Part 1: Card payments
What is an acquirer?
An acquirer is an acquiring bank or an acquirer processor or both.
What is an acquirer processor?
An acquirer processor, also known as frontend processor, is a payment processor that supports the acquiring bank in the four-party model. → issuer processor
What is an acquiring bank?
An acquiring bank is a bank that “acquires” card payments from issuing banks for depositing in a merchant account. → acquirer, acquirer processor
What is payment authorization?
Payment authorization is the first stage before clearing and settlement when an issuing bank authorizes a card transaction. → payment processor, stand-in processing (STIP)
What is a backend processor?
Backend processor is an alternative term for issuer processor.
What is a card not present (CnP) transaction?
A card not present (CnP) transaction is a card payment, either via a digital card, virtual card or simply online, that does not involve the presentation of a physical card to a merchant.
What is card on file?
Card on file is a less specific term for credential on file (CoF).
What is card provisioning?
Card provisioning is the inclusion of a payment card in a digital wallet as a digital card. → push provisioning
What is a card rail?
A card rail is a payment rail for payment cards that underlies a card scheme.
What is a card scheme?
A card scheme is a payment scheme specifically for card payments.
What is cardholder preferred currency (CPC)?
Cardholder preferred currency (CPC) is an alternative term for dynamic currency conversion.
What is Click to Pay?
Click to Pay is an open loop digital wallet, based on secure remote commerce (SRC) specifications, that allows one-click card not present (CnP) transactions on e-commerce sites.
What is a contactless card?
A contactless card is a payment card equipped for contactless payment.
What is a corporate card?
A corporate card, also known as a travel & expense or travel & entertainment (T&E) card, is a credit card for employees with liability either with the corporation or the employee or both. → procurement card (P-card)
What is credential on file (CoF)?
Credential on file (CoF), sometimes more loosely known as card on file in reference to payment card details, is customer payment credentials stored online by a merchant.
What is a digital card?
A digital card is a digital representation of an existing physical card, but it is also sometimes used to refer to a virtual card with no physical counterpart.
What is dynamic currency conversion (DCC)?
Dynamic currency conversion (DCC), also known as cardholder preferred currency (CPC), is conversion at the point of sale (POS) of a foreign currency transaction into the currency associated with the payment card along with any forex (FX) fees.
What are EMV specifications?
EMV specifications are payment card standards, originally established by EMVCo to replace magnetic strips with chips, that have since expanded to include other technologies such as a contactless payment using near-field communication (NFC), secure remote commerce (SRC), payment tokenization and EMV 3-D secure (EMV 3DS).
What is EMVCo?
EMVCo is a payment network body, originally founded by Europay, Mastercard and Visa, that oversees the EMV specifications for card payments.
What is the four-corners model?
The four-corners model is an alternative term for four-party model.
What is the four-party model?
The four-party model is the four main parties in a credit card payment: cardholder, merchant, issuing bank, acquiring bank. → three-party model
What is a frontend processor?
Frontend processor is an alternative term for acquirer processor.
What is in-app provisioning?
In-app provisioning is an alternative term for push provisioning.
What is an independent sales organization (ISO) in payments?
An independent sales organization (ISO) is a sales organization that relies on its acquirer and payment gateway relationships to refer a merchant to a payment service provider (PSP) for help with payment acceptance.
What is an independent software vendor (ISV) in payments?
An independent software vendor (ISV) is a vendor that enables a merchant to accept payments within its existing software infrastructure.
What is an interchange fee?
An interchange fee is a fee charged for a card payment by an issuer to an acquirer who then deducts the fee from what it deposits in a merchant account as a cost to the merchant. → processing fee, scheme fee, merchant discount rate (MDR)
What is an issuer?
An issuer is an issuing bank or a non-bank able to issue cards through a BIN sponsorship.
What is an issuing bank?
An issuing bank is a bank that issues payment scheme-branded payment cards under license and then submits payment information to an acquiring bank. → issuer, issuer processor
What is an issuer processor?
An issuer processor, also known as a backend processor, is a payment processor that supports the issuing bank in the four-party model. → acquirer processor
What is a merchant account?
A merchant account is a business bank account, and associated merchant ID, provided by an acquiring bank.
What is a merchant acquirer?
Merchant acquirer is an alternative term for acquiring bank.
What is a merchant category code (MCC)?
A merchant category code (MCC) is a classification of retailers by type for card payments, particularly as it pertains to interchange fee and rewards program considerations.
What is a merchant discount rate (MDR)?
A merchant discount rate (MDR) is a percentage of the value of each card transaction that is paid by the merchant to the acquirer to cover the processing fee, scheme fee and interchange fee.
What is a merchant of record (MoR)?
A merchant of record (MoR) is the entity responsible for handling card payments made at a merchant, which may be the merchant itself or may be an external payment service provider (PSP).
What is a payment facilitator (PayFac)?
A payment facilitator (PayFac) is a payment service provider (PSP) that gathers multiple merchants under one merchant ID (MID) and sometimes also acts as a processor.
What is payment processing?
