This is a auto-generated Article of all your definitions within the glossary.
Glossary
This is a auto-generated Article of all your definitions within the glossary.
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3D Secure (3DS)
A secure protocol that is designed to provide an extra level of security for online debit and credit card transactions. It helps to prevent fraud by requesting the customers to complete additional verification step with the card issuer when making online purchases.
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Acquirer / Acquiring bank
A Financial institution that acquires funds for its merchants from their customers. The Acquirer maintains business relationships with merchants and enables them to accept credit and debit card payments for the purchase of goods and services.
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Acquirer Reference Number (ARN)
A unique number assigned to each transaction when it goes through the payment flow. Both the acquirer and the issuer can use ARN to identify a transaction after it has been settled. ARNs are also used to trace refund transactions initiated by merchants.
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Application Programming Interface (API)
A software that enables Payment Services Providers to open up their applications’ data and functionality to their merchants. API sits between an application and the web server, acting as an intermediary layer that processes data transfer between systems, enabling merchants to manage the payments seamlessly.
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Arbitration
The final step in handling a chargeback that occurs when 2 parties (a merchant and a cardholder) cannot agree and need an independent arbiter. In that case a card scheme step to make the final decision. In practice most disputes get settled before they reach the arbitration phase.
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Authorisation
The process of verifying that the payment card has sufficient funds to cover the amount of the transaction. An approval response code is sent to the merchant from the card issuer that confirms availability of credit or funds on the cardholder’s account. The amount of the transaction is then put on hold for charging.
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Bank card
Any valid plastic or virtual card issued by a card-issuing institution that is used for payment for goods and services or to obtain cash advances.
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Bank Identification Number (BIN)
The first six to eleven numbers on a payment card which is set to identify the financial institution that issued the card, the issuer’s location and the type of a card (debit, credit). A BIN works to complete the first step in the payment process: authorisation.
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Business day
All days between Monday and Friday except for public holidays.
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Cardholder
The person to whom a payment card is issued or an additional person authorised to use that card.
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Cardholder data
Any information contained on a customer's payment card - name, surname, card expiration date, card number, service code, etc. The data is either printed on a card itself or contained in digital format on the magnetic stripe embedded in the backside of a card or a chip embedded on the front side of a card.
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Card-Not-Present (CNP) transactions
A card-not-present (CNP) transaction occurs when neither the cardholder nor the payment card is physically present at the time of the transaction. All online transactions fall into this category.
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Card schemes
Visa and Mastercard are examples of global card schemes that use their branded cards to facilitate payments.
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Chargeback
A credit or debit card charge that is asked to be reversed by an issuing bank following the request of the cardholder. In fact there are 3 main reasons for chargebacks: merchant error (mistakes in product/services description), criminal fraud (lost or stolen cardholder data) and friendly fraud (when after receiving the product/service the client illegitimately asks for money back).
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Chargeback/Payment ratio
The number of chargebacks a merchant received in a month divided by the total number of transactions processed in a month. A high chargeback/payment ratio will lead to higher processing fees and a large monthly fine. The only way to lower chargeback ratio is by preventing chargebacks.
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Chargeback period
Cardholders have 120 days from the transaction date to dispute it with merchants. Certain transactions are subject to a shorter deadline of 45 days. Then merchants have 30 days or less to compile the evidence of the services provided/products shipped/delivered. FMPay gives its merchants 7 business days to resolve chargebacks.
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Chargeback reason code
A 2-4 digits alphanumeric code provided by the issuing bank, which is stated to identify the reason for the dispute. Visa, Mastercard and other card schemes have their own chargeback reason codes systems. The reason codes are grouped into the categories of fraud, authorisation, processing errors and consumer disputes.
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Cross-border payment
Transaction where the client and the merchant are based in different countries.
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CVV number
Card Verification Value or CVV for Visa and Mastercard is a three-digit number on the back of a payment card, to the right of the signature box. CVV represents the basic security feature and required for all online payments to identify the cardholder, where the card is not present and the PIN code cannot be entered.
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Data breach
A security violation where sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an unauthorized individual. One of the data breach examples is the loss of theft of cardholder data.
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Decline / Declined
A transaction response where the customer's bank has refused the transaction request. There are several reasons why a card may be declined and these include insufficient funds in the account, the card not being activated, lost, stolen or cancelled card.
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Dispute
The first step in the chargeback process when a cardholder challenges a transaction by contacting his/her issuing bank. Disputes can be categorized into the following groups: Authorisation, Consumer disputes, Fraud, Processing errors.
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DSRP payments
Stands for Digital Secure Remote Payments. It is a Mastercard payment method for mobile devices that uses such elements as authentication, token retrieval and cryptogram generation to provide a safer, more secure transaction. All DSRP transactions are routed to the Mastercard network. The use of DSRP by a merchant is optional.
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eCommerce
Also known as electronic commerce or Internet commerce, refers to the buying and selling of goods or services using the Internet.
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eWallet
Stands for electronic wallet, a secure money management application or online platform that allows to store credit and other types of cards, coupons and tickets to make purchases using smartphones and computers. An e-wallet needs to be linked with the individual’s bank account to make payments. PayPal is the most popular eWallet.
