Looking for a payment definition? Look no further! Whether you’re already au fait with payments, or new to the payments space, get to know your acquirer from your EHI with our comprehensive glossary of words from the world of payments.
One of the later stages in chargebacks. By this point, all parties involved (cardholder, merchant and bank) are unable to resolve the dispute and so the card scheme is asked to intervene and make a final decision.
Acquirers are financial institutions that accept payment card transactions on behalf of the merchant. Merchants pay the acquirer a percentage of the cost of purchases.
An acquirer processor will accept transactions from a merchant prior to submitting to the relevant card schemes, such as Visa and Mastercard.
They operate on their own platform to connect directly with merchants and the acquiring bank via a payment gateway to facilitate payments.
Address Verification Service (AVS)
This is a fraud prevention service. It verifies that the address, including the postcode, entered by the customer is the same as the one associated with the cardholder’s card account.
Sometimes called an agent bank, agency banks provide services on behalf of other banks, groups of banks or occasionally businesses or individuals. They can offer a wide variety of services for businesses looking to expand internationally.
Application Programming Interface (API)
API is a software interface which allows two applications to talk to one another. The application then gathers and interprets collected data in a more usable and developer friendly way.
This is the process of ensuring the cardholder is who they say they are. There are a number of checks to confirm the cardholder’s identity, these can include PIN, CVV2 and CAVV or biometric authentication.
An approval from a card issuer, usually through a payment processor, that confirms the customer has sufficient funds to cover the cost of the transaction.
Also known as an ‘auth code’, this is a number that confirms that your credit or debit card payment has been approved.
This is an electronic reply to an authorisation request.
A set of additional checks when someone uses a payment card to verify the identity of the person who is using the card. In some instances, the cardholder will be required to verify their identity in two different ways.
These are the funds available in your account for immediate withdrawal.
Bank Identification Number (BIN)/Issuer Identification Number (IIN)
The first four to six numbers on a payment card. The number uniquely identifies the financial institution issuing the card. In some regions such as Japan - An Issuer Identification Number (IIN) is used which is the first eight digit of the long account number.
This is one of the methods used to calculate a cardholder’s finance charge. The credit card company starts with the balance from the end of the last billing cycle, subtracts any payments made, and adds any credit posted to the account during the current cycle.
Also known as the transaction currency, this is the currency against which exchange rates are generally quoted against in a given country.
This is the currency the cardholder chooses to be billed in.
They’re physical characteristics unique to a person that are used in automated recognition. They can include, for example, using your fingerprint to get into your mobile phone, or using your voice to access your bank account. GPS provide a 3D Secure service that supports biometric authentication.
Buy Now, Pay Later
A financial scheme where customers can buy something and get the items immediately, but their payments are split and paid back in the future. A key feature is that, unlike some other financial products, customers are usually charged 0% interest on their purchases.
Card-linking enables cardholders to link their existing payment cards to digital coupons, loyalty programmes or mobile wallets.
Card Scheme /Card Network
This is the payment system (rails) that enables the user to pay with their card, most used are - Visa, Mastercard, American Express, China Union Pay, Discover and JCB. Every issuer needs to have a card scheme to make their payment product work.
A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account transactions report.
As part of our Apex platform, GPS can raise individual chargebacks against any existing presentment, managing the full lifecycle of the chargebacks from submission to rejection, or credit from the schemes to the final stage of arbitration.
Clearing is all the activities from the time a commitment is made for a payment transaction until it is settled.
This allow consumers to pre-load funds into a spending account that is linked to a payment device (such as a wristband or card).
Payments which cross geographical borders and involve currency conversion.
A digital currency which can be sent and received by users. It’s not a physical currency, instead it can be stored in a ‘digital wallet’ on a device – this can be called a blockchain wallet. Blockchain Wallet can also refer to the wallet service provided by Blockchain.
3D Secure Authentication
An authentication system backed by major card schemes, designed to protect customers and retailers during online payment transactions.
The GPS Apex platform offers advanced fraud mitigation rules to reduce costs and deliver added security beyond the secure and reliable processing of Mastercard and Visa payments.
Examples of digital wallets (also known as wallet providers and E-wallets) include Apple Pay and Google Pay. These providers give the customer an opportunity to have their credit and debit cards in a digital format on their mobile phone or wearable device. Wallets can also link to bank accounts.
If customers don’t agree with a transaction, for example, if they feel they have been charged an incorrect amount or if they think it’s a fraudulent payment, they can raise a dispute.
In this scenario, the customer’s first point of contact is the card issuer, who will log this in Visa or Mastercard’s dispute management system.
Dynamic card verification is the technology which replaces a payment card's static CVV (the three or four-digit card verification value) with an electronic display that generates a new CVV number at regular intervals throughout the day. This can be customised by the card issuer.
Dynamic Currency Conversion (DCC)
DCC is a merchant-provided service that allows the cardholder to see foreign payment card transactions in their home currency at the point of sale.
See ‘digital wallet’
External Host Interface (EHI)
EHI is a real-time transactional data feed that enables you to implement bespoke decision-making logic and your own authorisation rules. This also helps in enabling ‘in time funding’ decisions.
Forwarding Institution Identification Code (FID)
The identity of the organisation forwarding a request or advice message in an interchange system.
In this instance, fraud is when someone gains money or benefits from being dishonest or deceptive about payments.
