Payment Terms Glossary
Looking for meanings and definitions of payment terms? Browse through the payment terms by their Initials from the table of contents and read what they mean.
Table of Contents
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3D SECURE PROCESSING
The 3D Secure authentication protocol prevents fraud on online card transactions by adding another step to payment processing.
3D Secure (3DS) makes online shopping safer. Transactions occur with two-step authentication, so no payment will process until you authorise it.
A
ACCOUNT NUMBER
Account number identifies your specific current account or savings account, and it gets generally paired with the sort code that identifies your bank rather than your identity.
Account numbers consist of eight digits. If you are filling out online forms for a bank in the UK that offers shorter account numbers, you can enter ‘0’ at the beginning so that it becomes eight digits.
ACCOUNT INFORMATION SERVICE PROVIDER (AISP)
An Account Information Service Provider (AISP) lets you see all your payment account information from different bank accounts in one place online or via a mobile app and can analyse your spending.
ACQUIRING BANK (or Merchant Acquirer)
An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant.
Acquirers connect merchants and card-issuing banks within an association to accept credit card payments.
ACQUISITION
Acquiring means gaining new customers, that is, issuers for cardholders and acquirers for merchants. It includes marketing, processing applications, and negotiating contracts with customers.
AMEX
The American Express Company is a multinational corporation that specialises in payment card services and is one of the leading global card schemes.
APACS
The Association for Payment Clearing Services is a non-statutory association of large banks and building societies. The forum enables banks and building societies to discuss non-competitive issues regarding money transmission.
In addition, APACS manages the major payment clearing systems in the UK.
ATV
ATV is an acronym for Average Transaction Value and is a relatively straightforward calculation. The ATV of your business is the average amount that a consumer spends with your business in a single transaction.
It plays a significant role in calculating your business ROI.
AUTHORISATION
The authorisation is a method by which a terminal performs an automated credit or debit card transaction for a preset amount. A card issuer authorises, refers to, or declines the transaction.
Authorisation confirms that credit is available on the customer’s card and that the card has not been reported stolen or lost.
AUTHORISATION CALL
Following a referral from a Merchant, the terminal initiates a telephone call to obtain authorisation for the transaction.
AUTHORISATION CODE
An authorisation code is often a series of letters, numbers, or a blend of both that confirms a person’s identification, authorises a transaction, or grants access to a secure area.
Additionally, the authorisation code gets printed on the receipt, confirming the merchant that the transaction was successfully approved.
Account Switch
Account switch means transferring an account from one PSP to another PSP, which may involve the complete transfer or partial transfer arrangements for payment.
AVS
Address verification service as part of the merchant’s request for authorisation in a non-face-to-face credit card transaction.
Major credit card processors provide an address verification service to enable merchants to authenticate ownership of a credit or debit card used by a customer.
APDU
An APDU is defined by ISO 7816.
A smart card reader and the card used communicates through an Application Protocol Data Unit.
APDUs are of two types: command APDUs and response APDUs.
APPLICATION BLOCK
An application block is a set of instructions sent by the card issuer instructing the card to shut down the selected application and refrains the access.
B
BACS
BACS Payment Schemes Limited (BACS), previously known as Bankers’ Automated Clearing System, is an electronic bank-to-bank transfer of funds categorised into two types, Direct Debit and Direct Credit.
- Direct Debit is a transaction where Party A authorises Party B to withdraw money from the bank account of Party B. Here the payee has complete control of the payment.
- Direct Credit is a transaction where Party A deposits money in Party B’s account. Here the payer has complete control over the payment.
BANKING DAY
Except for bank holidays, banking days are Monday through Friday. Most bank processes, such as clearing a bank payment, only occur these days, although some branches may be open on Saturdays and Sundays.
British Bankers Association – BBA
The British Bankers’ Association (BBA) was a trade association of firms in the UK’s banking and financial services sectors. It merged with UK Finance on 1st July 2017.
It has a broad range of members in banking and financial services.
The association also gave its views on the legislative and regulatory system in the UK.
Bulk Change Process
The process of updating Direct Debit mandates by bulk is called bulk change.
In a bulk change, merchant names, references, and SUNs on mandates can be changed; as long as the customers are aware of the change, the new SUN owner agrees, and so does their sponsor bank.
BANKING WINDOW
The acquirer allocates a time for merchants to reconcile their End of Day with the Acquirer system. After the cutover time, subsequent transactions get logged on the next trading day.
BLUETOOTH TERMINALS
One can use the Chip and PIN Terminal from a Bluetooth hub; it is portable but not completely mobile.
Bluetooth Terminal can serve both as a server to connect to client devices and receive data from them, as well as a client to connect to other devices.
BACK-END SYSTEMS
Any system that supports back-office applications is known as a back-end system. These systems are used in corporate management, incorporating user input and obtaining input from other systems to produce responsive outcomes.
