A
- Account Number – A unique sequence of numbers assigned to a cardholder account that identifies the bank or credit union issuing the card and the type of financial-transaction card.
- Acquirer/Acquiring Bank – A financial institution that processes a payment transaction, such as credit or debit card payments, on behalf of a merchant. In the payments value chain, the Acquirer enables businesses to accept credit card payments for the purchase of goods and services. The Acquirer underwrites the merchant account and may provide the hardware and software to enable the merchant to process transactions.
- Acquiring – The process whereby a bank or financial institution (also known as acquiring bank or acquirer) processes credit or debit card transactions on behalf of a merchant, enabling that merchant to accept card payment for the purchase of goods or services.
- Adjustments – Adjustments are used by the Acquirer, or the entity processing payment transactions on behalf of a merchant, to address process disputes, duplicate charges, and other discrepancies.
- Alternative Payments/Local Payments – Payment types that eliminate card associations and that are used as an alternative to credit-card transactions (e.g., debit cards, prepaid or stored-value cards, direct debit, bank transfers, mobile payments, checks, cash, money orders).
- American Express® – American Express, also known as AMEX, is an American multinational financial services corporation headquartered in New York City that issues payment, travel, and expense-management solutions for individuals and businesses.
- ApplePay – A mobile payment and digital wallet service by Apple Inc. that allows users to make payments in person, in iOS apps, and on the web.
- Arbitration – The process utilised by the credit card issuing companies to ascertain whether an Acquirer (or the entity processing payment transactions on behalf of a merchant) has definitive responsibility for a chargeback.
- ATM Interchange Fee – The fee paid to the Acquirer Member (processes the debit transaction on behalf of merchant) by the Issuer Member (issues the debit card to the cardholder).
- ATM (Automated Teller Machine) – This refers to an electronic banking terminal that can be physically located at a bank branch, retail business, or other location. An ATM enables customers to complete basic banking transactions without the presence of a bank representative. Most commonly used to facilitate cash withdrawals with debit and credit cards.
- Authentication – This is the process to verify the identity of a credit-card user, such as when a cardholder is required to provide secret information, such as a Personal Identification Number (PIN), to complete a transaction or request information.
- Authorisation – This refers to the initial electronic request made by a merchant for a customer’s card issuer to release funds. This verification process confirms that a credit card has adequate funds to cover a transaction.
- AVS (Address Verification System)
– A security system requiring merchants to supply address information for a cardholder to the institution that issues the credit card in card-not-present transactions, including online purchases.
B
- B2B Payments (Business-to-Business) – A form of a transaction between two or more businesses, such as a payment made by a manufacturer to a wholesaler for raw materials, or a retail business to its rental company.
- Back-End Processor – A data company (often a third party) contracted by an acquirer (or the entity that processes payment transactions on behalf of a merchant) to provide processing and communication services. As opposed to a front-end processor that has connections to the card associations and supplies the acquirer with authorisation and settlement services, the back-end processor accepts the settlement information from the front-end processor and routes the payment from the bank that issued the card to the merchant to complete the transaction.
- Bank Card – Typically, a plastic card issued by a card-issuing entity, often a bank or credit union, providing access to funds, either drawing on a bank or a credit account. ATM cards, debit cards, and credit cards are all examples of bank cards.
- Bank Routing Number – The bank routing number is the first nine digits that appear across the bottom of a personal check that identifies the financial institution that issued the check.
- Banking Report – A banking report gives you the totals agreed with the bank, meaning the card machine and banking totals match. It will not reset the card machine to zero or provide a breakdown by card type.
- Basis Point – A basis point-measured in one hundredth of one percent-that is used in expressing differentiation in interest rates or interchange rates where differences of less than one percent are common.
- Batch – The accumulation of captured (sale) transactions waiting to be settled. Multiple batches may be settled throughout the day.
- Batch Processing – A type of data processing and data communications transmission in which related transactions are grouped together and transmitted en masse for processing, usually by the same computer and under the same application.
- Big Data – This refers to the extremely large volumes of data. This term is often applied in the context of the challenges associated with attempting to derive value by collecting and analysing massive pools of diverse data to identify patterns of behaviour and then develop business strategies to act upon that analysis.
- BIN (Bank Identification Number) – This refers to the initial four to six digits that appear on a payment card, identifying the bank or entity that issued the card, that issuer’s location, and the card type (e.g., credit, debit, gift).
- Breach – A breach is a common term to refer to an incident of exploitation of security safeguards to access and compromise a merchant’s sensitive cardholder data.
- Business Day – This refers to a standard day for conducting business, excluding government holidays and weekends, when the securities markets and most retail locations are open for business. This term is often used in defining the timeline of a payment transaction, such as the number of days that will expire before funds will be deposited in an account after a transaction is initiated.
C
- Capture Date – This refers to the date on which a payment transaction is processed by an acquirer, the entity that processes transactions on behalf of the merchant.
