Payments Glossary: Definitions & Terminology

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3D Secure

3D Secure (3DS) is an additional layer of security in online credit and debit card transactions. This protocol is designed to authenticate the cardholder's identity during the payment process, reducing the risk of unauthorized transactions and fraud liability for merchants and issuers. The process involves three key participants - a cardholder, a merchant, and an issuer. Once customers enter their card details, they are redirected to a page where they must enter a one-time code sent to their mobile or email.

A

Acceptance Rate

Acceptance Rate refers to the percentage of initiated payment transactions successfully authorized by a payment system or financial institution. It represents the ratio of approved transactions to the total number of attempted transactions over a period of time.

Acquirer or Acquiring Bank

Acquirer, also known as an Acquiring Bank or merchant bank, plays an important role in the payment processing ecosystem by facilitating merchants' ability to accept electronic payments. The acquiring bank processes credit or debit card payments on behalf of merchants by securely routing the card payment data onto the relevant card scheme for authorization by the issuer.

Acquirer Reference Number

Acquirer Reference Number (ARN) is a unique identifier assigned to a financial transaction by the acquiring bank or payment processor. It serves as a crucial reference in the payment ecosystem, facilitating communication and tracking throughout the transaction lifecycle.

Address Verification Service

Address Verification Service (AVS) is a fraud prevention measure employed in credit card transactions to verify the authenticity of the billing address provided by a cardholder. During an online purchase, the AVS compares the numerical portion of the billing address entered by the customer with the address on file at the issuing bank. The AVS system assigns a code indicating the level of match between the entered address and the one on record. Merchants can use this information to assess the risk of a fraudulent transaction.

Alternative Payment Method

Alternative Payment Methods (APM) refer to non-traditional forms of payment beyond credit and debit cards, providing customers with diverse options for completing transactions. These methods vary globally and include digital wallets, bank transfers, mobile payments, and others.

Anti-Money Laundering

Anti-Money Laundering (AML) refers to a set of regulations, policies, and procedures designed to detect and prevent the illegal practice of money laundering. Money laundering involves disguising the origins of illegally obtained funds, making them appear legitimate. Financial institutions, including banks and other entities involved in monetary transactions, implement AML measures to safeguard their systems and comply with legal requirements.

Authorization

Authorization request verifies sufficient funds and reserves them for settling the payment transaction. Authorization happens at the moment of the swipe, dip, or tap at the payment terminal. It is a crucial step that determines whether the cardholder has the necessary funds or credit to complete the transaction.

Authorization Hold

Authorization Hold is a temporary hold placed on a portion of a cardholder's credit or debit limit during a transaction's authorization process. It is used to verify that the account is valid and has sufficient funds to cover a pending transaction, without actually debiting the cardholder’s account upfront. This practice is common in industries such as hospitality, car rentals, and online retail where the final transaction amount may not be known immediately.

Automated Clearing House

Automated Clearing House (ACH) is an electronic funds transfer system widely used for financial transactions in the United States. Governed by the National Automated Clearing House Association (NACHA), the ACH network enables the secure and efficient transfer of funds between banks and financial institutions.

B

Bank Identification Number

Bank Identification Number (BIN) is the initial six digits of a credit or debit card that uniquely identifies the issuing financial institution. Acting as the card's first line of defense in transaction processing, the BIN allows merchants and financial institutions to swiftly identify the card's origin. Crucial in fraud prevention, the BIN aids in determining the card type, level of authorization required, and potential geographic restrictions.

Billing Address

Billing Address refers to the residential or business address associated with the payment method, typically a credit or debit card. It serves as a verification point during the transaction process, allowing merchants to authenticate the cardholder's identity.

Billing Descriptor

Billing Descriptor is the concise line of information appearing on a customer's financial statement, representing a specific transaction or purchase. Also known as a statement descriptor or billing statement, this descriptor provides clarity to the cardholder regarding the nature of the transaction. It typically includes details such as the merchant's name, a brief description of the product or service, and may include a contact number or website for customer inquiries.

Buy Now Pay Later

Buy Now Pay Later (BNPL) represents a financial service approach enabling consumers to make purchases and delay payments over a predetermined period. Frequently, these payments come with minimal or no interest rates and additional fees, although specific terms can differ among BNPL providers. In essence, consumers using BNPL have the flexibility to divide their purchases into equal payments, with the initial payment required at the time of checkout. Subsequent balances are then charged to their credit card, debit card, or bank account until the full cost of the purchased item is paid.