BANK IDENTIFICATION NUMBER (BIN)
Bank Identification Numbers, or BINs, identify financial institutions that issue credit cards.
Financial institutions can use the BIN system to identify fraudulent or stolen payment cards, preventing identity theft.
BANKCARD
A bank card is typically a plastic card issued by a bank to its clients. It performs one or more of several services that give the client access to the bank account.
A bank card will usually have the client’s name, the issuer’s name, and a unique card number printed on it.
C
CARDHOLDER
An individual who owns a card, such as a credit card or debit card, is known as a cardholder.
CARDHOLDER TRANSACTION
The process by which a cardholder obtains cash from an ATM or financial institution and uses a card to purchase goods or services from a merchant.
CARD ISSUER
Card Issuer refers to the financial institution or company which issues the Card to the Cardholder.
CARD SCHEME
Card schemes are payment networks linked to payment cards, such as debit or credit cards, of which a bank or any other eligible financial institution can become a member.
The member of the scheme gets the possibility to issue cards or acquire merchants operating on the network of that card scheme.
CARD SCHEME RULES
Transactions via branded cards follow the Card Scheme’s terms and conditions. Merchants, acquirers, and card issuers must comply with the rules.
CHARGEBACK
The chargeback is a refund returned to a payment card after a customer successfully disputes a transaction or statement entry. Chargebacks may occur on the debit or on credit cards.
CHARGE CARD
A charge card is a credit card that enables the cardholder to make purchases paid for by the card issuer.
By agreement with the card issuer, the cardholder must repay the debt in full by the due date, usually every month, or be subject to late fees and restrictions on card usage.
CHIP & PIN
Face-to-face transactions securely using Chip & PIN machines, which allow customers to pay using their credit or debit cards and entering PINs.
CHIP & PIN CARDS
The chip-and-PIN card type requires the cardholder to enter their personal identification number (PIN) while purchasing.
CLI
Call Line Identity or Telephone number.
CNP
Customer Not Present — a transaction where the cardholder is not physically present. The merchant does not see the card and carries out the transaction via mail/telephone (MOTO) or online.
In online transactions, the cardholder enters their card details.
MOTO involves the cardholder verbally or in writing providing the merchant with the card details, which the merchant then punches in on a virtual terminal or mobile app.
CORPORATE CARD
A corporate card, aka commercial card, is given to businesses to help with corporate expenses, notably travel and entertainment (T&E).
Corporate cards have greater transfer charges than personal credit cards; hence the MSC charged to the merchants will be higher for these card types.
CREDIT CARD
A credit card is a payment card issued to users to enable the cardholder to pay a merchant for goods and services based on the cardholder’s accrued debt, pledge to the card issuer to pay them for the amounts plus the other agreed charges.
CSC
Card Security codes, aka CVV, are the last three digits on the signature strip on the back of a credit card.
CUSTOMER PRESENT TRANSACTION
In a customer present or face-to-face transaction, the cardholder is present, and the transaction is processed using the Point of Sale Terminal.
Contactless
In terms of merchant services, contactless cards are those types of credit or debit cards that can make payments or issue refunds by wirelessly contacting an electronic card reader.
With Apple Pay and Samsung Pay, payments can go through using contactless NFC technology.
All NFC enabled payments are referred to as contactless payments.
The updated limit for contactless payments is 100 pounds.
D
DEBIT CARD
A debit card is a payment card used in place of cash to make purchases.
The money for the purchase must be in the cardholder’s bank account at the time of purchase and is immediately transferred directly from that account to the merchant’s account to pay for the purchase.
DYNAMIC CURRENCY CONVERSION
Dynamic currency conversion is a process where the amount of a credit card transaction gets converted at the point of sale, ATM or over the Internet to the currency of the card’s country of issue.
A commission is charged to the Cardholder, which the Merchant and the Acquirer usually share. DCC can be a lucrative revenue stream for businesses that regularly sell products/services to overseas cardholders.
E
E-COMMERCE
E-commerce is the process of electronically buying or selling products on online services or over the Internet.
EFT
The electronic fund’s transfer is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff.
ETU
An electronic top-up solution enables mobile operators to provide prepaid mobile top-ups anytime, anywhere, through online payments or retail channels.
Electronic Point of Sale (EPOS)
An EPOS system refers to a digital or electronic point of sale system that allows transactions to take place outside the actual point of sale.
Electronic point-of-sale transactions happen via specialised terminals that combine hardware such as cash draws, card payment machines, and barcode readers.
F
FALL-BACK
When a chip card machine is unable to read a card because of technical issues either with the terminal or the card, the fallback occurs.
If the chip is unable to be read, the technology falls back to a magnetic stripe transaction.