- Card Association – An organisation owned by a financial institution that licenses bank credit card programs and performs operational functions for its members, such as transaction processing, authorisations, and interchange settlement (e.g., Visa®, MasterCard®).
- Card Issuer – A financial institution, such as a bank or a credit union, that offers a payment card (credit or debit cards) directly to consumers (or organisations) and is liable for the use of the card. The issuer is also responsible for the billing and collecting of funds for purchases that were made using that card. In the payments value chain, the card issuer pays the acquiring bank for purchases of goods and services that the cardholder makes. The cardholder then repays the issuing bank based on terms of the agreement.
- Cardholder – The person to whom a payment transaction card (credit and debit cards) is issued or an additional person authorised to use that card.
- Card-Not-Present Transactions – This refers to credit or debit card transactions where the physical card is not present at the point of transaction, such as for online purchases.
- Cash Advance – An amount advanced by a bank teller (or Automated Teller Machine) to a bank cardholder that is drawn against the cardholder’s line of credit.
- Cash Back – This term refers to an amount of money added to the total purchase price of a retail transaction paid by debit card where the customer receives that amount in cash along with the purchased item or service. This also refers to cash amounts returned to a cardholder by a retailer or card issuer as part of a loyalty and rewards program.
- Chargeback – This refers to a demand on behalf of the credit-card issuer, on behalf of its cardholder, made to a retailer to reverse a payment based on a disputed transaction or instance of fraud.
- Chargeback Period – The number of calendar days (counted from the transaction processing date) during which the card issuing institution has the right to charge the transaction back to the acquirer. The number of days varies from 45 to 180 days, according to the type of transaction.
- Check Verification – This refers to a database service provided to merchants, businesses, and individuals to verify the check writer has a valid checking account and does not have a history of writing bad checks. This is not a guarantee of payment to the merchant.
- Chip Cards – A type of credit/debit card with an embedded smart chip designed to make transactions more secure. Now the global standard for credit and debit cards, also known as EMV® for the founding developers of the technology: Europay, MasterCard and Visa.
- Closed Loop – This term refers to single-purpose payment cards, such as a store credit card or gift card (or even wristband), that may only be used for a transaction at a single store or group of stores owned by a company. The customer may have the option to reload funds for continued use. Conversely, Open Loop refers to the use of a credit card, debit card, or gift card to purchase goods or services anywhere that payment cards are accepted, subject to terms and conditions of the card issuer.
- Commercial Card – A generic term referring to payment cards issued to businesses for use by employees to cover expenses (e.g., corporate cards, purchasing cards, travel, and entertainment cards).
- Consumer Authentication – This refers to tools used to verify that the cardholder making a transaction is actually the individual authorised make that transaction, for both in-person and card-not-present transactions.
- Contactless Payments – Contactless payments refer to a secure method of transaction that leverages mobile devices and payment terminals equipped with radio frequency identification (RFID) or near-field communication (NFC) technologies.
- Control Number – A unique numerical identifier used for a chargeback or retrieval request. (Also see Chargeback.)
- Counterfeit Card – A plastic card that has been fraudulently printed, embossed, or encoded to appear to be a genuine bank card, but that has not been authorised by MasterCard or Visa or issued by a member. This also refers to a card that was originally issued legitimately but that was subsequently altered without the issuer’s knowledge or consent.
- Credit Account – This is an access account that provides for the advance of cash, merchandise, or other commodity, in the present, in exchange for a promise to pay a definite sum at a future date, usually with interest.
- Credit Bureau – A company that collects, researches, and maintains credit information, and that sells that data to lenders, creditors, and consumers as credit reports. Though there are many credit bureaus, the most recognisable are Equifax, Experian, and TransUnion.
- Credit Card – A plastic card with a credit limit used to purchase goods and services and to obtain cash advances on credit for which a cardholder is subsequently billed by the issuer (the institution, such as a bank or credit union, which offers the card to the individual) for repayment of the credit extended.
- Credit Limit – This refers to the maximum amount that a cardholder may owe to the issuer on the card account at any given time.
- Credited – This is the status indicating a refunded transaction has been processed successfully.
- Cryptocurrency – A digital or virtual currency where encryption technology-operating independently of a central bank-is used to facilitate generation of units of currency and verify the transfer of funds.
- CVV (Card Verification Value Code) – The Card Verification Code is an authentication code added to a payment card for use during the authorisation process. The purpose of the CVC is to verify that the cardholder making the transaction during a card-not-present transaction actually possesses the credit or debit card being used for the purchase. Credit card companies have their own name for the CVV code. Visa denotes to the code as CVV2, MasterCard refers to it as CVC2, and American Express® calls it CID. For Visa and MasterCard, the code appears as three digits on the back of the card. For American Express, the verification code appears as a four-digit code on the front of the card.
D
- Data Breach – This refers to an incident when sensitive, confidential data, such as credit card or personal health information, is viewed, stolen, or used by an unauthorised, untrusted individual.
