Even finance experts can find the industry jargon confusing sometimes. Here, we demystify payments parlance to help you tell your API from your AVS.
One of the later stages in chargebacks. The cardholder, merchant and bank are unable to resolve the dispute and so the card scheme is asked to intervene and make a final decision.
Financial institutions that accept payment card transactions on behalf of a merchant. Merchants pay the acquirer a percentage of the purchase cost.
A financial institution that accepts transactions from a merchant before submitting to the relevant card schemes, such as Visa and Mastercard. They operate on their own platform, connecting directly with merchants and the acquiring bank to facilitate payments via a gateway.
A fraud prevention service that verifies that the address entered by the customer is the same as the one associated with the cardholder’s account.
Sometimes called an agent bank, agency banks provide services on behalf of other banks, groups of banks, businesses, or individuals. They can offer a wide range of services for businesses looking to expand internationally.
A software interface which allows two or more applications to communicate with one another. The application then gathers and interprets relevant data in a more useful and developer-friendly way.
The process of ensuring the cardholder is who they say they are. These identity checks can include PIN, CVV2 and CAVV or biometric authentication.
Approval from a card issuer, usually through a payment processor, that confirms the customer has sufficient funds to cover the cost of a transaction.
Also known as an ‘auth code’, this is a number that confirms that your credit or debit card payment has been approved.
An electronic reply to an authorisation request.
A set of additional checks to verify the identity of the person who is using a payment card. In some instances, the cardholder will be required to verify their identity in two different ways.
The funds available in your account for immediate withdrawal.
The first four to six numbers on a payment card, which uniquely identifies the financial institution issuing the card. In some regions, such as Japan, an Issuer Identification Number (IIN) is used instead, which is the first eight digits of the long account number.
One of the methods used to calculate a cardholder’s finance charge. The credit card company starts with the balance from the end of the last billing cycle, subtracts any payments made, and adds any credit posted to the account during the current cycle.
Also known as the transaction currency, this is the currency against which a country generally quotes its exchange rates.
The currency the cardholder chooses to be billed in.
A person’s unique physical characteristics that are used in automated recognition. They can include using a fingerprint to unlock your mobile phone, or using your voice to access your bank account.
A financial scheme where customers can buy something and get the items immediately, but their payments are split and paid back in the future. Unlike some other financial products, customers are usually charged 0% interest on their purchases.
Enabling cardholders to link their existing payment cards to digital coupons, loyalty programmes or mobile wallets.
The payment system that enables the user to pay with their card. The most used are Visa, Mastercard, American Express, China Union Pay, Discover and JCB. Every issuer needs to have a card scheme for their payment product to work.
A charge that is returned to a payment card after a customer successfully disputes an item on their account transactions report.
All activities from the time a commitment is made for a payment until it’s settled.
Allows consumers to pre-load funds into a spending account that’s linked to a payment device (such as a wristband or card).
Payments which cross geographical borders and involve currency conversion.
A digital currency where transactions are verified and records maintained on a decentralised system using cryptography. This currency can be stored on a device’s digital wallet.
An authentication system backed by major card schemes, designed to protect both customers and retailers during online payment transactions.
Digital payment formats which allow customers to store their crypto, credit and debit cards on a mobile phone or wearable device. Wallets can also link to bank accounts. Examples of digital wallets (also known as wallet providers and E-wallets) include Apple Pay, Samsung Pay and Google Pay.
If customers don’t agree with a transaction – for example, if they feel they have been charged an incorrect amount or if they think it’s a fraudulent payment – they can raise a dispute. The customer’s first point of contact is the card issuer, who will log this in Visa or Mastercard’s dispute management system.
The technology which replaces a payment card's static CVV (the three or four-digit card verification value) with an electronic display that generates a new CVV number at regular intervals. This can be customised by the card issuer.