FALL-BACK VOUCHER
A multi-part document is used to record transaction details if the transaction isn’t completed electronically on a merchant terminal.
A card imprinter captures the card information.
FIXED-LINE TERMINAL
A fixed-Line terminal is a chip and pin terminal that is only suitable for a stationary environment.
FLOOR LIMIT
The floor Limit is a transaction threshold that merchants and acquirers agree to request authorisation.
FULFILMENT PERIOD
It is the time period between charging a card and receiving the goods or services. Due to more extended chargeback periods, merchants are at higher risk of chargebacks due to non-fulfilment; the acquirer will view the merchant as riskier.
Acquirers will often require riskier merchants to provide a Reserve Account (cash collateral) as a form of risk mitigation.
Airlines, hotels, and furniture retailers usually experience the most prolonged fulfilment periods.
G
GRATUITY
A gratuity is a sum of money traditionally offered by a client to certain service sector personnel in addition to the basic price of the service.
I
INTERCHANGE
The cost charged by the card issuer to the acquirer for each transaction performed is known as interchange.
The charge for debit cards is a fixed cost per transaction, but the order for credit cards is a fixed percentage of the transaction value.
ISO
Individuals or businesses who serve as third parties on behalf of a bank, financial service provider, or payment processor are independent sales organisations.
The ISO will not be a card scheme member or influence the technical infrastructure utilised for card authorisation, processing, or settlement.
Acquirers and processors authorise ISOs to acquire merchants on their behalf.
ISSUING BANK or ISSUER
An issuing bank is a bank that offers card association branded payment cards directly to consumers, such as credit cards, debit cards, contactless devices such as key fobs as well as prepaid cards.
IVC
Businesses use an identity verification service to ensure that users or customers provide information associated with a person’s identity.
IVR
Interactive voice response is a technology that allows humans to interact with a computer-operated phone system through voice and DTMF tones input via a keypad.
J
JCB
Japan Credit Bureau is a credit card company based in Tokyo, Japan. It is accepted at JCB merchants and has strategic alliances with Discover Network merchants in the United States, UnionPay merchants in China, American Express merchants in Canada, and RuPay merchants in India.
K
KNOW YOUR CUSTOMER (OR “KYC”)
The know your customer or know your client guidelines in financial services require that professionals make an effort 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.
M
MAESTRO
Maestro is a brand of debit cards and prepaid cards owned by Mastercard, first introduced in 1991.
MASTERCARD
Mastercard Inc. is an American multinational financial services corporation headquartered in the Mastercard International Global Headquarters in Purchase, New York.
MCC
Merchant category codes (MCCs) are four-digit numbers that identify the primary activities of merchants. Credit card issuers use merchant category codes to determine the type of business a merchant owns.
MERCHANT
A person or company involved in wholesale trade, especially one dealing with foreign countries or supplying goods to a particular trade, is a merchant.
MERCHANT ACCOUNT
A merchant account is a bank account that allows businesses to accept payments in multiple ways.
A merchant account gets established under an agreement between an acceptor and a merchant acquiring bank to settle payment card transactions.
MERCHANT ADVANCE
In a merchant advance, businesses can borrow capital and repay it through a percentage of their future debit and credit card sales.
MID
Merchant ID is a unique identification number allotted to a merchant by an acquirer.
MOBILE TERMINALS
A merchant can use a Chip and PIN terminal anywhere using GPRS/GSM mobile data networks.
MOTO
Mail Order Telephone Order is part of the ‘Cardholder Not Present Transactions’ where a merchant takes the customer’s card details over the telephone or in writing to complete the transaction.
MSC
Merchant service charges are fees that merchants pay to the acquiring bank. A wide range of factors influences the fee — regulated and unregulated debit, card type, channel, the location of the holder, etcetera.
MULTI-CURRENCY PROCESSING AND SETTLEMENT
With the Acquirer’s Service, the merchant will process Transactions in currencies other than their domestic currency.
O
ONLINE AUTHORISATION
OLA is a method for verifying an online transaction using a payment card (for example, a credit card). An online verification takes place in real-time. In most cases, a transaction will not get approved if the account is overdrawn.
ONLINE TERMINAL
The terminal generates an online authorisation request for each transaction and captures the acquiring bank’s information during the online authorisation process.
P
PAN KEY
A service enables a merchant’s terminal to accept card information by keying it in the terminal instead of swiping a card.
PAYMENT CARD
Payment cards are part of a payment system issued by financial institutions, such as a bank, to the cardholder to access the funds in the designated bank accounts or through a credit account and make payments by electronic acc transfer and access automated teller machines.
PAYMENT PAGE
The payment page is a secure website with HTTPS:// in the address, where confidential credit card information gets added to complete the payment.