- Data Encryption – Data encryption is the process of securing sensitive data, such as credit card information, by transforming that data using an algorithm to make it unusable to anyone except those possessing special knowledge, referred to as a key.
- Database – This term refers to a large collection of data that is stored digitally and organised and designed for easy access and retrieval, e.g., a collection of customer names and addresses.
- Debit – This refers to a charge to a customer’s deposit account.
- Debit Card – Any card that primarily accesses a deposit account.
- Debit Network – An electronic system used for debit-card transactions to withdraw cash from automated teller machines (ATMs), reconcile bills online, and make purchases. The network’s logo appears on the card.
- Debit Transaction – A bank card may be used to purchase goods and services and to obtain cash, which debits the cardholder’s personal deposit account.
- Decline/Declined – This refers to the refusal of a credit-card issuer to authorise and proceed with a payment transaction. A decline can occur for several reasons, include the suspicion of fraudulent activity, account-balance deficiency, a new card that has yet to be activated, etc.
- Deposit Account – This refers to a bank account where money can be deposited and withdrawn by the account holder. Deposit accounts include checking, NOW, savings, share draft, and such other depository accounts as are legal under applicable law.
- Discount Rate – A merchant discount rate is the amount charged a merchant for payment processing services its daily debit and credit card transactions.
- Digital-Only Bank – A financial institution that provides banking services exclusively via digital platforms.
- Dynamic Currency Conversion – With Dynamic Currency Conversion, merchants can offer customers with foreign-issued MasterCard® and Visa® cards the option of paying for goods in their local currency.
E
- EBT (Electronic Benefits Transfer Cards) – Electronic Benefits Transfer (EBT) refers to the electronic system enabling state government assistance programs to issue benefits to recipients in the form of payment cards, or EBT cards. Previously, state welfare agencies distributed benefits in the form of paper coupons.
- ECA (Electronic Check Acceptance) – This refers to a system that captures banking information from a paper check and converts it into data that can be processed through the Automated Clearing House (ACH) network. With ECA, checks are processed similarly to credit cards, and the paper check is returned to the consumer at the Point-of-Sale.
- eCheck – This refers to the electronic equivalent of a paper check.
- eCommerce – The buying and selling of goods and services via an electronic network, usually the Internet.
- EFT (Electronic Funds Transfer) – This refers to the transfer of funds between bank accounts (either within the same institution or among multiple institutions) by electronic means rather than conventional paper-based payment methods or requiring the intervention of bank personnel. For instance, direct deposit, where payroll is automatically deposited into an employee’s account at on a previously schedule payment date, is an example of an EFT transaction.
- Electronic Banking – A form of banking in which funds are transferred through an exchange of electronic signals between financial institutions, rather than traditional banking exchanges of physical cash, paper checks, or other negotiable instruments.
- ePay (Electronic Bill Payment) – An alternative to paper checks for paying bills, where consumers or businesses can use computers, telephones, smartphones, or ATMs to send electronic instructions to their bank or bill-payment provider to withdraw funds from their accounts and pay merchants.
- EMV® – EMV is a fraud-reducing technology that can help protect issuers, merchants and consumers against losses from the use of counterfeit and lost or stolen payment cards at the Point-of-Sale. EMV cards are embedded with a microprocessor or smart chip that interacts with the merchant’s Point-of-Sale device to make sure that the payment card is valid and with the use of a PIN that it belongs to the person using the card. This kind of chip technology adds layers of security against fraud and is virtually impossible to duplicate. At the moment of transaction- when the cardholder is most susceptible to fraud- an EMV cryptogram is what keeps sensitive data away from cyber-thieves. Now the global standard for credit and debit cards, EMV is actually an acronym that represents the founding developers of the technology: Europay, MasterCard® and Visa®.
- EMV Resource Center – This is a comprehensive online repository of updates and educational resources providing latest information regarding EMV adoption.
- Encryption – The technique of scrambling sensitive data automatically in the terminal or computer before data is transmitted for security/antifraud purposes.
- End Of Day Report – This should be carried out at the end of each business day once the last customer has left the premises. This is to make checking credits and reconciliation with your bank reports easier.
- ERP Integration – An Enterprise Resource Planning, or ERP, system is business process management software that provides an enterprise with a series of integrated applications for managing its business operations and automating many back office functions related to technology, services, human resources, and more.
- Expiration Date – This refers to the date appearing on the face of a credit card, which identifies when that card is no longer valid for transactions.
F
- Faster Payments – Electronic payments that can be made online, over the phone or in a bank branch. If the receiving bank or building society also uses Faster Payments, the payment will arrive almost immediately.
- FCA (Financial Conduct Authority) – The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. FCA works with HM Treasury but operates independently of the UK Government.
- Financial Institution – A financial institution is any organisation in the business of moving, investing, or lending money, dealing in financial instruments, or providing financial services. This includes commercial banks, thrifts, federal and state savings banks, saving and loan associations, and credit unions.