C

CAID

CAID (Card Acceptor ID) is a numeric string that identifies a specific store location or transaction point. CAID serves as a unique identifier for the origin of a payment transaction provided by the merchant's acquiring bank and its value typically ranges from 1 to 15 characters long. The primary purpose of a CAID is to enable acquiring banks and card brands to track and process transactions accurately and communicate with each other.

Card Network

Card Network, also known as a card scheme, is a financial infrastructure that facilitates the communication and transaction flow between various entities involved in electronic payment processing. Comprising major entities such as Visa, Mastercard, American Express, and Discover, card networks form the backbone of the global payment ecosystem. These networks establish and govern the rules and standards that govern transactions, ensuring seamless interoperability between merchants, acquiring banks, issuing banks, and payment processors.

Card Not Present

Card Not Present (CNP) transaction occurs when a payment is made without the physical presence of the payment card. Common in online and over-the-phone purchases, CNP transactions lack the traditional card swipe or chip insertion. Instead, cardholder details, including card number, expiration date, and CVV, are provided electronically. Even if a customer is physically present and provides their card to manually input the required information, the payment would still be categorized as card-not-present. Beyond just the physical presence of the credit card, a transaction is categorized as a Card-Present Transaction only when electronic data is captured at the point of sale.

Card Present

Card Present transaction occurs when a customer physically presents their payment card, such as a credit or debit card, to a merchant for an in-person purchase. This transaction type is prevalent in traditional retail environments where customers physically interact with merchants at the point of sale.

Cardholder

Cardholder is an individual to whom a payment card is issued, entitling them to use their card for financial transactions.

CESOP

Central Electronic System of Payment Information (CESOP) is an EU regulatory system that requires payment service providers to collect and report detailed data on cross-border payment transactions within the European Union.

Challenge Flow

Challenge Flow refers to a security protocol employed during online transactions to authenticate the cardholder's identity. When additional verification is required, often due to perceived risk factors, the transaction enters a challenge flow. In this process, the transaction is redirected to a secure page, requiring the cardholder to provide supplementary information, which can include biometrics, two-factor authentication, or other methods aligned with Strong Customer Authentication (SCA) factors.

Chargeback

Chargeback is a dispute resolution mechanism in the payment industry initiated by a cardholder, resulting in the reversal of a transaction. When a cardholder identifies an unauthorized or fraudulent transaction on their statement, they can request a chargeback from their issuing bank. The bank investigates the claim, and if deemed valid, the transaction amount is refunded to the cardholder, and the merchant incurs a chargeback fee.

Chargeback Notification

Chargeback Notifications are alerts sent to merchants by their acquiring banks or payment processors, informing them that a cardholder has disputed a transaction and initiated a chargeback process.

Chargeback Reason Code

Chargeback Reason Code is a numerical or alphanumeric code assigned to a chargeback to categorize the reason behind a disputed transaction. Each reason code corresponds to a specific type of dispute, such as fraud, non-receipt of goods or services, or dissatisfaction with the product quality.

Chargeback Representment

Chargeback Representment is a component of the payment dispute resolution process when merchants can respond to chargebacks initiated by cardholders. This process begins when a cardholder disputes a transaction with their issuing bank, usually citing reasons such as fraud or dissatisfaction. Representment is a vital phase in the chargeback process, offering merchants a strategic opportunity to challenge unwarranted financial losses, protect their reputation, and maintain the integrity of the payment ecosystem.

Chargeback Threshold

Chargeback Threshold represents the predefined limit of chargebacks a merchant can incur within a specific period before facing consequences such as fines, increased processing fees, or even account termination. Chargeback Threshold Ratio (CTR) is calculated by dividing a merchant's total number of first chargebacks for a particular month by the previous month's total number of sales transactions. The CTR provides acquirers and card networks insight into the percentage of a merchant's transactions that get disputed.

Combating Financing of Terrorism

Combating Financing of Terrorism (CFT) refers to the wide-ranging policies and procedures intended to stop the money flow toward terrorist operations through financial channels. As a crucial part of Anti-Money Laundering efforts, CFT relies on recognizing, tracking, and reducing the dangers linked to financial payments that could potentially provide resources for terrorism. By closely following money trails and transaction patterns, regulators, financial institutions, and law enforcement agencies work to detect and disrupt the financing of terrorist groups. This coordinated approach across systems aims to impede terrorism by identifying and closing down their funding avenues.