Payment processing is the authorization, clearing and settlement of card payments by a payment processor liaising with an issuer or an acquirer on apayment network. → stand-in processing (STIP)
What is a payment processor?
A payment processor is a payment service provider (PSP) that conducts payment processing either as an issuer processor or an acquirer processor.
What is a processing fee?
A processing fee is either a fee charged by an acquirer to a merchant for its services, or it is a fee charged by an issuer processor to an issuer for its services. → interchange fee, scheme fee, merchant discount rate (MDR)
What is a procurement card (P-card)?
A procurement card (P-card), also known as a purchasing card, is a card for low-value business purchases that links with other P-cards to a master account that must be paid in full by a business at the end of each billing cycle. → corporate card
What is a purchasing card (P-card)?
Purchasing card is an alternative term for procurement card (P-card).
What is push provisioning?
Push provisioning, also known as in-app provisioning, is a form of card provisioning where the cardholder can instantly “push” their card into a digital wallet as a digital card.
What is a push-to-card payment?
A push-to-card payment is a near real-time push payment onto a debit or credit card.
What is revolving credit?
Revolving credit is owed balance on a credit card that transfers over to another billing cycle after a minimum payment has been made and continues to be charged interest by the issuer.
What is a scheme fee?
A scheme fee is a fee charged to issuers and acquirers by a payment network for membership of its card scheme. → interchange fee, processing fee, merchant discount rate (MDR)
What is secure remote commerce (SRC)?
Secure remote commerce (SRC) is the EMV specifications behind Click to Pay that incorporate payment tokenization and EMV 3-D secure (3DS).
What is stand-in processing (STIP)?
Stand-in processing (STIP) is a payment network conducting payment authorization on behalf of an issuing bank or issuer processor when its authorization systems are temporarily unavailable.
What is straight-through processing (STP)?
Straight-through processing (STP) is transaction processing that eliminates the need for a seller to manually input transaction information, such as the automatic generation on behalf of an acquirer of a payment authorization request to an issuer.
What is the three-party model?
The three-party model is an alternative to the four-party model with the role of issuing bank and acquiring bank combined.
What is a travel & entertainment card?
Travel & entertainment card is an alternative term for travel & expense (T&E) card.
What is a travel & expense (T&E) card?
Travel & expense (T&E) card is an alternative term for corporate card.
What is a virtual card?
A virtual card is a digital card with no physical representation.
What is a virtual card number (VCN)?
A virtual card number (VCN) is the primary account number (PAN) associated with a virtual card.
Part 2: General terms
What is an account to account (A2A) payment?
An account to account (A2A) payment is a payment made directly from one account to another.
What is an ACH transfer?
An ACH transfer is a transfer made via an automated clearing house (ACH) for net settlement.
What is an alternative payment method (APM)?
An alternative payment method (APM) is a way of paying that does not involve cash or a physical card, although a card payment may be involved on the backend.
What is an automated clearing house (ACH)?
An automated clearing house (ACH) is a provider of clearing services for the batch processing of account to account (A2A) payments for net settlement. → ACH transfer
What batch processing?
Batch processing, also known as bulk processing, is the processing of multiple payments in one go.
What is bulk processing?
Bulk processing is an alternative term for batch processing.
What is clearing?
Clearing is the recording and reconciliation of a transaction between banks in preparation for settlement. → automated clearing house (ACH), authorization, payment processor
What is a clearing and settlement mechanism (CSM)?
A clearing and settlement mechanism (CSM) is a provider of clearing and settlement services, which is broadly used as an umbrella term in the EU for automated clearing house (ACH) and TARGET Instant Payment Settlement (TIPS).
What are closed-loop payments?
Closed-loop payments are payments accepted only at designated partners. → open-loop payments
What is a contactless payment?
Contactless payment is broadly a catch-all term for any payment involving tapping or holding a contactless card or digital wallet near a point-of-sale (POS) device, but it is sometimes used specifically for contactless card payments. → tap to pay, QR code payment
What is a credit transfer?
A credit transfer is any account to account (A2A) payment that is also a push payment. → electronic funds transfer (EFT), wire transfer, direct debit
What is a direct debit?
A direct debit is any account to account (A2A) payment that is also a pull payment, and it is typically used for recurring payments.
What is an electronic funds transfer (EFT)?
An electronic funds transfer (EFT) is an account to account (A2A) payment that may be a push payment or a pull payment. → credit transfer, direct debit
What is an embedded payment?
An embedded payment is a form of embedded finance that allows a merchant or other non-financial institution to integrate payments into its environment so that a customer can complete a purchase without any interruption to their customer journey.
What is a faster payment?
Faster payment is an alternative term for real-time payment and is sometimes specifically used in reference to the UK’s Faster Payment System. → instant payment
What is an instant payment?
Instant payment is an alternative term for real-time payment and is commonly associated with the EU because of its TARGET Instant Payment Settlement (TIPS) infrastructure. → faster payment
What are multi-rail payments?
Multi-rail payments are multiple payment rail options provided simultaneously in one place.
What is net settlement?
Net settlement is the settlement of grouped transactions after batch processing. → real-time gross settlement (RTGS)
What are open-loop payments?