- FinTech – This term refers to the array of emerging technologies applied to enable banking and financial services functions. In the payments industry, this term often refers to technology companies competing with traditional financial institutions in delivery of services.
- Fraud – In payments, this refers to dishonest means to perpetrate false or illegal transactions, including account takeovers, identity theft, card counterfeiting, and other illicit schemes.
- Fraud Score/Fraud Scoring – A predictive analytics system for payment processors to assign a score, based on various models and transaction data, to assess the risk level of a pending transaction during the authorisation process and determine the probability that the transaction is unauthorised or fraudulent. The fraud score assigned will determine if additional verification is required for the transaction to proceed.
- Freeze – This term refers to the act of blocking a consumer’s access to credit. A credit freeze, or security freeze, is most often applied in incidents of identity theft when a cardholder wants to prevent an identity thief of opening accounts or making purchases. A freeze may also be applied by a consumer seeking to limit their own spending or to limit potential threats to a family member, such as an elderly parent.
- Friendly Fraud – This refers to a scheme where a cardholder, or someone who gains access to the card, makes a purchase and then enters a chargeback based on a false claim, such as they did not receive the purchased goods or did not initiate the original transaction.
- Front-end Processor – Payment processors are third parties designated by merchants to handle credit card and debit card transactions, and include both front-end processors and back-end processors. Front-end processors provide the connections to the card associations, as well as authorisation and settlement services. Back-end processor accept the settlement information from the front-end processor and route the payment from the bank that issued the card to the merchant to complete the transaction.
- Funding – This refers to the payment to a merchant for the merchant’s submitted deposits.
- Funds Transfer System – A wire transfer network, Automated Clearing House (ACH), or other communication system or clearinghouse or association of banks in which the Clearing/Funding Bank is a member and through which a payment order by a bank may be transmitted. This includes: SWIFT, CHIPS, Fedwire, the NACHA® (previously the National Automated Clearing House Association), MasterCard®, and Visa®.
G
- Gateway – In the payment industry, this refers to an eCommerce payment service to process credit card transactions and direct payments for both online and traditional brick-and-mortar businesses.
- Gift Cards – A gift card is basically a prepaid stored-value card, issued by a bank or retail business, for use as an alternative to cash for the purchase of goods or services. The monetary value is stored on the card itself and not in an external account maintained by the merchant or a financial institution.
- GooglePay – A digital wallet platform and online payment system developed by Google to power in-app, online, and in-person contactless purchases on mobile devices, enabling users to make payments with Android phones, tablets, or watches.
- Grace Period – This refers to the period of time where a cardholder is allowed to pay the balance of a credit card bill without incurring interest charges. The length of the grace period is established in the credit card agreement.
H
- Hard Credit Pull – Also known as a “Hard Inquiry,” this is the verification process performed by a credit-card issuer or lender when a consumer applies for some form of credit (e.g., credit-card application, loan, or mortgage). Initiating this process requires consent by the individual seeking credit. Conversely, a “Soft Credit Pull” is a credit check performed by a lender without knowledge of the consumer, such as to assess if that individual prequalifies for an offer, or if a credit check is requested by the consumer.
- Hold – When a final transaction total is uncertain, as in a hotel stay, an authorisation hold is placed on a portion of the cardholder’s credit limit or debit balance as a pledge of collateral. Once the full amount of the transaction is determined, usually at checkout, the card is charged and the hold is removed.
- Hosted Checkout – This refers to a third-party service that enables a business to accept debit and credit payments online that helps ensure faster, uninterrupted online payments thanks to top processing speeds and an intelligent infrastructure.
I
- In-App Payments – The purchase of goods or services from within a mobile application.
- Ingenico – Ingenico, part of Worldine, is a payment software and services provider. It is the manufacturer of the card terminals which ClearAccept provide and install our software onto.
- Intelligent Payment Routing – The process of routing a payment transaction to the acquiring bank most likely to approve a transaction, based on specific criteria, designed to minimise the convenience of declines.
- Interchange – The domestic and international systems operated by MasterCard® and Visa® for authorisation, settlement, and the passing through of interchange and other fees, as well as other monetary and non-monetary information related to bank card activities.
- Interchange Fee – In credit-card processing, this refers to the fees paid by the acquiring bank to the issuing bank to compensate for transaction-related costs. MasterCard and Visa establish interchange-fee rates.
- Interchange Network – Electronic networks managed by American Express®, Discover®, MasterCard, and Visa for the exchange of data pertaining to card transactions among issuers and acquirers. Access is required to facilitate verification for approvals and settlement. Interchange fees vary by card.
- Invoice-to-Pay – This refers to technology that enables financial institutions to provide their commercial customers with end-to-end payment automation, including integration with their back-office systems for a seamless business-management experience. Invoice-to-Pay technology seeks to supplant manual bill payment still performed with paper checks.
