Payment Industry Glossary
This page seeks to explain key terms that are widely used in the Payment Industry. Whilst there is an emphasis on Unattended Payment Terminals, some of the terms are used exclusively in other ways and are included to provide a holistic, summary view of the industry.
Term | Description |
|---|---|
Acquirer | A financial institution or bank that processes credit or debit card payments on behalf of a merchant. The acquirer works with the merchant to accept payments and ensures that the funds are transferred from the cardholder's bank. The acquirer is also responsible for managing risk and regulatory compliance. |
Authorization | The process by which a transaction is approved or declined by the card issuer or payment processor. This usually involves verifying the cardholder’s credentials and ensuring sufficient funds or credit are available. |
Card Scheme | A network, such as Visa or Mastercard, that facilitates card transactions between cardholders, merchants, and card issuers. Card schemes provide the framework for processing card payments and near-global interoperabilty. |
Cardholder | The individual who owns a payment card (credit, debit, or prepaid) issued by a financial institution. The cardholder uses the card to make purchases or withdraw cash. |
Card-Not-Present Transaction | A transaction where the cardholder and card are not physically present at the point of sale. Common examples include online e-commerce, mail order, and telephone order transactions. The processing fees for CNP are generally higher as they are considered marginally higher risk. |
Card-Present Transaction | A transaction where the cardholder physically presents the card to the merchant at the point of sale, usually swiping, dipping, or tapping the card on a terminal, and verifying their identify with the use of a PIN when required. Payter transactions are all Card-Present. |
Completion / Commit | The method by which Payter confirms that a previously Authorized amount should be settled. |
Contactless Payment | A payment method that allows the cardholder to make transactions by tapping their card or other capable device near a point-of-sale terminal equipped with Near Field Communication (NFC) technology. |
EMV | A global standard for credit and debit payment cards based on chip card technology. EMV cards are more secure than traditional magnetic stripe cards, reducing fraud in card-present transactions. |
Incremental Authorization | An Authorization that attempts increase an existing PreAuthorization by the chosen amount. |
Issuer | The financial institution or bank that provides payment cards (credit, debit, etc.) to consumers and is responsible for the cardholder’s account. |
Merchant | A business or individual that accepts payment cards as a form of payment for goods or services. Merchants work with acquirers to process card transactions. |
Merchant Category Code | A four-digit code used to classify the type of business a merchant operates. MCCs are used by card networks and issuers to determine interchange fees and other transaction terms. |
MOTO | A type of transaction where payment is made via mail or telephone, typically without the physical presence of the card. MOTO transactions are often used in remote sales environments. |
Payment Gateway | A service that securely transmits payment information from the merchant’s point-of-sale system or payment processor to the acquirer. |
Payment Processor | A Software as a Service (Saas) company who process payment data on behalf of others. Examples include: 3rd party applications on a payment terminal, a payment aggregator, or ecommerce solution. |
Payment Terminal | Hardware designed and certified to capture card data in a compliant way so that it may be processed by an Acquirer. |
PreAuthorization | An Authorization request that is not a final amount, but subject to change either up or down. If not completed, pre-authorized funds are released back to the cardholder after a variable period of time (typically 3 to 30 days depending on the issuer). |
SCA | A requirement under PSD2 that mandates multi-factor authentication for electronic payments. SCA aims to reduce fraud and improve the security of online transactions. |
Settlement | The process of transferring funds between the acquirer and issuer after a transaction has been cleared. This is when the merchant actually receives the funds for the transaction and typically occurs 1 to 3 days after the original authorisation and completion takes place. |
Tokenization | The process of replacing sensitive payment data (like a credit card number) with a unique identifier or token. This enhances security by reducing the risk of sensitive data being exposed. |