Contactless Payment

Contactless Payment allow consumers to complete transactions quickly and securely without inserting or swiping a card. The cardholder simply taps their contactless card or enabled device on the merchant's point-of-sale terminal to pay. This contactless tap transmits payment data using short-range wireless technologies like near-field communication (NFC).

Customer Initiated Transaction

Customer Initiated Transaction (CIT) refers to a financial transaction initiated by the account holder or customer, typically through electronic channels such as online banking, mobile applications, or interactive voice response systems. In CIT scenarios, customers take an active role in authorizing and executing transactions, including fund transfers, bill payments, and account inquiries. This contrasts with transactions initiated by merchants or service providers on behalf of the customer.

CVV Code

Card Verification Value (CVV) is a security feature on credit and debit cards, consisting of a three- or four-digit code that businesses use to authenticate a card along with the credit card number and expiration date when a purchase is made. Also known as Card Verification Code (CVC) or Card Security Code (CSC), the CVV is typically located on the back of the card for Visa, Mastercard, and Discover, and on the front for American Express. Some financial institutions have dynamic CVV codes that replace the static number with one that changes periodically and can be accessed through an app rather than via a physical card, but those are not yet common.

D

DBA

Doing Business As (DBA) is a designation used by businesses to operate under a name different from their legal business name. This alternative name, also known as a trade name or fictitious business name, allows businesses to brand themselves uniquely without undergoing a formal name change.

Decline Code

Decline Code is a numerical or alphanumeric identifier returned by a card issuer during a payment transaction to indicate the unsuccessful authorization of a transaction. Each decline code corresponds to a specific reason for the rejection, providing insight into the cause of the declined transaction. Common reasons for decline codes include insufficient funds, expired cards, suspicious activity, or reaching credit limits.

Digital Wallet

Digital Wallet is an application that securely stores users' payment information, such as credit card details, enabling them to make electronic transactions conveniently. Digital wallets can take various forms, including mobile apps, software programs, or cloud-based solutions. They streamline the payment process by allowing customers to link their payment cards or bank accounts to the digital wallet, eliminating the need to input card details for each transaction.

Direct Debit

Direct Debit is a financial transaction mechanism where a payer authorizes a third party, such as a service provider or merchant, to automatically withdraw funds from their bank account. This authorization, typically established through a formal agreement, empowers the payee to collect payments on agreed-upon dates.

DSRP

Digital Secure Remote Payment (DSRP) is a tokenization-based security standard designed to enhance the security of remote payments. It involves the use of a unique digital token rather than actual card details during the transaction process. DSRP aims to protect sensitive card information by substituting it with a token that is useless to cybercriminals even if intercepted.

Dynamic Currency Conversion

Dynamic Currency Conversion (DCC) is a financial service that allows cardholders to make international purchases in their home currency while using their credit or debit cards abroad. When a cardholder makes a transaction in a foreign currency, the merchant offers the option to convert the purchase amount into the cardholder's native currency at the point of sale. This conversion is based on real-time exchange rates, providing transparency to the cardholder regarding the transaction cost in familiar terms.

E

E-commerce

E-commerce, short for Electronic Commerce, refers to the buying and selling of goods and services conducted over electronic networks, primarily the internet. It encompasses a wide range of online transactions, including online retail, electronic payments, and digital services.

ECI

Electronic Commerce Indicator (ECI) is a code that signifies the type of electronic commerce transaction during payment processing. It aids in distinguishing between different transaction categories, particularly in card-not-present transactions where the cardholder and card are not physically present.

EMV Co

EMV Co, short for Europay, Mastercard, and Visa Company, is a global organization that manages and advances secure payment card transaction standards. Established by major card networks, EMV Co is responsible for developing and maintaining the EMV specifications, which outline the technical standards for chip-based payment cards and devices.

F

Foreign Exchange Rate

Foreign Exchange Rate, also known as Forex, represents the value of one currency in terms of another and dictates the rate at which currencies can be exchanged. These rates fluctuate based on market dynamics, geopolitical events, and economic indicators.