- IoT (Internet of Things) – This term refers to the interconnection of everyday devices (also called “smart devices”), embedded with computer chips and sensors, via the Internet. The integration of evolving payments technology into the IoT paradigm holds promise to help revolutionise the payments industry.
- ISO (Independent Sales Organisation) – In merchant services, this refers to an independent credit-card processing company, often an approved entity reselling services from a larger company under its own company name.
- Issuer/Issuing Bank – An issuer is a financial institution, such as a bank or a credit union, which offers a payment card (credit or debit cards) directly to consumers (or organisations) and is liable for the use of the card. The issuer is also responsible for the billing and collecting of funds for purchases that were made using that card. In the payments value chain, the card issuer pays the acquiring bank for purchases of goods and services made by the cardholder. The cardholder then repays the issuing bank based on terms of an existing agreement.
- ISV (Independent Software Vendors) – An organisation specialising in making and selling software that is not owned or controlled by a hardware manufacture. An ISV makes and sells software products that run on one or more computer hardware or operating system platforms.
- IVR (Interactive Voice Response) – IVR refers to the field of telephony technology enables a computer to interact with a consumer using voice commands and keypad buttons. In the payments industry IVR is the basis for menu systems enabling identification, segmentation, and routing of inbound callers to specific agents on a customer response or call centre team, or for self-service resolution.
J
- Joint Credit – The issuing of credit to two or more people, based on combined income, credit histories, and assets. Joint credit may be issued to organisations as well as groups of individuals. The parties involved share the responsibility for repaying the debt accumulated.
K
- KYC (Know Your Customer) – The practice carried out by companies to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a bank’s anti-money laundering policy.
L
- Late Payment Fee – A fee charged to a borrower or cardholder for not submitting a minimum required payment by a previously agreed-upon deadline for payment.
- Local Payments/Alternative Payments – Refers to payment types that eliminate card associations, used as an alternative to credit card transactions (e.g., debit cards, prepaid or stored-value cards, direct debit, bank transfers, mobile payments, checks, cash, money orders).
M
- Machine Learning – Machine learning refers to the developing field of high-performance computing in the payments industry that applies a set of data analytics tools to enhance various aspects of transactions processing, such as more accurately predicting delinquencies and improving virtual customer service.
- Magnetic Stripe – A stripe (on the bank card) of magnetically encoded cardholder account information affixed to a plastic card.
- MCC or SIC Codes – A four-digit code that is assigned by credit card companies to merchants for tracking purposes.
- Member – A financial institution that is a member of Visa® USA and/or MasterCard® International. A member is licensed to issue cards to cardholders and/or accept merchant drafts.
- Merchant – A retailer, or any other person, firm, or corporation that, according to a Merchant Agreement signed with an Acquirer or Independent Sales Organisation (ISO), agrees to accept credit cards, debit cards, or both, when properly presented.
- Merchant Acquirer – A financial institution that processes a payment transaction, such as credit or debit card payments, on behalf of a merchant. In the payments value chain, the Acquirer enables businesses to accept credit card payments for the purchase of goods and services. The Acquirer underwrites the merchant account, and may provide the hardware and software to enable the merchant to process transactions. (Also see Payments Value Chain.)
- Merchant Agreement – The written contract between merchant and acquirer that details their respective rights, responsibilities, and warranties related to the processing of payment transactions.
- Merchant Bank – This refers to a bank that primarily provides business loans, underwriting, and other financial services to businesses. A merchant bank does not provide banking services to consumers.
- MICR (Magnetic Information Character Recognition) – Imprinted banking numbers (routing/transit number, checking account number, check number) that appear at the bottom of a check.
- MICR Number Method – A check-authorisation procedure that uses the bank routing/transit numbers, checking account numbers and check number encoded along the bottom of the check.
- MID (Merchant Identification Number) – A number that numerically identifies each merchant to the merchant processor for accounting and billing purposes.
- Minimum Monthly Service Charge – A Fee charged if the total transaction processing fees for the month do not add up to a minimum amount.
- Mobile Commerce – The purchase of goods and services conducted over the Internet with mobile devices.
- Mobile Payments – The use of a mobile device to pay for goods or services.
- Mobile Wallets – Also known as an eWallet or Digital Wallet, this is a software application usually used in conjunction with a mobile payment system to facilitate electronic payments using a smartphone for online transactions as well as purchases at physical stores. Digital wallets need to be linked to a user’s bank or credit card account.
- MSP (Merchant Service Provider) – Third-party entity that provides intermediary services to help a merchant manage the processing of payments. An MSP may also assist in managing a merchant account with a card association or a card network.
N
- Net Payment – Payment to the merchant for sales drafts less credits minus the appropriate discount fee.
- Net Revenue – Discount income less interchange expense.
- Net Settlement – This refers to the settlement, through an actual transfer of funds, of the net effect of a series of financial transactions involving customers of two or more banks.
