Being a very technical industry, the Online Payment sector can sometimes seem to speak its own language. This glossary will help you start to understand what you hear and read about the industry.

  • Acquirer (Acquiring Bank/Merchant Bank): A financial institution that provides accounts for merchants. Your merchant account at the acquiring bank receives funds when a transaction is complete. Acquirers are so named because they obtain (acquire) a merchant's sales transactions and credit the order value to the merchant's account.
  • API (Application Programming Interface): APIs provide users with pre-existing interfaces to program against which allows rapid and standardised application development.
  • Approval: A positive reply from a transaction authorisation request.
  • Arbitration: Process used by Acquirers to resolve a chargeback related dispute with an Issuer.
  • Authorisation: The approval or guarantee of funds given by the Card Issuer to the Acquirer.
  • BIN (Bank Identification Number): The six-digit number assigned by Visa and MasterCard to identify a member (Issuer or Acquirer) or processor for authorization, clearing or settlement processing. The Issuer assigns the six digits as the first six digits of the card number. The Acquirer assigns the six digits as the first six digits of the merchant number. Visa numbers always begins with a 4 and MasterCard numbers with a 5
  • Card Issuer: Financial institution that issues the payment card to the Cardholder.
  • Card Present Transaction: Card is present at the POS (Point of Sale) and swiped through an electronic device that reads the magnetic stripe on the card.
  • Card Not Present (CNP) Transaction: Type of transaction where the card is not presented at the POS (Point of Sale) and no magnetic stripe is read. These are usually considered higher risk transactions.
  • Cardholder: Customer associated with the primary account number (or an additional authorized user) that requests a transaction from a merchant.
  • Cardholder-Initiated Chargeback: Cardholder contacts the Issuer with-in 90 days of a transaction and refuses to accept the charge.
  • Chargeback: A payment dispute initiated by the cardholder with their credit card issuing bank when a charge was not authorised by the cardholder or the goods were not delivered as promised. The amount of the disputed transaction is partially or completely reversed and immediately withdrawn from the merchant's bank account. The merchant can dispute the chargeback with proof of purchase, signature, proof of delivery, etc.
  • Chargeback Fee: Amount charged to a Merchant, by an Acquirer, for processing a chargeback.
  • CVV (Card Verification Value): Term for 3-digit code in signature panel to verify that the card is in the cardholder's possession.
  • Decline: Negative issuer response to an authorization request on card payment. Merchant must request a different form of payment.
  • E-Commerce (Electronic Commerce): A way of doing real-time business transactions via the Internet using any combination of technologies designed to exchange data (such as EDI or e-mail), access data (such as shared databases or electronic bulletin boards) and capture date (through bar coding and magnetic or optical character readers).
  • Encryption: Way of scrambling data to protect personal information.
  • Financial Institution: Any organization that supplies financial services such as commercial banks, thrifts, savings banks and credit unions.
  • Financial Transaction: A transaction from the Acquirer to the Issuer containing all the necessary data elements for authorization, posting and reconciliation.
  • Merchant: Seller of products or services.
  • Merchant Agreement: Contract between a Merchant and Acquirer that outlines payment processing rights and responsibilities.
  • Merchant Bank: See Acquirer.
  • MID (Merchant Identification Number/Merchant ID): Unique number assigned by an Acquirer to identify a specific merchant.
  • MOTO (Mail Order/Telephone Order): A classification of merchant account with a specific set of rules that is more restrictive than for retail merchants but enables a merchant to accept a credit card payment without a cardholder's signature. The merchant and the cardholder do not need to be in the same physical location. MOTO accounts are also known as Card Not Present or CNP accounts.
  • MOTO Transaction: With a MOTO transaction the merchant never gets a physical signature from the customer - only the credit card number and expiration date are received to effect the payment.
  • Notification: A message where the sender notifies the receiver of an activity taken, requiring no approval or response.
  • Payment Cards: A broad term that encompasses all types of plastic cards used to make payments including credit, debit, stored value and prepaid.
  • Payment Gateway: Electronic connection between a Merchant and Acquirer that transmits payment data.
  • PIN (Personal Identification Number): A cardholders secret identification number that completes an online debit transaction.
  • POS (Point of Sale): Usually associated with retail points-of-sale, but also applies to any initial point where the customer presents payment to the merchant, such as by telephone or Internet.
  • Real-Time Authorization: Merchant requests and receives an authorization/decline for a credit card purchase as the customer makes their purchase. Typically take 2-3 seconds.
  • Reconciliation: An exchange of messages between two institutions (Acquirer, Issuer or their agents) to reach agreement on their financial totals.
  • Recurring or Periodic Payment: A pre-authorized recurring transaction charged to a cardholders account (i.e. phone bill, memberships).
  • Retrieval Request: Request by an Issuer for a copy of the original sales ticket from the Acquirer.
  • Reversal: A transaction from the Acquirer to the Issuer informing the card issuer that the previously initiated transaction cannot be processed as instructed (i.e. is undeliverable, unprocessed or cancelled by the receiver).
  • Settlement: A transfer of funds to complete one or more prior transactions made, subject to final accounting.
  • Smart Card: A payment card with a built in chip to store information.
  • SSL (Secure Sockets Layer): This is a technological method used to transmit information which is submitted via a website securely in order to prevent unauthorised users gaining access to that information. Typically, when a user accesses a website which secured with SSL, a symbol displays in their browser windows to indicate that the site is secure. When information is transmitted using SSL, it is encrypted prior to transmission using a special certificate key. It is then decrypted with another key after transmission.
  • TID (Terminal Identification Number): Number that identifies a merchant to the front-end network. A unique number is assigned to each POS terminal.
  • Transaction: Transfer of goods or services between a customer and merchant that results in payment.
  • Transaction Date: Actual date transaction was made.
  • Transaction Fee: The amount a merchant pays per transaction for processing.