizes and processes credit card and digital payment transactions between a merchant and the acquiring bank.
- [Payment Link](https://dodopayments.com/glossary/payment-link): A payment link is a URL or QR code generated by a merchant that directs a customer to a secure checkout page.
- [Payment Localization](https://dodopayments.com/glossary/payment-localization): Payment localization is the practice of adapting checkout experiences, currencies, and payment methods to match the preferences and requirements of customers in different regions.
- [Payment Method](https://dodopayments.com/glossary/payment-method): A payment method is any instrument or mechanism used by a customer to pay for goods or services, including credit cards, bank transfers, digital wallets, and local payment options.
- [Payment Processor](https://dodopayments.com/glossary/payment-processor): A payment processor is a company that handles the technical infrastructure for transmitting transaction data between merchants, card networks, and issuing banks.
- [Payment Service Provider (PSP)](https://dodopayments.com/glossary/payment-service-provider): A payment service provider (PSP) is a third-party company that enables merchants to accept electronic payments by connecting them to payment networks, acquiring banks, and alternative payment methods.
- [Payout](https://dodopayments.com/glossary/payout): A payout refers to the distribution of funds from one entity to another, such as a business disbursing payments to employees, vendors, or partners.
- [PayPal](https://dodopayments.com/glossary/paypal): PayPal is a global online payment system that supports money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.
- [PCI DSS](https://dodopayments.com/glossary/pci-dss): PCI DSS (Payment Card Industry Data Security Standard) is a set of security guidelines created by credit card companies to protect cardholder data.
- [Per-Seat Pricing](https://dodopayments.com/glossary/per-seat-pricing): Per-seat pricing is a model where the total cost of a subscription is based on the number of individual users or "seats" authorized to use the software.
- [Per-Unit Pricing](https://dodopayments.com/glossary/per-unit-pricing): Per-unit pricing is a model where a customer pays a fixed price for every unit of a product or service they purchase.
- [Pricing Strategies](https://dodopayments.com/glossary/pricing-strategies): A pricing strategy is an approach a business takes to set the price of its products or services.The goal is to strike a balance between profitability and customer satisfaction while maintaining a competitive edge.
- [Product Catalog](https://dodopayments.com/glossary/product-catalog): A Product Catalog is a comprehensive list of all the items a merchant has for sale, including detailed information like titles, descriptions, prices, and images.
- [Product-Led Growth (PLG)](https://dodopayments.com/glossary/product-led-growth): Product-led growth (PLG) is a business strategy where the product itself drives customer acquisition, activation, and expansion through self-serve experiences and organic adoption.
- [Proration](https://dodopayments.com/glossary/proration): Proration is the calculation of partial charges or credits when a customer changes their subscription plan mid-billing cycle.
- [Recurring Billing](https://dodopayments.com/glossary/recurring-billing): Recurring billing is the automatic, scheduled collection of payments from customers at predetermined intervals for ongoing services or subscriptions.
- [Recurring Billing](https://dodopayments.com/glossary/what-is-recurring-billing): Recurring billing means automatically invoicing and collecting payment from customers at set intervals for goods or services they continue to receive.
- [Recurring Revenue Model](https://dodopayments.com/glossary/recurring-revenue-model): A recurring revenue model is a business model where customers pay at regular intervals for ongoing access to a product or service, creating predictable and compounding income.
- [Refund](https://dodopayments.com/glossary/refund): A refund is the return of funds to a customer for a previous transaction, typically initiated by the merchant or required by the payment processor due to a dispute.
- [REST API](https://dodopayments.com/glossary/rest-api): REST API (Representational State Transfer Application Programming Interface) is a set of rules that allows different software applications to communicate over the internet.
- [Revenue Churn](https://dodopayments.com/glossary/revenue-churn): Revenue Churn is the percentage of recurring revenue lost in a given period due to customer cancellations or downgrades.
- [Revenue Recognition](https://dodopayments.com/glossary/revenue-recognition): Revenue recognition is the accounting principle that determines when and how revenue from customer contracts is recorded in financial statements, governed by standards like ASC 606.
- [Rule of 40](https://dodopayments.com/glossary/rule-of-40): The Rule of 40 is a principle stating that a healthy SaaS company's combined growth rate and profit margin should exceed 40%.
- [SaaS (Software as a Service)](https://dodopayments.com/glossary/saas-software-as-a-service): Software as a Service (SaaS) is a cloud computing model where software is hosted by a provider and delivered to customers over the internet on a subscription basis.
- [SaaS Billing](https://dodopayments.com/glossary/saas-billing): SaaS billing is the process of charging customers for access to cloud-based software, supporting models like subscriptions, usage-based pricing, and hybrid billing.
- [Sales Tax](https://dodopayments.com/glossary/sales-tax): Sales Tax is a government-imposed tax on the sale of goods and services, usually collected at the point of sale.
- [Seat-Based Billing](https://dodopayments.com/glossary/seat-based-billing): Seat-based billing is a pricing model where a customer is charged for each individual user account that has access to the software.
- [Settlement](https://dodopayments.com/glossary/settlement): Settlement is the process by which funds from a completed payment transaction are transferred from the acquiring bank to the merchant's bank account.
- [SMB (Small and Medium-sized Business)](https://dodopayments.com/glossary/smb-small-and-medium-sized-business): Small and medium-sized businesses (SMBs) are companies typically defined by having fewer than 500 employees or under $100 million in annual revenue.
- [Subscription Billing](https://dodopayments.com/glossary/subscription-billing): Subscription billing is a recurring payment model where customers are charged at regular intervals for ongoing access to a product or service.
- [Subscription Payment](https://dodopayments.com/glossary/subscription-payment): A subscription payment is a recurring charge for ongoing access to a product or service, such as software, streaming media, or a physical box of goods.
- [Tax Compliance](https://dodopayments.com/glossary/tax-compliance): Tax compliance is the process of meeting all legal requirements for collecting, reporting, and remitting taxes to the appropriate government authorities across all applicable jurisdictions.
- [Tiered Pricing](https://dodopayments.com/glossary/tiered-pricing): Tiered pricing is a model where the price per unit changes as the customer moves into different usage brackets.
- [Tokenization](https://dodopayments.com/glossary/tokenization): Tokenization is a security process that replaces sensitive payment data like credit card numbers with a non-sensitive placeholder token that can be used for transaction processing.
- [UPI (Unified Payments Interface)](https://dodopayments.com/glossary/upi-unified-payments-interface): UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI).
- [US Sales Tax Nexus](https://dodopayments.com/glossary/us-sales-tax-nexus): US sales tax nexus is the connection between a business and a state that requires the business to collect and remit sales tax in that state.
- [Usage-based Billing](https://dodopayments.com/glossary/usage-based-billing): Usage-based billing is a pricing model where customers are charged based on their actual consumption of a product or service, such as API calls, storage, or compute time.
- [Usage-based Billing](https://dodopayments.com/glossary/what-is-usage-based-billing): Usage-based billing, sometimes called consumption-based or metered billing, is a pricing model where customers are charged based on how much of a product or service they use.
- [VAT (Value-Added Tax)](https://dodopayments.com/glossary/vat-value-added-tax): Value-added tax (VAT) is a consumption tax levied on products and services at each stage of the supply chain where value is added, collected by the seller on behalf of the government.
- [Volume Pricing](https://dodopayments.com/glossary/volume-pricing): Volume pricing is a model where the price for all units is determined by the total quantity purchased.
- [Webhooks](https://dodopayments.com/glossary/webhooks): A webhook is an HTTP callback that automatically sends real-time data from one application to another when a specific event occurs, such as a successful payment or subscription change.