- NFC (Near Field Communications) – More commonly known by its acronym, NFC, Near Field Communications refers to close-range contactless wireless technologies enabling connectivity between devices, such as for processing mobile payments, when the devices are either touching or within close proximity to one another.
- Non-Bank – In a payment system, this is a financial institution or company that provides some banking services, but does not offer a full array of retail banking services and does not have the legal status of a bank. For example, a company that offers a credit card but does not accept deposits is an example of a non-bank.
O
- Offline Debit Transaction – Also known as a signature-debit transaction, this is a payment method utilising a debit card to transfer funds from the cardholder’s bank account to the merchant via a credit card network, processing in much the same way as a credit card transaction. An interchange fee is charged to the merchant and not the card-issuing bank.
- Omnichannel – Omnichannel is the concept of integrating multiple channels for retail sales (online purchases, in-store purchase, mobile shopping, etc.) focused on presenting a seamless, high-quality shopping experience for the buyer.
- Online Debit – Also known as PIN debit, during an online debit card transaction, once the card is inserted/swiped at the Point-of-Sale, the cardholder is required to enter a Personal Identification Number (PIN), and the funds for the transaction are deducted from the cardholder’s bank account. The transaction is processed on the ATM network of the cardholder’s bank.
- Online Payments – This refers to the electronic purchase of goods or services utilising the internet, computer networks, and digital stored value systems.
- Open Loop – The use of a credit card, debit card, or gift card to purchase goods or services anywhere that payments cards are accepted, subject to terms and conditions of the card issuer. This the opposite of a Closed Loop card, also called a single-purpose card, referring to a store credit card or gift card that can only be used for a transaction at a single store or group of stores owned by a company.
- Origination – This is the up-front multi-step process by which a consumer or borrower applies for a new loan or credit card, and the lender or card issuer processes that application, covering all steps from application submission through approval/denial.
- Outlet – This refers to one physical location of a retail chain in the network of a merchant’s business.
- Over-Limit/Overlimit – When a cardholder exceeds the predetermined credit limit on a payment card, that cardholder’s account is deemed over-limit. At that point, the card issuer may decline the transaction or process the transaction and then assess a penalty fee for surpassing the agreed-upon limit.
P
- P2P Payments – Digital technology that enables consumers to transfer funds from their credit card or bank account directly to another individual’s account through a mobile device or the internet.
- P2PE (Point-to-Point Encryption) – Security standard that immediately encrypts cardholder info at the initial swipe device, then securely transfers that information to the payment processor who in turn decrypts the data. This technology is designed to ensure unencrypted cardholder data is never stored or processed in a merchant’s Point-of-Sale system, thereby intended to minimise the potential of a data breach.
- PAN (Primary Account Number) – Numerical code, up to 16 digits, uniquely identifying a credit cardholder’s account, created when the account is opened. The first six numbers identify the card network, the next set of digits signifies the cardholder, and the remaining digits are used for security purposes.
- Partial Authorisation – During a transaction, when the purchase amount exceeds the cardholder’s credit limit, the issuer can return a partial authorisation for funds only up to the amount of the limit. At the Point-of-Sale, the merchant then requests an additional method of payment to cover the outstanding balance of the transaction.
- Payment Amount – This refers to the total amount of a cardholder’s transaction submitted for authorisation for payment.
- Payment Gateway – An Internet-based system used in an eCommerce transaction for the transfer of credit-card information from a computer or website to a credit-card processor for verification, completing the authorisation process between the merchant and the consumer.
- Payment Method – The form of payment a consumer uses to purchase goods or services from a seller (e.g., cash, credit card, debit card, money order, bank transfer).
- Payment Service Provider – A third party that enable merchants accept payments, including credit/debit, Direct Debit, bank transfer and real-time bank transfer.
- Payments Value Chain – The Payment Value Chain refers to the complex ecosystem supporting a payment transaction that includes the consumer, merchant, acquirer, network (e.g., MasterCard®, Visa®), issuer, and processor, as well as myriad third-party servicing entities supporting many aspects of this process.
- PCI DSS (Payment Card Industry Data Security Standards) – Common information security standards set by The PCI Security Standards Council for merchants, financial institutions, payment-device makers, software designers, processors, and other third parties, that handle credit cards from major card organisations, intended to help ensure the safeguarding of payment card account data. All entities that store, process, and / or transmit cardholder data are required to adhere to these standards to protect that data and prevent misuse of cardholders’ personal information.
- PED (PIN Entry Device) – In Chip & PIN card transactions, customers insert their card and enter their PIN into a PIN Entry Device (PED).
- PIN (Personal Identification Number) – A Personal Identification Number, or PIN, is the confidential individual number or code used by a cardholder to authenticate card ownership for ATM or POS-terminal transactions.
- PIN Authorisation Request – This refers to the procedure enabling the card issuer to validate the cardholder’s identity by comparing the Personal Identification Number to the account numbers.
