What
A payment allocation order for revolving credit accounts, based on the amount disbursed through each transaction channel.
Why
Different types of transaction performed with credit cards in the UK are often subject to such hierarchies, as the following example illustrates:
Tx channel A: ATM withdrawal £50
Tx channel B: Online purchase £30
Interest on ATM withdrawal, charged at 25% over X days: £6
Interest on online purchase, charged at 19.5% over Y days: £2
The allocation order might then be configured so that interest is paid before principal, but ATM withdrawals are covered first:
Tx channel A interest (£6)
Tx channel B interest (£2)
Tx channel A principal (£50)
Tx channel B principal (£30)