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FinTech
Stands for Financial Technology, meaning the integration of technology and innovation in delivering of financial services.
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Fraudulent transaction
A transaction that takes place without legitimate consent of the cardholder. This can happen when the card is stolen or the card details have been compromised, or when the cardholder is tricked into providing the card details to a criminal.
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GIG economy
A business model where workers rely on a digital platform to get connected with their clients to provide their freelance services.
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Interchange fee
A non-negotiable fee determined by the card schemes for the payment cards processing. Being regularly adjusted by Visa and Mastercard in April and October each year, interchange fees vary from country to country and make up the most significant amount of card processing fees. The fee depend on the card scheme, card present/card not present environment, MCC codes, card type (debit/credit) and transactions region (domestic/cross border).
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Issuer / Issuing bank
A licensed payment institution authorized to issue payment cards to customers on behalf of the card networks Visa, Mastercard and others.
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Know Your Customer (KYC)
A standard designed to financial institutions against fraud, corruption, money laundering and terrorist financing. KYC involves establishing customer identity, understanding the nature of customers' activities and qualification that the source of funds is legitimate. KYC helps to access money laundering risks associated with customers.
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Marketplace
A mobile app or a web-platform that enables third parties (called sub-merchants) to sell their products or provide their services to the users of that platform. Marketplace owner connects vendors and their customers and earns a commission from each sale. Examples of a marketplace are: holidays rental apps, ride-sharing platforms, educational materials platforms.
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M.A.T.C.H list
A database of merchants created by Mastercard, who are considered to carry an unacceptable level of risk. Payment Services Providers, banks and other financial institutions refer to this list to identify merchants that they might not want to do business with. The main reason for merchants to end up in this list is excessive chargebacks.
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Merchant
A company that sells goods or services online, accepting debit and credit payment cards.
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Merchant category code (MCC)
Four-digit number that is used to describe a merchant's type of business activity. For merchants MCC will affect the risk assessment and Payment Service Provider fees. For customers MCC will determine how they will be rewarded for their purchases.
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Merchant Identification number (MID)
A unique identifier given by Payment Service Providers to their merchants. The code is designed to recognize the merchant in interaction with the processor and additional parties.
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One-click payment
A simplified payment process for the repeated sales, offering a smoother shopping experience. The technique allowing customers to make online purchases in a single click, without the need to re-enter their payment details for each order.
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Payment getaway
An internet-based system, that allows merchants to process e-commerce payments. It is the “virtual” equivalent of a physical payment card reader.
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Payment Service Provider (PSP)
A licensed company that receives, authenticates, and processes different types of electronic payments on behalf of merchants.
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PCI DSS
Stands for Payment Card Industry Data Security Standard. It is a set of security standards designed to ensure that all companies that accept, process, store or transmit credit card information maintain a secure environment.
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Recurring payment
A transaction charged to the cardholder (with prior permission) on a periodic basis for recurring goods and services, (e.g., health-club memberships, digital content subscription).
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Refund
A money back request by a customer to the merchant in case of dissatisfaction or undelivered products or services after the transaction is settled. When the merchant makes the refund, the funds are sent back from the acquirer to the issuer. If a merchant refuses to make a refund, a shopper can request a chargeback from their issuing bank.
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Retrieval request
A request to provide a copy of the paperwork to validate the transaction, also known as a “soft chargeback”. It starts when a cardholder contacts their issuing bank to ask about a charge they don't recognize on their account. Merchants are charged by their Payment Service Providers for processing of the retrieval requests.
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Reversal
The funds returned to the cardholder’s bank by a Merchant before the transaction is settled.
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Risk appetite
The amount and type of risk a financial organisation is ready to accept in order to meet its strategic objectives. Organizations with a high risk appetite are prepared to take on more risks, provided the return is substantial. Organizations with a low risk appetite will try to avoid high probability and high impact risks.
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Settlement
The process through which the funds transferred to a Merchant by the Payment Service Provider for the acceptance of the card transactions. The settlement frequency and minimal amount are subject to the contract between a Merchant and a PSP.
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Strong Customer Authentication (SCA)
A new regulatory requirement in the European Economic Area and the UK created to increase security of electronic payments by using multi-factor authentication at the check-out. SCA is defined as “an authentication based on the use of two or more elements categorised as knowledge (something only the user knows, ex. password or PIN), possession (something only the user possesses, ex. smartphone) and inherence (something the user is, ex. Fingerprint or face recognition). The customers will need to provide two forms of identification to their bank when shopping online.
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Subscription
A business model that allows customers to receive an access to the products and services for a specific period of time for a regular advanced payment.
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Transaction
The digital sale or purchase of goods and services, which can take place between businesses, individuals, governments, and other public or private organizations, conducted over Internet without the need for cash.
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Transaction ID
A unique ID that is generated by Payment Service Provider at the time the purchase took place.
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Transaction status
A term used to track the state or condition of the transaction record. FMPay’s transaction statuses are “declined”, “charged”, “prepared”, “credited”, “rejected”, “fraud”, “error”, “authorised”.
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Transaction type
In eCommerce there are four traditional types of transactions: B2C (Business-to-Consumer), B2B (Business-to-Business), C2B (Consumer-to-Business) and C2C (Consumer-to-Consumer).