In order to successfully navigate the myriad issues, challenges and solutions regarding integration of payment processing within your ERP and finance systems, it is important to have a solid understanding of the lexicon and definition of terms in this important and fast-changing arena.

Below are definitions for fifty of the key terms that you are likely to encounter on your journey to payments optimization.
(Note: this glossary will be periodically updated so we suggest that you bookmark this URL).

 

  1. Digital Payments: Electronic transactions conducted through various digital channels, such as online platforms or mobile devices.
  2. Payment Service Provider (PSP): A Payment Service Provider is a company or organization that offers a range of services and solutions to businesses and merchants to facilitate digital payment transactions. PSPs act as intermediaries between merchants, customers, and financial institutions, enabling the acceptance, processing, and settlement of various payment methods.
  3. Payment Gateway: A service that facilitates secure online transactions by connecting the merchant’s website to the acquiring bank or payment processor.
  4. Merchant Account: An account provided by a financial institution that enables businesses to accept payments from customers via credit or debit cards.
  5. Payment Processor: A company or service that handles the authorization, settlement, and processing of digital payment transactions on behalf of merchants.
  6. Acquirer: The financial institution that establishes and maintains the merchant account, authorizes transactions, and transfers funds from the customer’s account to the merchant’s account.
  7. Card Association: An organization, such as Visa or Mastercard, that sets the rules and standards for card-based transactions and facilitates communication between issuing banks and acquiring banks.
  8. Tokenization: The process of replacing sensitive payment card data with a unique identifier, or token, to enhance security and protect cardholder information.
  9. EMV: Stands for Europay, Mastercard, and Visa, which are the three companies that developed the global standard for secure chip-based card transactions.
  10. NFC: Stands for Near Field Communication, a technology that enables contactless payments by allowing devices to communicate within a short range.
  11. QR Code: A two-dimensional barcode that can be scanned by a mobile device to initiate a payment transaction or provide payment-related information.
  12. Mobile Wallet: A digital application that allows users to store payment card information and make payments using their smartphones or other mobile devices.
  13. E-commerce: The buying and selling of goods or services over the internet, typically involving online transactions and digital payments.
  14. Payment API: An application programming interface that allows developers to integrate payment processing functionality into their applications or websites.
  15. Cryptocurrency: Digital or virtual currencies that use cryptography for security and operate independently of traditional banking systems.
  16. Blockchain: A decentralized and distributed digital ledger that records transactions across multiple computers, providing transparency, security, and immutability.
  17. Settlement: The process of transferring funds from the customer’s account to the merchant’s account after a payment transaction has been authorized and processed.
  18. Chargeback: A dispute initiated by a customer with their card issuer, requesting a refund for a transaction due to fraud, dissatisfaction, or other reasons.
  19. Fraud Detection: Techniques and systems employed to identify and prevent fraudulent activities in digital payment transactions, such as transaction monitoring and risk scoring.
  20. PCI DSS: Stands for Payment Card Industry Data Security Standard, a set of security standards designed to protect cardholder data and prevent fraud in payment card transactions.
  21. ACH: Stands for Automated Clearing House, a network that facilitates electronic funds transfers between banks in the United States.
  22. Biometric Authentication: The use of unique physical or behavioral characteristics, such as fingerprints or facial recognition, to verify the identity of a user during payment authentication.
  23. Recurring Payments: Payments that are automatically initiated on a regular basis, such as subscriptions or membership fees, without the need for manual authorization each time.
  24. Digital Wallet: A virtual wallet that allows users to store payment card information, loyalty cards, and other digital assets for convenient and secure online transactions.
  25. KYC: Stands for Know Your Customer, a process used by financial institutions and payment service providers to verify the identity of their customers as a part of regulatory compliance.
  26. Instant Payment: Real-time payment transactions that provide immediate fund transfer from the payer to the payee, typically facilitated through faster payment systems.
  27. Interchange Fee: A fee paid by the merchant’s acquiring bank to the card issuer for each card transaction, typically a percentage of the transaction amount.
  28. Virtual Terminal: A web-based application that allows merchants to manually enter payment card information to process transactions without the need for a physical card reader.
  29. Multi-Currency Processing: The capability to accept and process payments in multiple currencies, allowing merchants to cater to international customers.
  30. Secure Sockets Layer (SSL): A protocol that ensures secure communication between a web server and a browser, encrypting sensitive data during online transactions.
  31. Encryption: The process of converting plain text into ciphertext using an algorithm, making the information unreadable to unauthorized users and enhancing data security.
  32. PCI Compliance: Compliance with the Payment Card Industry Data Security Standard (PCI DSS) requirements to ensure the secure handling of cardholder data.
  33. Authorization: The process of verifying if a payment card has sufficient funds and receiving approval from the issuing bank to proceed with a transaction.
  34. Settlement Period: The timeframe between when a transaction is authorized and when the funds are deposited into the merchant’s account.
  35. Batch Processing: The process of grouping multiple transactions together for authorization and settlement at specific intervals, usually at the end of the business day.
  36. Digital Invoice: An electronic document that includes payment details, issued by a seller to a buyer, facilitating the payment process and record-keeping.
  37. Two-Factor Authentication (2FA): A security measure that requires users to provide two forms of identification, typically a password and a unique verification code, to access an account or authorize a payment.
  38. Card-Not-Present (CNP) Transaction: A payment transaction where the cardholder is not physically present, typically occurring in online or telephone purchases.
  39. Point-of-Sale (POS) System: Hardware and software used by merchants to process payments at physical retail locations, typically including cash registers, card readers, and inventory management.
  40. Contactless Payment: A method of payment that uses radio-frequency identification (RFID) or near field communication (NFC) technology to enable quick and secure transactions without physical contact.
  41. Dynamic Currency Conversion (DCC): A service that allows customers to choose to pay in their home currency during international transactions, providing transparency in exchange rates.
  42. Merchant Category Code (MCC): A four-digit code assigned to merchants by payment card networks to classify the types of products or services they offer, used for reporting and analysis purposes.
  43. P2P Payment: Person-to-person payment, also known as peer-to-peer payment, allows individuals to send and receive funds directly from their bank accounts or digital wallets.
  44. Secure Element: A tamper-resistant hardware or software component embedded in mobile devices, used to securely store sensitive payment information for mobile payment transactions.
  45. Omni-Channel Payments: The ability to accept payments across multiple channels, including online, mobile, and in-store, providing a seamless and consistent customer experience.
  46. PCI SAQ: Stands for Payment Card Industry Self-Assessment Questionnaire, a tool used by merchants to assess their compliance with PCI DSS requirements based on their business model.
  47. Tokenization Service Provider: A third-party entity that provides tokenization services to merchants, enabling secure storage and transmission of payment data.
  48. Card Verification Value (CVV): A three- or four-digit security code printed on payment cards, used as an additional authentication factor in card-not-present transactions.
  49. In-App Payments: The ability to make payments within a mobile application, eliminating the need for users to navigate to an external website or payment gateway.
  50. Recurring Billing: A payment arrangement where a customer’s payment card is automatically charged at regular intervals for subscription services or ongoing memberships.
  51. Dispute Resolution: The process of resolving payment-related disputes, including chargebacks, through mediation between the cardholder, merchant, and payment processor.