Fraud

Fraud or Fraudulent Transaction constitutes any unauthorized or deceptive transaction wherein an individual's or organization's payment or identity information is illicitly acquired and misused for unauthorized transactions or purchases. This malicious activity is orchestrated by individuals or groups seeking financial gain through unauthorized access to sensitive information.

Fraud Notification

Fraud Notification is an alert initiated by an issuing bank to merchants when a transaction raises suspicion of potential fraudulent activity. It serves as an early warning, indicating that the cardholder's account or card details may have been compromised or used illegitimately. Fraud Notification is an early intervention mechanism, prompting businesses to investigate, communicate, and take preventative actions against potential fraudulent transactions.

Fraud Scoring

Fraud Scoring is a sophisticated risk management technique employed by financial institutions and payment processors to assess the likelihood of a transaction being fraudulent. This predictive modeling system uses a variety of factors, including transaction history, customer behavior, and anomaly detection algorithms, to assign a numerical score to each transaction. The score reflects the perceived risk level, enabling quick and accurate identification of potentially fraudulent activities.

G

Gateway

Gateway, also known as a Payment Gateway, serves as an intermediary that facilitates the flow of information and transactions between different systems. It acts as a bridge between merchants, payment processors, and financial institutions, enabling the authorization and settlement of electronic payments.

I

IBAN

International Bank Account Number (IBAN) is a standardized alphanumeric code used internationally to uniquely identify individual bank accounts. Developed to facilitate efficient and accurate cross-border transactions, IBANs consist of a country code, two check digits, and a Basic Bank Account Number (BBAN). The BBAN further includes a bank code and the customer's account number.

Interchange

Interchange facilitates the acceptance of credit card payments for businesses by establishing connections with credit card networks and issuing banks. When a customer opts to pay with their payment card for a product or service, the merchant incurs an interchange fee from their card network. This fee serves as compensation for the card network, the issuing bank, and any other entities engaged in the transaction. The purpose of the interchange fee is to cover the costs associated with processing and settling the payment.

Interchange ++

Interchange ++ is a pricing model in payment processing where merchants are charged based on the actual interchange fees set by card networks plus an additional markup or percentage fee. Interchange fees are fees paid by the merchant's acquiring bank to the cardholder's issuing bank for each transaction.

Issuer or Issuing Bank

Issuer, also known as Issuing Bank, refers to a financial institution or bank that issues payment cards, such as credit cards or debit cards, to individuals or businesses. The issuer plays a central role in the payment process by providing cardholders with a means of accessing funds and making purchases. Issuers are responsible for managing cardholder accounts, setting credit limits, and ensuring the security of transactions.

K

Know Your Business

Know Your Business (KYB) is a due diligence process implemented by financial institutions and service providers to verify and authenticate the identity and legitimacy of corporate entities or businesses. KYB involves collecting and verifying information about a business, including its registration details, ownership structure, financial standing, and business activities.

Know Your Customer

Know Your Customer (KYC) is a regulatory requirement and process employed by financial institutions and businesses to verify and authenticate the identity of their customers. The primary objective of KYC is to prevent financial crimes such as money laundering, fraud, and terrorist financing by ensuring that businesses have a thorough understanding of their customers.

L

Liability Shift

Liability Shift refers to the transfer of responsibility for fraudulent transactions from the merchant to the card issuer or payment processor, typically occurring in the context of electronic payments. A liability shift may take place when one party adopts enhanced security measures, such as the EMV implementation (Europay, Mastercard, Visa) chip technology.

Local Acquiring

Local Acquiring refers to the process of a merchant or business establishing a relationship with an acquiring bank or payment service provider within a specific geographical region or country to accept electronic card payments. In the context of global commerce, businesses often engage with local acquiring services to optimize transaction processing, currency conversion, and compliance with regional regulations.

Low-Value Transaction

Low-Value Transactions refer to purchases that involve a relatively small dollar amount. Under PSD2 regulations, low-value transactions may qualify for an exemption from Strong Customer Authentication (SCA) requirements during checkout. The maximum threshold to be considered low-value is established by the card issuer or payment service provider, typically around €30 for online transactions in Europe.

Luhn Algorithm

Luhn Algorithm, also known as the modulus 10 or mod 10 algorithm, is a mathematical formula employed to validate the integrity of identification numbers, such as payment card numbers or social security numbers. Named after its creator Hans Peter Luhn, the algorithm ensures that the digits in a numerical sequence adhere to a specific pattern to prevent errors or fraud.

