Glossary

This glossary contains general terms used in the payment industry and should help you demystify the world of payments.

1

What Are Recurring Payments?

What are recurring payments? Recurring payments are what we call automatic, ongoing transactions that happen at regular intervals between a customer and a service provider. These typically involve a set amount of money being debited from the customer’s account on a scheduled basis,often monthly or annually. This system is commonly employed for subscription-based services, like Streaming platforms Gym memberships Software subscriptions Recurring payments offer convenience to consumers by automating regular

a

What is Acquiring Banks?
A financial institution that accepts credit and debit card payments on behalf of merchants and deposits them into merchant accounts is known as an acquiring bank. Another way to refer to an acquiring bank is as an acquirer. Issuing banks, or the companies that give their clients credit and debit cards, are typically compared with acquiring banks. Alternative payment methods A different way to pay for a purchase than using a credit or debit card is called an alternative payment option. Usually, the phrase is used to describe more contemporary payment options that not all retailers accept. Alternative payment options include Klarna, Apple Pay, PayPal, and cryptocurrencies.

b

What is my Bank Identification Number (BIN)?

What is a bank identification number (BIN)? A Bank Identification Number (BIN) is the initial set of six digits on your credit card or debit card. These digits aren’t random; they identify the bank or financial institution that issued the card. Let’s say your card starts with “123456”—that’s your BIN. Another important identifier is the Bank Identification Code (BIC), also known as a SWIFT code. This code helps identify specific

c

What is a Cardholder?

Who is a cardholder? A cardholder is an individual or entity that possesses a card, typically referring to a payment card such as a credit card, debit card, or prepaid card. The cardholder is the person or organization to whom the card is issued by a financial institution or card issuer. They are responsible for: Using the card for transactions Managing the associated account Complying with the terms and conditions

What is a Chargeback Fee?

What is a chargeback fee? A chargeback fee is a fee imposed by a credit card issuer or payment processor when a customer disputes a charge on their credit card statement. Chargebacks are typically initiated by customers who believe that a charge on their credit card is unauthorized, fraudulent, or represents a failed transaction. When a chargeback occurs, the merchant is required to provide evidence to dispute the claim. If

What is a Card Issuer?

What is a card issuer? A card issuer is an organization, often a bank or a credit card company, that issues payment cards to individuals or businesses. These payment cards can take various forms, such as: Credit cards Debit cards Prepaid cards The card issuer provides these cards to customers as a means of facilitating electronic transactions. What do card issuers do? The card issuer is responsible for manufacturing and

What is a Card Verification Code (CVC)?

What is Card Verification Code (CVC)? The Card Verification Code (CVC), also known as the Card Security Code (CSC), is a three-digit (sometimes four-digit) number found on credit and debit cards. This code, usually featured on the back of the card near the signature panel, serves as an additional layer of security in online and telephone transactions. Its primary purpose is to verify that the person making the purchase is

d

What is a Debit Network?
Debit card transactions, online bill payment, and ATM cash withdrawals are just a few of the financial transactions that can be made over a debit network. Merchants must provide a minimum of two unaffiliated networks for them to select from when deciding which debit network to use for their transactions. The three main debit networks are Star, Mastercard, and Visa.

e

f

g

h

What is a High-Risk Merchant?
A processor or bank may designate a merchant as high-risk if they believe they pose a higher risk of fraud and chargebacks. This might be the result of the merchant’s involvement in high-risk industries, sale of goods or services subject to a high rate of chargebacks, or propensity for fraudulent transactions. High-risk retailers frequently cannot open a merchant account with many providers and must pay greater payment processing fees.

i

What is an Issuing Bank?

What is an issuing bank? An issuing bank is a financial institution that gives out financial tools like credit cards, debit cards, or bank guarantees. When a person applies for a credit card, this institution evaluates the applicant’s creditworthiness and, if approved, issues the credit card with a predetermined credit limit. The cardholder can then use the credit card to make purchases, and the issuing bank becomes responsible for: Managing

j

k

l

m

What is a Moto Payment?

What is a MOTO (Mail Order Telephone Order) payment? Mail Order Telephone Order (MOTO) payments are a way of buying goods or services without being physically present – a common type of card-not-present (CNP) transaction. Whether ordering through the mail, over the phone, or via fax, the customer provides their credit card information to remotely complete the purchase. The merchant typically processes the transaction manually by entering the credit card

What is a Mobile Wallet?

What is a Mobile Wallet? A mobile wallet is a digital app that lets you store and manage your card and bank account details securely using your mobile device. Its main purpose is to make it easier and quicker for you to shop online and offline. The Importance of Mobile Wallets These days, mobile wallets have become more popular than traditional payment methods in many countries. They bring convenience to

n

What is NFC?
NFC is the newer version of chip technology which is used for cards, in order to facilitate easy payments via POS or tablets. These days it can also be used in other facets of life, another example could be, that it could be used to replace business cards and in some way help the environment moving forward.

o

p

What is a Payment Tokenization?

What is payment tokenization? Payment tokenization is a security measure that helps to protect sensitive financial information in electronic payments. When you add your card to a digital wallet or a payment app, the actual card information is transformed into a unique token – a randomly generated alphanumeric string specific to a particular transaction, device, or user. This secret code represents your card but is meaningless to prying eyes. How

What is PSD2 (Payment Services Directive)?

What does PSD2 mean? PSD2 stands for Payment Services Directive 2 and is a regulatory framework in the European Union (EU) that aims to enhance and modernize payment services. It came into effect on January 13, 2018, replacing the original Payment Services Directive (PSD) that was introduced in 2007. PSD2 introduces several key changes and initiatives to promote innovation, competition, and security in the financial sector within the EU, with

q

r

What Are Recurring Payments?

What are recurring payments? Recurring payments are what we call automatic, ongoing transactions that happen at regular intervals between a customer and a service provider. These typically involve a set amount of money being debited from the customer’s account on a scheduled basis,often monthly or annually. This system is commonly employed for subscription-based services, like Streaming platforms Gym memberships Software subscriptions Recurring payments offer convenience to consumers by automating regular

What is a Recurring Charge?

What is considered a recurring charge? A “recurring charge” is a payment you make regularly, such as every month or year. It’s the money you spend on things that you use or enjoy regularly like: Streaming services Software subscriptions Gym memberships Utility bills These payments happen automatically, usually taken directly from your bank account or charged to your credit card without you having to do it manually each time. Types

s

t

What is Tokinization?
By replacing sensitive data with a distinct token that can be used to refer to the right credentials without actually holding them, tokenization is a technique for protecting payment credentials and other sensitive data. Without ever giving the merchant direct access to payment details, the company offering the tokenization solution generates and validates these tokens to allow payments.
What is a Transaction Fee?
This is a fee which occurs on every purchase confirmation sent from merchant’s end to the Acquiring Bank. The fee will be functional for approvals, as well as declines, as each transaction will have to be shipped from the merchant, through the spectrum of involved partners to ensure the status of this transaction.

u

v

What is a Virtual Card?
A virtual card is a non-psychical card which can be used in the same manner as a “normal” card. Which means you can connect it to your phone wallets and use with NFC technology. This is becoming more and more common in the online space, as it can in many ways be easier for the consumer.

w

x

y

z