- PIN Pad – This refers to an electronic device where cardholders can enter their Personal Identification Numbers, usually at a Point-of-Sale terminal, to complete a transaction using a payment card. The PIN Pad should encrypt the PIN during the transaction to ensure security.
- PIN Verification – A procedure utilised by or on behalf of the card issuer to verify the identification of the cardholder as a result of the use of the PIN upon receipt of a transaction request.
- PINless Debit Transaction – This refers to a debit-card transaction where a customer is not required to enter a Personal Identification Number at the point of purchase.
- Plastics – This colloquial term refers to the physicality of payment card, usually in reference to the manufacture, enhancement, and addition of security features of these hard-plastic cards.
- POS (Point-of-Sale) – This refers to the specific time and place where a retail transaction is completed.
- Point-of-Sale System – This is an electronic system, including software and hardware, which is used to complete retail transactions including sales transactions, returns, exchanges, gift cards, customer loyalty and rewards programs, promotions, discounts, inventory management.
- POS Terminal – A device placed in a merchant location that is connected to the merchant’s bank or authorisation service provider via telephone lines and is designed to authorise, record, and transfer data by electronic means for each sale.
- Prepaid Cards – A prepaid card is payment card that is not linked to a bank account, where the cardholder can only spend up to the amount that has been pre-deposited onto the card. Prepaid cards are often reloadable.
- Private Label Credit Cards – A private label credit card is a store-branded credit card intended for use at a specific retailer’s store locations or website, based on a revolving credit program managed by a financial institution or finance company.
- Processor – A third party that is designated by a merchant to handle credit card and debit card transactions between that merchant and its customers. They are often broken down into two types: front-end processors and back-end processors. (See Front-end processors and Back-end processors.)
- PSD2 (the second Payment Services Directive) – The Revised Payment Services Directive is an EU Directive, administered by the European Commission to regulate payment services and payment service providers throughout the European Union and European Economic Area.
- PSP (Payment Service Provider) – A Payment Service Provider is a third party that provides merchants with the ability to accept electronic payments, enabling connectivity to financial institutions and credit card acquirers.
- Purchasing Card/P Card – Type of commercial card issued to a business for use by an employee for transactions made outside the standard corporate-purchasing process.
Q
- QR (Quick Response) Code Mobile Payments – This technology allows customers to display a QR code (trademarked name for a two-dimensional bar code) on their mobile devices that can then be scanned by a merchant’s optical scanner to read the code and facilitate a payment.
- QSR (Quick Service Restaurants) – Quick service restaurants, also known as fast food restaurants, serve food quickly and conveniently, with minimal table service.
- Qualifying Ratio – The qualifying ratio is the percentage of a credit applicant’s income that is consumed by paying existing debt obligations. The qualifying ratio is used by lenders to determine creditworthiness and approve/reject credit requests.
R
- Reason Code – This refers to a code used to provide additional information to the receiving clearing member regarding the nature of a chargeback, subsequent presentment, fee collection, funds disbursement, or request for a source document.
- Receipt – A documented acknowledgement that a transaction took place at the Point-of-Sale, containing at a minimum: date, merchant name/location, primary account number, type of account accessed, amount, reference number, and an action code.
- Recurring Billing Transaction – A transaction charged to the cardholder (with prior permission) on a periodic basis for recurring goods and services, (e.g., health-club memberships, book-of-the-month clubs).
- Reloadable Card – A reloadable card is a prepaid payment card where the consumer has the ability to add additional funds. A reloadable is not linked to a bank account.
- Remittance – This refers to the sum of money sent in outstanding payment for goods or services.
- Remittance Information – Information required by the biller to post customer bill payments effectively.
- Retailer – A retailer is an individual or business that sells goods or services to the public. More retailers today are offering their customers the convenience of an increasing array of payment options to complete purchases (e.g., cash, credit or debit transactions, store credit or gift cards, Point-of-Sale loans, alternative payment methods, digital wallets) across various channels (e.g., in-store purchases, eCommerce, mobile shopping).
- Retrieval Request – A retrieval request is when a credit-card issuer requests from a merchant additional information regarding a transaction involving one of that issuer’s cardholders. For instance, the issuer may request a transaction ticket or receipt when a charge is being disputed. A retrieval request is also known as a soft chargeback. Merchants are usually charged fees by their Managed Service Provider for retrieval requests, and may incur penalties for not responding in a timely manner.
- Routing Number – Series of numbers assigned to checking accounts, savings accounts, or other accounts that identify the financial institution associated with the specific account.
S
- Sales Draft – A sales draft is paper documentation of a transaction. A sales draft may also be called a sales slip, a charge slip, or a hard copy.
- SCA (Strong Customer Authentication) – Strong Customer Authentication (SCA) is a new requirement of the second Payment Services Directive (PSD2), which aims to add extra layers of security to electronic payments such as a password, one time passcode or fingerprint.
- Secure Payment Page – This refers to a web page that is secured with Secure Sockets Layer (SSL) 128-bit encryption and designed to accommodate the safe transfer of sensitive data, including credit card information, for the purpose of eCommerce transactions.