M

Mail Order/Telephone Order

Mail Order/Telephone Order (MOTO) refers to a method of accepting payments where transactions are initiated by customers via mail or telephone communication. In MOTO transactions, customers provide their payment details, such as credit card information, to merchants who then manually process the payment.

Mastercard Digital Enablement Service

Mastercard Digital Enablement Service (MDES) is a technology platform developed by Mastercard to facilitate the secure and seamless integration of digital payment solutions into various connected devices. MDES enables the tokenization of payment credentials, replacing sensitive information such as card numbers with unique digital tokens. These tokens are used for transaction authorization, enhancing the security of digital payments.

Merchant Account

Merchant Account is a specialized financial account that allows a business or merchant to accept and process electronic payments, particularly credit and debit card transactions. Establishing a merchant account is essential for businesses to integrate with payment processors and acquire the necessary infrastructure for electronic transactions. It differs from a bank account, a merchant account stores and validates the customers’ card details and available funds. Once the funds have cleared, they are sent to the merchant's business bank account.

Merchant Advice Code

Merchant Advice Codes (MAC) are alphanumeric codes employed by Mastercard to convey to merchants the reason for declining a Mastercard payment transaction. These codes are included in authorization request responses, providing merchants with insights into the cardholder's account status and the specific reasons behind the approval or decline of a recurring payment.

Merchant Category Code

Merchant Category Code (MCC) is a four-digit code assigned to businesses and merchants by payment card networks, such as Visa and Mastercard, to classify the type of goods or services they offer. MCCs categorize merchants into specific industry segments, providing insights into their primary business activities. These codes assist payment processors and financial institutions in managing risk, setting interchange fees, and implementing targeted marketing strategies. For example, an MCC of 5812 may represent a restaurant, while 7379 may indicate a computer programming service.

Merchant Discount Rate

Merchant Discount Rate (MDR), also known as Transaction Discount Rate (TDR), refers to transaction processing fees charged to merchants and businesses for debit or credit card transactions. Expressed as a percentage of purchase volume, the MDR covers costs like interchange fees, assessment charges from networks like Visa or Mastercard, and a margin for the acquirer.

Merchant Initiated Transaction

Merchant Initiated Transaction (MIT) is a type of electronic payment where the merchant initiates the transaction on behalf of the customer, often in a recurring or subscription-based model. Unlike traditional customer-initiated transactions, such as online purchases, MITs occur without the direct involvement of the customer during each transaction. Examples include subscription renewals, installment payments, or scheduled billing cycles.

Merchant of Record

Merchant of Record (MoR) is the entity designated as the legal seller of goods or services in an electronic transaction, taking responsibility for the fulfillment of orders and compliance with relevant regulations. MoR is the party recognized as the seller of record for a specific transaction, even if other entities may be involved in the transaction process, such as payment processors. From the moment a customer inputs their payment details to the point when the funds are deposited into the business's bank account, the MoR guarantees precise and secure transactions. Additionally, it manages the processes related to refunds and chargebacks.

MID

Merchant Identification Number (MID) is a unique numerical identifier assigned to each merchant with a merchant account to distinguish them within the electronic payment system. MIDs play a crucial role in transaction tracking, reporting, and settlement processes. Acquiring banks or payment service providers assign MIDs to merchants upon the establishment of a merchant account. This identifier is embedded in transaction data, facilitating the identification of the merchant involved in each electronic payment transaction.

N

NFC Payment

NFC Payment leverages near-field communication technology to facilitate contactless transactions by wirelessly transmitting data between devices. This technology enables seamless and secure transactions through mobile payment options like Apple Pay, Samsung Pay, and Google Pay, as well as contactless cards. During NFC payments, compatible mobile devices, functioning as digital wallets or contactless cards communicate with payment terminals, securely transmitting encrypted payment information.

O

Omnichannel Payment

Omnichannel Payment solution refers to a comprehensive payment infrastructure that seamlessly integrates and supports multiple channels through which customers can make payments. Omnichannel payments involve creating a unified payment infrastructure that empowers customers to conduct payments effortlessly across all channels and touchpoints when they make payments for products or services to a business. This interconnected approach blends various payment modes like bank transfers, credit or debit cards, digital wallets, and more into one seamless experience.