Open-loop payments are payments made anywhere that accepts a payment network. → closed-loop payments
What is a payment gateway?
A payment gateway is an online version of a point of sale (POS) device.
What is a payment initiation service provider (PISP)?
A payment initiation service provider (PISP) is a payment service provider (PSP) that makes payments on behalf of customers via open banking. → account information service provider (AISP)
What is a payment network?
A payment network, also known as a payment scheme, is a payment rail infrastructure and the provider of that infrastructure.
What is a payment rail?
A payment rail is the infrastructure provided by a payment network that facilitates transactions, such as card or account to account (A2A) payments.
What is a payment service provider (PSP)?
A payment service provider (PSP) is any enabler of non-cash payments that is typically on the acceptance side but also makes payments when an issuer processor or payment initiation service provider (PISP) or account servicing payment service provider (ASPSP).
What is a payment scheme?
Payment scheme is an alternative term for payment network.
What is a payment switch?
A payment switch is the router of a transaction along a payment rail to the appropriate parties in the manner of a railroad switch. → switched transaction
What is payment tokenization?
Payment tokenization is data tokenization applied to a primary account number (PAN).
What is a peer to peer (P2P) payment?
A peer to peer (P2P) payment is a payment from an individual to another individual.
What is a peer to merchant (P2M) payment?
A peer to merchant (P2M) payment is a payment from a customer to a merchant.
What is a point of sale (POS) device?
A point of sale (POS) device is technology to accept payments at the point of sale as the physical counterpart to an online payment gateway.
What is a pull payment?
A pull payment is a payment initiated by the payee, such as a direct debit. → push payment
What is a push payment?
A push payment is a payment initiated by the payer, such as a credit transfer. → pull payment, push-to-card
What is real-time gross settlement (RTGS)?
Real-time gross settlement (RTGS) is the immediate settlement of a single, usually high-value, payment. → net settlement
What is a real-time payment (RTP)?
A real-time payment (RTP), also known as a faster payment or instant payment, is an irrevocable account to account (A2A) payment that is completed immediately at any time of day→ real-time gross settlement (RTGS)
What is request to pay (R2P)?
Request to pay (R2P), sometimes abbreviated to RTP as in the UK’s Request to Pay and the EU’s SEPA Request-To-Pay (SRTP), is a messaging system over a real-time payment rail that allows a payee to request payment from a payer with pre-confirmed payment information and irrespective of banking app.
What is a QR code payment?
A QR-code payment is a contactless payment that allows consumers to make payments by scanning a QR code with their mobile device.
What is a SEPA credit transfer (SCT)?
A SEPA credit transfer (SCT) is a credit transfer within the single Euro payments area (SEPA). → SEPA instant credit transfer (SCT Inst)
What is a SEPA instant credit transfer (SCT Inst)?
A SEPA instant credit transfer (SCT Inst) is a SEPA credit transfer (SCT) as an instant payment. → TARGET Instant Payment Settlement (TIPS)
What is settlement?
Settlement is the transfer of funds between banks after clearing. → authorization, payment processor
What is the single Euro payments area (SEPA)?
The single Euro payments area (SEPA) is a unified approach to payments across Eurozone countries that consists of four payment schemes across Eurozone banks: SEPA credit transfer (SCT), SEPA instant credit transfer (SCT Inst), and SDD core and SDD B2B as two direct debit schemes for general and business use.
What is softPOS?
SoftPOS, or software point-of-sale, is software that converts a mobile device into a point of sale (POS) device without additional hardware.
What is a SWIFT transfer?
A SWIFT transfer is a cross-border payment using the financial messaging service of the Society of Worldwide Interbank Financial Telecommunications, which conforms to ISO 20022 since 2023.
What is a switched transaction?
A switched transaction is a transaction appropriately routed by a payment switch.
What is T2?
T2 is an ISO 20022-compliant replacement of TARGET2. → TARGET Instant Payment Settlement (TIPS)
What is tap on phone?
Tap on phone is the use of softPOS to enable contactless payment acceptance on a phone. → tap to pay
What is tap to pay?
Tap to pay is a contactless payment that uses near-field communication (NFC) to allow consumers to make payments by tapping their payment cards or digital wallets on a point of sale (POS)device. → tap on phone
What is TARGET2?
TARGET2 is a single centralized replacement of the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) system, which linked local European real-time gross settlement (RTGS) systems, that has in turn been replaced by T2.
What is TARGET Instant Payment Settlement (TIPS)?
TARGET Instant Payment Settlement (TIPS) is a centralized clearing and settlement mechanism (CSM) by the European Central Bank to reduce the risk associated with the instantaneity and irrevocability of a SEPA instant credit transfer (SCT Inst). → T2
What is a variable recurring payment (VRP)?
A variable recurring payment (VRP) is a payment made on behalf of a customer by a payment initiation service provider (PISP) whenever predefined conditions are met.
What is a wire transfer?
A wire transfer is a credit transfer between banks, often via correspondent bank relationships, using a financial messaging system. → ISO 20022, SWIFT
