The payments industry is full of unique terminology and acronyms that are regularly used in everything from press releases and blog articles to your end of the month merchant statement. But, this also means that as business owners or operators it’s important to be able to define what all these terms mean.
We all need a refresher from time to time on payment terms, which is why we’ve created this glossary of the most popular terms you’ll run into in the payments space, and what exactly they mean!
Acquirer – the entity that have accounts that merchants transmit information to, so that a transaction can be settled. This could be a merchant’s bank, customer’s bank, or another financial institution.
Address Verification System (AVS) — a fraud-prevention tool offered by banks wherein customers put in the address attached to their card information as part of the transaction authentication. AVS checks to see that the information matches the account information, but it does not affect the completion of a purchase.
Application Programming Interface (API) — A solution that allows for integration between websites. Moneris' API allows you to integrate a payment option into your website or application that maintains the same look and feel as your service, while using our system to process a payment.
Authorization - a step in the lifecycle of a payment where the funds from an account are approved to be processed, but not taken out of the account yet.
Batch – a group of authorized transactions which have been collected together over a certain period of time. Once a batch period is completed, the transactions are sent to be cleared and settled.
Biometric Authentication – a security and fraud prevention process that relies on cardholders’ biological characteristics to verify their identity and approve a transaction.
Card Association - an organization that oversees the licensing of cards for issuing parties, and establishes guidelines for the cards use. Examples include: Visa, Mastercard, American Express and Union Pay.
Card Not Present (CNP) Transaction - A purchase that is made without presenting a physical debit or credit card. These transactions can occur online, through virtual terminals, and over the phone.
Card Verification Value (CVV) — The 3 or 4 digit code on the back or front of a credit card that helps to confirm that the cardholder is in possession of the physical card when making an online transaction.
Chargeback – A customer disputed transaction. In most scenarios, chargebacks occur when a customer calls their card-issuer to address concerns about purchases made on their account, and ask for a refund. It is then the merchants responsibility to prove the transaction was completed correctly, or risk losing that revenue.
Contactless Payments — A payment method where customers utilize near-field communication (NFC) enabled devices to complete a transaction without ever inserting or swiping a card. These can be made both with physical cards, and devices such as smartphones or smartwatches.
Dynamic Currency Conversion (DCC) - a solution from Moneris that converts purchases made on international credit cards into over 90 currencies directly on the payment terminal.
Encryption - the process of encoding data automatically before it’s transmitted. Encrypted data can only be read or authorized by another party with a key or password.
Financial Institution - an organization or establishment that handles money and monetary transactions. Financial institutions include commercial banks, credit unions, savings or loan associations, and brokerage firms.
Fraud - an umbrella term for a number of situations in which a debit or credit card, and/or its data, is used in a way that is illegal, deceitful or otherwise improper.
Gateway - also known as a payment gateway, a gateway is a service offered by payment processors that authorizes online payments made through a variety of methods. The Moneris Gateway is a comprehensive platform that powers online payment processing and is supported by the Merchant Resource Center and our Developer Portal.
Interchange - the process where all participants involved in credit card transactions (acquirers, issuers, processors, etc.) manage the processing, clearing, settlement and deposit of funds into a merchant’s account. This process also includes the evaluation, collection and distribution of fees between all entities involved.
Issuer - sometimes referred to as a card issuer, this is a group that provides a debit or credit card to a customer. Issuers are most commonly banks or credit unions.
Magnetic Stripe - sometimes referred to as simply the mag stripe, this is the black strip on the back of a debit, credit or gift card that holds the cardholder’s account and/or payment information.
Near Field Communication (NFC) - more commonly referred to by the acronym NFC, near field communication is a set of protocols that enable two devices within close proximity to one another to communicate without an internet connection.
Network – a system of hardware and software used to accept, transmit and process payment transaction information electronically.
Payment Processor - a company selected by a merchant to complete the process of processing a financial transaction.
Personal Identification Number (PIN) - a unique numeric code that is associated with a credit or debit card that is used in the process of authenticating a purchase.
Point of Sale (POS) - the location where a transaction is made. A POS is typically referred to in relation to a software or solution that is being used to create, authenticate and complete a transaction at a business location, such as the Moneris iPad POS Solution.
Processing Fees - the costs that are incurred for processing a payment. These fees are commonly set by a payment processor and the card networks, both of whom have separate fees. Moneris offers Simplified Pricing, a simple pricing structure that clearly outlines processing fees.
Recurring Payment – sometimes referred to as a recurring transaction, this is a transaction that is charged to a cardholder on a regular or periodic basis.
Settlement - the completion of the transaction processing between all involved parties, and the successful deposit of funds into the merchant’s bank account.
Terminal – Sometimes referred to as a payment terminal, this is the device that facilitates card-based payments through swipe, chip and PIN and contactless transactions. Moneris offers a variety of terminals, including countertop, wireless short range, wireless long range devices, self-serve and kiosks.
Tokenization - The process of protecting a cardholder’s data by replacing it with a unique, sensitive data strand that has no value, known as a token. Tokens are randomly generated, and used within processing a payment. Learn more about tokenization here.
Transaction - An action between a consumer and/or customer and a business that results in a financial activity, such as making a purchase or issuing a refund.
Looking for more technical definitions? Make sure to check out our Developer Payment Glossary!
The information in this article is provided solely for informational purposes and is not intended to be legal, business or other professional advice or an endorsement of any of the websites or services listed.