P

Payment Form

Payment Form is a user interface element designed to collect and submit payment information from customers during online transactions. Typically embedded on e-commerce websites or mobile applications, payment forms include fields for entering credit card details, billing addresses, and other relevant information. The design of payment forms is crucial for providing a seamless and secure checkout experience, reducing friction for customers.

Payment Orchestration

Payment Orchestration refers to the strategic management and optimization of various payment methods, providers, and channels within a unified framework. It involves dynamically selecting the most suitable payment methods and providers based on factors such as transaction type, customer preferences, and regional considerations.

Payment Page

Payment Page is a web page or user interface element specifically designed to collect payment information from customers during online payments. Often hosted by a payment service provider or integrated into e-commerce platforms, payment pages offer a secure and standardized environment for customers to input their credit card details, billing addresses, and other relevant information. The design of payment pages focuses on simplicity, security, and ease of use, ensuring a frictionless checkout experience.

Payment Processor

Payment Processor is a financial entity or service provider that facilitates the electronic transfer of funds between customers and merchants during transactions. Operating as an intermediary in the payment ecosystem, payment processors handle the technical aspects of payment transactions, including authorization, capture, and settlement.

Payment Service Provider

Payment Service Provider (PSP) is a third-party company facilitating secure electronic payment transactions between merchants and consumers. PSPs act as intermediaries, offering a seamless and efficient payment processing solution for businesses that accept online, mobile, or in-store payments. Aside from allowing businesses to accept card and bank-based payments, payment service providers also offer a range of other services that can improve the payment experience for customers and merchants alike.

Payments Facilitator

Payments Facilitator serves as a streamlined solution for merchants seeking a quick and easy path to accepting card-based payments. In contrast to traditional payment processors, payment facilitators often leverage existing acquiring bank relationships, which allows them to offer a simplified onboarding process and ready-made solutions.

Payout

Payout is a broad term generally understood to be a large sum of money paid out in one go to an individual or business entity. For instance, within the online business and payment ecosystem, payouts also refer to the process by which a payment service provider transfers funds from customer transactions to a merchant's designated bank account. This financial process guarantees that merchants obtain their earnings promptly and systematically.

PCI Compliance

PCI Compliance, short for Payment Card Industry Data Security Standard (PCI DSS) Compliance, is a set of security standards established to ensure the secure handling of sensitive information during electronic payment transactions. Developed by the Payment Card Industry Security Standards Council (PCI SSC), PCI DSS Compliance encompasses a comprehensive set of requirements for businesses that handle payment card data.

Point-Of-Sale

Point-Of-Sale (POS) payments refer to transactions where customers make payments for goods or services at the physical location where the sale occurs. The point of sale is typically a retail counter, checkout terminal, or any location equipped with a payment terminal. POS payments involve the use of various payment methods, including credit and debit cards, mobile wallets, and contactless payments.

PSD2

Payment Services Directive 2 (PSD2) is a European Union regulatory framework designed to enhance competition, security, and innovation in the European payments market. Implemented to update and expand upon the original Payment Services Directive, PSD2 introduces key provisions such as Strong Customer Authentication (SCA), which requires additional authentication steps for certain electronic transactions.

Push-to-Card

Push-to-Card is a payment method that involves transferring funds directly to an individual's or a recipient's payment card, typically a prepaid card or debit card. This method allows funds to be "pushed" to the cardholder's account without the need for a traditional bank account. Push-to-Card transactions provide a convenient and efficient way to disburse funds, make payments, or distribute funds in real time.

R

Reconciliation

Reconciliation refers to the process of comparing and aligning financial records to ensure consistency and accuracy between different stages of the payment lifecycle. This process involves matching transaction data from various sources, such as payment processors, banks, and merchant records, to verify that all transactions are accounted for and accurately reflected in financial statements.

Recurring Payment

Recurring Payment, also known as the subscription-based model, refers to a payment arrangement where a customer authorizes the automatic and periodic withdrawal of funds from their account to fulfill ongoing financial obligations. Commonly used for subscription services, memberships, and installment payments, recurring payments eliminate the need for customers to initiate individual transactions manually. Customers provide authorization initially, allowing merchants or service providers to automatically charge the agreed-upon amount at scheduled intervals.