- Semi-Integrated Solution – Software that separates the merchant’s systems from the payment process, meaning that sensitive cardholder data never comes in contact with the merchant’s infrastructure, strengthening payment security and reducing the PCI scope on these systems.
- Settlement – As the sales transaction value moves from the merchant to the acquiring bank to the issuer, each party buys and sells the sales ticket. Settlement is what occurs when the acquiring bank and the issuer exchange data or funds during that function to complete the payment transaction.
- Settlement Error – This refers to a transaction status denoting an error that occurred during processing that is now preventing settlement of the transaction.
- Settlement Statement – A document issued to the merchant, indicating the sales and credit activity, billing information, discount fee, and chargebacks (if any) occurring during a particular time frame (one week, one month).
- Shopping Cart Software – Shopping cart software allows an online shopper to select items from an eCommerce store and place them in a virtual shopping basket or shopping cart, where those items can then be processed for sale. The shopping cart remembers which items are selected while the cardholder views other items within the virtual storefront, keeps a running total, and may calculate taxes and shipping. The items in the shopping cart are eventually ordered if the cardholder chooses.
- Smart Card – A smart card is a plastic card resembling a traditional credit or debit card that contains a computer microprocessor chip capable of storing significantly more information than a magnetic stripe.
- Submission – The process of sending batch deposits to Merchant Services for processing. This may be done electronically or by mail.
- Support Documentation – This refers to the forms necessary to support a chargeback-processing cycle, and any additional material to uphold a dispute. (Also see Chargebacks.)
T
- Third-Party Processing – Processing of transactions by service providers acting under contract to card issuers or acquirers.
- TID (Terminal Identification Number) – Unique numerical identifier that denotes the specific Point-of-Sale device or computer where a payment transaction initiated, used by merchants, card associations and others to source the origin of fraud transactions.
- Token/Security Token/Authorisation Token – A unique identifier created by an algorithmic process that replaces a credit card number and other sensitive data during the processing of a payment transaction to prevent credit card fraud. Tokens can be passed electronically without exposing actual customer account data.
- Tokenisation – Tokenisation is data-security technology that substitutes non-sensitive random numerical sequences for sensitive credit card data in the transaction process so it can be passed over the internet without exposing the data to cybercriminals.
- Trading As – This term refers to a secondary name (also known as an assumed name, fictitious business name, or trade name) that is legally associated with a company and can be used to open bank accounts, write checks, enter into contracts, and for other business purposes.
- Transaction – In payments, a transaction refers to an agreement between a buyer and seller to exchange an asset for payment for goods or services. A transaction involves the change in financial status between the two parties. One example of a transaction is the process that takes place when a consumer makes a purchase at a retail store using a credit card.
- Transaction Date – This refers to the actual date on which a transaction occurs that is used in recording and tracking transactions.
- Transaction Fees – Service costs charged to a merchant on a per-transaction basis.
- Trans ID (Transaction ID) – A unique identification code assigned to a specific credit or debit transaction, used for sorting transaction data.
- Transaction Status – Refers to the specific state in which a transaction currently is in in the processing cycle. Various transaction states include Authorised/ Pending Capture, Captured/Pending Settlement, Credit/ Pending Settlement, Declined, Voided, Credited, General Error, Communication Error, Settled Successfully, Under Review, and Review Failed.
- TSP (Token Service Provider) – The entity within the payments ecosystem responsible for issuing and managing tokens, including mapping customer card numbers to payment tokens.
U
- uCommerce – Short for Universal Commerce or Ubiquitous Commerce or Ultimate Commerce, uCommerce refers to commerce that is enabled between buyers and sellers anytime, anywhere, and on any type of device. With uCommerce, the mobile device is at the center of the user experience.
- Under Review – The payment processor practice of reviewing a potentially fraudulent or high-risk transaction prior to submission for processing, usually resulting in a minor delay.
- Unauthorised Transaction – During a purchase, the use of a credit or debit card, or via other method, to make a payment not authorised by that account holder, often the result of fraud or cybercrime. Note that this does not refer to an issuer declining authorisation for payment on a transaction.
V
- Voided – A credit or debit transaction cancelled by the seller, or merchant, after authorisation but prior to completion and settlement.
W
- Wallets – Also known as an eWallet, this refers to a software application usually used in conjunction with a mobile payment system to facilitate electronic payments using a computer or smart phone for online transactions as well as purchases at physical stores. Digital wallets need to be linked to user’s bank account.
X
- X Balance – This report is often referred to as an End of Shift Balance report. This is because it allows you to print a total of all transactions performed since the last Z Totals report.
Z
- Z Balance – This report show the total of all transactions processed through the terminal for each card company since the last Z-Totals were performed. Once Z-Totals have been completed the totals within the terminal are reset to zero once terminal returns to the ‘Ready Screen’.
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