A service that allows the cardholder to see foreign payment card transactions in their home currency at the point of sale. This can be offered by a merchant or an acquirer that enables a cardholder.
See ‘digital wallet’.
A real-time, transactional data feed that enables you to implement bespoke decision-making logic and your own authorisation rules. This also helps in enabling ‘in time funding’ decisions.
A code that identifies the organisation forwarding a request or advice message in an interchange system.
In this instance, fraud is when someone gains money or benefits from being dishonest or deceptive about payments.
Allows a mobile application to create a new virtual card, adding it to a digital wallet to make funds instantly available.
The percentage fee charged by the cardholder's issuing bank to the merchant service, whenever the merchant service uses their credit or debit card.
The vital connector between an issuer and the major card schemes, such as Visa and Mastercard. This function can cover card issuance, cardholder transaction authorisation and settlement between the different payment stakeholders.
Also known as an issuer, an issuing bank issues branded payment to customers. The debit, credit and prepaid cards they provide are part of Visa and/or Mastercard’s card networks.
A standard protocol driven by regulators and market participants that ensures firms know detailed information about their clients' risk tolerance, investment knowledge, and financial position. KYC initiatives aim to protect both clients and firms from fraud.
Helps transform a connected device into a commerce device that can make and receive secure, contactless and in-app payments.
Any company or individual selling goods or services.
A four-digit number used to classify a business by the type of goods or services it provides.
A prepaid card designed to be used for payments anywhere in the world.
Combination of Interchange Fee and Scheme Fee. This is usually borne by the merchant and gets divided across network participants as per regulatory/commercial arrangements.
Enables users to grant third parties permission to access their financial information. Companies that create application programming interfaces (APIs) can provide innovative financial services digitally, without the need for a physical presence.
Any payment methods that enable payment devices (Oyster cards, mobile phones, wearable payment technology, etc.) to link directly to a credit or debit card.
A company that manages the payment cards of any transaction process, acting as a kind of mediator between the bank and the merchant.
A merchant service provider which can provide payment processing services to their own merchant clients. PayFacs include PayPal, eBay, Stripe, etc.
A set of regulatory security standards for all organisations that process data from major card networks such as Visa, Mastercard, American Express, Discover, etc. The standard was established to tighten security around cardholder data and reduce the risk of fraud.
The front-end technology that reads payment cards and sends customer information to the merchant acquiring bank. Payment gateways process and authorise transactions between customers, merchants and acquirer banks.
The funds that are transferred to a merchant from an acquirer for the sale amount, once a payment transaction has been accepted.
Uses a website or app to transfer funds from one person to another over the internet or a mobile network.
The time and place where a payment transaction takes place.
The 16 to 19-digit number on the front of a payment card.
The payment has been financed and taken by the merchant bank.
A retailer-branded card that’s intended for use at a specific retailer, usually providing loyalty rewards and perks to their customers.
A program manager maintains relationships with multiple partners in the payment process chain and establishes pooled account(/s) with banks.
A data feed that is usually processed and visible immediately (in real time).
The ability to approve or decline a payment card transaction in seconds.
Used to apply fees based on rules or actions set for the payment card.
Making sure that all transactions are accounted for: that payments in and out of the account match up, balance, and are accurate.
Using an e-money licence to issue cards under a card scheme licence.
When a transaction is approved and the merchant and cardholder exchange funds.
Every debit and credit card belongs to a scheme, which sets out rules and regulations for the use of its cards. The scheme also provides the network which carries card transactions to the next link in the payments chain.
Whenever there’s a transaction, there’s a fee, which gets paid to the scheme.
A unique number used to identify the source of a transaction, assigned to a merchant account by the processor.
A temporary 16-digit, computer-generated card number that comes with an expiration date and security code tied to your account. It’s used to settle a specific vendor payment transaction issued for a specific amount.
This service from Visa switches out sensitive account information during digital or mobile payments with a one-off digital identifier ‘token’, for an added layer of security.
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