There are a number of fraud management solutions GPS offers, primary being GPS Protect and others such as permission lists, which can block transactions from certain merchants or countries, and velocity checks which can block transactions if it exceeds an allowed amount or volume in a day. This is on top of things like 3D Secure which verifies the identity of the cardholder.
This allows a mobile application to create a new virtual card, adding it to a digital wallet for instant availability of funds.
The GPS Apex platform enables the latest mobile payment experiences, including Apple Pay, Google Pay, Samsung Pay and Fitbit Pay.
This is a percentage fee charged by the cardholder's issuing bank to the merchant service whenever the latter uses their credit or debit card.
Issuer Processing/ Processor
An issuer processor is the vital connector between an issuer and the major card schemes, such as Visa and Mastercard. Card issuance, cardholder transaction authorisation and settlement between the different payment stakeholders are some of the key activities covered by this important function.
Many financial institutions and banks outsource their issuer processing to an experienced third-party provider, like Global Processing Services, as it is costly and complex to build and handle internally, without significant transaction volumes.
An issuing bank, sometimes known as an issuer, ‘issues’ branded payment to customers. The debit, credit and prepaid cards they provide are a part of Visa and/or Mastercard’s card networks.
KYC (Know Your Customer) Verification
A standard protocol driven by regulators and market participants that ensures firms know detailed information about their clients' risk tolerance, investment knowledge, and financial position. KYC initiatives aim to protect both clients and firms from fraud.
Mastercard Digital Enablement Service (MDES)
Mastercard’s Digital Enablement Service helps transform a connected device into a commerce device to make and receive payments, enabling secure payments to take place for contactless and in-app payments.
A merchant is any company or individual selling goods or services.
Merchant Category Code (MCC)
The MCC is a four-digit number used to classify a business by the type of goods or services it provides.
Multi-Currency Card (MFX)
A prepaid card designed to be used for payments of goods and services anywhere in the world.
Combination of Interchange Fee and Scheme Fee. This is usually borne by the Merchant which gets divided across Network participants as per regulatory/commercial arrangements.
Open banking is a concept backed by regulations enabling users to grant permission to third parties to access their financial information.
Companies that create application programming interfaces (APIs) are able to provide innovative financial services via technology without first needing to have a physical presence like high street banks.
Open Loop Payment
Open loop payments are any payment methods that enable payment devices (Oyster cards, mobile phones, wearable payment technology, etc.) to link directly to a credit or debit card.
A payment processor is a company that manages the payment cards or any transaction process, acting as a kind of mediator between the bank and the merchant.
PayFacs or Payment Facilitators
PayFacs include PayPal, eBay, Stripe. This is where a merchant service provider can provide payment processing services to their own merchant clients.
Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS is a set of regulatory security standards for all organisations that process data from major card networks such as Visa, Mastercard, American Express, Discover, etc. The standard was established to tighten security around cardholder data and reduce the potential for fraud.
The front-end technology that reads payment cards and sends customer information to the merchant acquiring bank for processing.
Payment gateways transfer transaction information from the merchant to the card processor and then returns the authorisation. In short, they are a service that processes and authorises transactions between customers, merchants and acquirer banks.
The funds that are transferred to a merchant from an acquirer for the sale amount once the payment transaction has been accepted.
A peer-to-peer money transfer uses a website or an app to transfer funds from one person to another over the internet or a mobile network.
Point Of Sale (POS)
The time and place where a payment transaction is completed.
Primary Account Number (PAN)
This is the 16 to 19-digit number on the front of a payment card.
This means the payment has been financed and taken by the merchant bank.
Private Label Card
A retailer-branded card that is intended for use at a specific retailer. They usually provide loyalty rewards and perks to their customers.
A program manager maintains relationships with multiple partners in the payment process chain and establishes pooled account(/s) with banks.
Real-time Data Feed
Also known as RTD, this is a data feed that is usually processed and visible immediately (in real-time).
This is the ability to approve or decline a payment card transaction in seconds while the customer waits.
This is used to apply fees based on rules or actions set for the payment card.
Making sure the transactions are all accounted for - that payments in and out of the account match up, balance, and are accurate.
Using an e-money licence to issue cards under a card scheme licence.
The settlement process begins when an issuer processor receives an authorisation request. If the card is valid and there are sufficient funds available, the transaction is approved.
For approved transactions, the merchant then sends a settlement message through the appropriate card network, which in turns goes to the issuing bank that handles the transfer of funds from cardholder to merchant.
Every debit and credit card belongs to a scheme who give rules and regulations around the use of the cards. The scheme also provides the network which carries the card transactions to the next link in the payments chain.
Card schemes which Global Processing Services support include Visa and Mastercard.
Whenever there’s a transaction, there’s a fee for those in the payments eco-system. The scheme fee gets paid to the Scheme.
Terminal Identifier (TID)
TID is a unique number that is assigned to a merchant account by the processor. It is used to identify the source of a transaction.
A virtual card is a unique temporary 16-digit computer-generated card number that comes with an expiration date and security code tied to your account. It is used to settle a specific vendor payment transaction issued for a specific amount.
Virtual cards can be for single or multiple use and help protect your actual account number from being potentially exposed to fraud on unsecure connections. Once used, virtual cards show up as regular transactions on your statements.
Visa Token Service
This service from Visa switches out sensitive account information during digital or mobile payments with a one-off digital identifier ‘token’.
It provides strong security for transactions by hiding traditional payment account information from potential bad actors.