Refund

Refund is a financial transaction where a previously processed payment is reversed, and funds are returned to the customer. Typically initiated by a merchant, a refund can be triggered for various reasons, such as product returns, cancellations, or resolution of disputes.

Retrieval Reference Number

Retrieval Reference Number (RRN) is a unique identifier assigned to a specific transaction to facilitate the retrieval of transaction details. RRN helps trace and locate information related to a particular transaction when requested by the cardholder's issuing bank. The RRN is crucial in the retrieval request process initiated by issuing banks to gather additional details about a transaction that may be under dispute or requires clarification.

Retrieval Request

Retrieval Request (RR) is a formal inquiry initiated by a cardholder's issuing bank to obtain additional information about a specific transaction. Issuing banks use retrieval requests to gather details from the merchant or acquiring bank when a cardholder raises concerns or disputes a transaction.

S

SAFE

System to Avoid Fraud Effectively (SAFE) is a Mastercard initiative designed to provide merchants with comprehensive information about cardholder fraud claims. While it does not directly prevent chargebacks or fraudulent transactions, SAFE serves as a valuable resource for merchants to better understand the nature and circumstances surrounding fraud claims made by their customers.

SCA

Strong Customer Authentication (SCA) is a security protocol mandated by regulatory authorities, such as the European Union's Revised Payment Services Directive (PSD2), to enhance the authentication and protection of electronic payment transactions.

Scheme Transaction ID

Scheme Transaction ID is a unique identifier assigned to a financial transaction within a payment card network, such as Visa or Mastercard. It serves as a reference key that uniquely identifies and tracks a specific transaction throughout the payment processing ecosystem.

Security Level Indicator

Security Level Indicator (SLI) is a numeric value embedded in payment card transactions that indicates the level of security applied to the transaction. It is part of the information exchanged during the authorization process between the cardholder's issuing bank and the merchant's acquiring bank.

Settlement

Settlement refers to the final stage of the payment process, where the acquiring bank retrieves funds from the cardholder's issuing bank, and funds get deposited into the merchant's business account, deducting applicable processing fees. The settlement process ensures that the financial aspects of the transaction are finalized.

T

TC40

TC40 is the name of the report that issuing banks send to Visa to report fraudulent transactions as part of its Risk Identification Service. Issuing banks utilize TC40 data to assess the risk associated with a merchant in terms of fraud and chargebacks. Given the direct correlation between fraud occurrences and the frequency of chargebacks, any data that aids in identifying fraud issues can consequently assist in managing chargebacks.

Tokenization

Tokenization is a security measure applied to electronic payments to protect sensitive information, such as credit card numbers, by replacing it with a unique identifier called a token. This process involves converting the original payment data into a non-sensitive and randomly generated token while preserving its format and length.

Transaction Fee

Transaction Fee is a fee charged on a financial transaction, usually by a payment processor, acquiring bank, or service provider, to cover the costs of facilitating the transaction. This fee can cover pay for payment processing infrastructure, network fees, and other operational expenses.

Transaction Risk Analysis Exemption

Transaction Risk Analysis Exemption (TRA) is a provision within the regulatory framework, particularly associated with the European Union's Revised Payment Services Directive (PSD2). This exemption allows for a more streamlined authentication process during electronic payment transactions, specifically when the transaction is deemed low risk.

U

UBO

Ultimate Beneficial Owner (UBO) refers to the natural person who ultimately owns, controls, or benefits from a legal entity, such as a company or trust. Identifying the UBO is essential for anti-money laundering (AML) and Know Your Customer (KYC) compliance, as it helps uncover the individuals with significant influence or ownership in an organization.

V

Visa Token Service

Visa Token Service (VTS) is a security technology developed by Visa to enhance the security of digital transactions. VTS replaces sensitive payment card information, such as the card number and expiration date, with a unique digital identifier called a token. This tokenization process adds a layer of security by ensuring that the actual card details are not transmitted or stored during digital transactions.

X

XID

XID, short for Transaction ID, is a unique identifier associated with a specific transaction in the 3D Secure (3DS) authentication process. In the context of online credit and debit card transactions, 3DS adds an additional layer of security by authenticating the cardholder.

Z

Zero-Value Authorization

Zero-Value Authorization, also known as zero-amount authorization or pre-authorization, is a practice in electronic payments where a nominal or zero-value transaction is temporarily processed to verify the validity of a payment card before the actual purchase or service usage.