PAYMENT PROVIDER
A payment service provider (PSP) is a third-party company that assists businesses to accept a wide range of online payment methods, such as online banking, credit cards, debit cards, e-wallets, cash cards, and more.
They ensure customer transactions make it safely and securely from point A to point B.
PAYMENT INITIATION SERVICE PROVIDER (PISP)
PISPs are third-Party payment service providers initiating a payment on behalf of the Payment Service User. PSIP allows you to pay companies directly from your bank account rather than to use your debit or credit card through a third party such as Visa or MasterCard.
PCI DSS
The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organisations that handle branded credit cards from the major card schemes.
The PCI Standard is mandatory for all the card brands and administered by the Payment Card Industry Security Standards Council.
Point Of Sale (POS)
A point of sale is a physical location where a customer pays for goods or services bought — and covers everything from cash payments to card transactions.
PDQ
The PDQ or to Process Data Quickly is a device that interfaces with payment cards to process electronic funds transfers. Terminals typically have a secure keypad, a screen, a means of reading payment cards, and a network connection for access to the payment network.
Learn more about PDQ machines on our card terminal page.
PIN
A personal Identification Number is a set of characters, usually a four-digit sequence, to authenticate cash withdrawals from a payment card through terminals such as an ATM or Chip and Pin card machines, etcetera.
POLLING
It is the process of collecting data in batches rather than in real-time and storing it on a terminal by a central computer or polling service.
POT
A predominantly offline terminal is a POS where a merchant point-of-sale for electronic authorisations aim above a pre-agreed floor limit.
PROCESSOR
A processor is a technology platform business that one uses to process and settle card transactions. Banks used to own their platforms, but many have now outsourced to the tech payment businesses.
PSTN
The public switched telephone network (PSTN) provides infrastructure and services for public telecommunication. The PSTN is the aggregate of the world’s circuit-switched telephone networks operated by national, regional, or local telephony operators.
PWCB
A Purchase with Cash Back is an optional transaction type available within the Maestro and Visa debit card schemes that allow a merchant, with the approval of its acquirer, to let a customer draw cash up to an agreed limit during a standard Sale.
Payment Gateway
The payment gateway sends financial information from the issuing bank to the acquiring bank to authorise credit and debit card payments. This merchant service is provided to retailers, online stores and brick and mortar stores to process online transactions.
You can learn more on our payment gateway page.
PAYMENT RECONCILIATION
Payment reconciliation verifies that all accounts are accurate, consistent, and up-to-date. Organisations can reconcile their accounts every day, every week, or month.
R
RECURRING TRANSACTION
In recurring payments, customers authorise the merchant to withdraw funds from their accounts at regular intervals for goods and services offered to them on an ongoing basis., for example, a Netflix subscription.
REFUND
A refund occurs when a merchant returns a customer’s money due to a service issue, a defective product, etcetera.
RESERVE
A reserve is like a savings account – a collection of money for future use. Reserve funds may come from operations surpluses or scheduled well-planned budget transfers.
S
SETTLEMENT
A settlement means transferring funds from the acquirer to the merchant post a transaction.
A settlement gets initiated by the Card Issuer, passes to the Card Scheme, then to the Acquirer, and finally reaches the merchant.
SET-UP FEE
For setting up the card processing arrangements, some acquirers, processors and ISO providers charge a one-time fee to the merchant. Not all providers will charge a set-up fee.
STATEMENT
A statement is an invoice provided by the acquirer to the merchant detailing the transactions accepted by the merchant that month and the fees charged by the acquirer.
T
TCP
TCP is a connection-oriented protocol that connects the client and server before sending the data. The server must be listening for connection requests from clients before a connection gets established.
TERMINATED MERCHANT ACCOUNT
An acquiring bank terminates a merchant account when its contractual agreement with the merchant ends. One of the reasons could be that the acquiring bank is constantly evaluating its risk appetite.
TRAVEL & ENTERTAINMENT CARDS
Travel and entertainment cards are charge cards used to pay for lodging, travel, and other business expenses.
TURNOVER
Turnover is the gross value of a transaction. Annual or monthly turnover is the total value of transactions processed by a merchant in a year or month.
U
UTR
A unique Tax Reference Number (UTR) is a piece of confidential information. The Unique Taxpayer Reference numbers (UTRs) are unique 10-digit codes that identify you or your business.
HMRC uses UTR to deal with your taxes.
V
VISA
Visa Inc. is an American multinational financial services corporation that facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit cards and prepaid cards.
VOICE AUTHORISATION
Invoice authorisation is the process of making a regular telephone call between a merchant and the authorisation centre.
VOICE REFERRAL
Essentially, a Voice Referral indicates that an authorisation attempt failed because the card could not be approved online by the property processor or cardholder’s bank.
The property processor or cardholder’s bank requests a manual approval.
