Payments Glossary
This glossary serves as a resource for understanding common terms used in the payments industry, offering clarity in navigating the complexities of payment systems.
Account Verification (or Zero-value Auth)
Account verification involves an authorisation request with a value of 0 and is used to confirm validity of the card. With cardholder consent details can be stored and used for future purchases.
Acquirer (or Acquiring Bank)
An acquirer, typically a bank or financial institution, receives funds on behalf of merchants from customers.
To enable card payments, an acquirer must be licensed by relevant card networks and either collaborate with a payment processor or function as one itself.
In certain regions, a payment service provider may act as an acquirer (e.g., Monek provides acquiring services to clients in Europe).
Authorisation
Authorisation involves the card issuer (e.g., Visa or Mastercard) verifying payment details and earmarking funds for later capture.
In e-commerce, in-app, and point-of-sale payments, authorisation occurs via an API call to the payment gateway. The gateway, along with the payment processor, validates and conducts necessary risk checks before requesting authorisation from the card network to transfer funds from the issuer to the acquirer.
If an authorised payment remains uncaptured, merchants may opt to cancel it, perhaps due to suspected fraud. authorisation has a limited validity period; if uncaptured or cancelled within this timeframe, it expires.
Bank Identification Number (BIN)
The initial six to eight digits of a card number constitute the Bank Identification Number (BIN) or Issuer Identification Number (IIN) allowing identification of the card network and issuing financial institution.
Cancel a Payment
An authorised payment may be captured (transferring funds to the merchant) or cancelled (merchant rejection, often due to fraud risk).
Cancellation isn't possible for captured transactions; in such cases, refunds are initiated to reimburse customers. Together, captures, cancellations, and refunds constitute modifications, altering the status of authorised payment requests.
Capture (or Clearing and Settlement)
Capturing is the process of completing an authorised payment by transferring reserved funds from the customer to the merchant.
Payments are typically automatically captured immediately after authorisation, though many methods support separate authorisation and capture. This allows for capture delays, manual capture (via both Customer Area and API calls), partial captures, or cancellation of authorisations.
Captures, cancellations, and refunds collectively constitute modifications, impacting the status of authorised payment requests.
Card Networks (or Card Schemes)
Card networks establish rules and infrastructure for card issuance and payment processing. Both the issuer and acquirer must belong to the same network for a payment to proceed. Common examples include Visa, Mastercard, American Express, and UnionPay.
Card schemes levy processing fees and regulate interchange fees, determined by various factors specific to each transaction.
Card Not Present (CNP)
CNP transactions occur when a cardholder makes a payment without physically presenting the card to the merchant, as in online, in-app, or MOTO transactions.
CNP transactions are vulnerable to card fraud due to the difficulty of verifying the cardholder's identity. Mitigate this risk by employing features like 3D Secure and AVS.
Card Number (PAN)
The Primary Account Number (PAN) uniquely identifies every payment card, be it debit, credit, gift, or similar. er associated with it. This number is usually printed on the card and required to uniquely identify this card and to refer to it in every transaction.
The whole card number is called Primary Account Number (PAN), and the first six or eight digits of it are also called the Bank Identification Number (BIN).
Also, a card may contain a card security code, which, along with the card number, can be used in card-not-present transactions.
Card Security Code (CSC)
A 3- or 4-digit numeric code printed on a card, distinct from the card number. The security code is essential for card-not-present transactions to authenticate the cardholder's identity.
Different card networks have varying names for this code:
- Visa: Card Verification Value (CVV, CVV2)
- Mastercard: Card Validation Code (CVC, CVC2)
- Amex and Discover: Card Identification Number (CID)
The security code is considered Sensitive Authentication Data and is subject to PCI DSS compliance regulations.
Card-on-File (CoF)
When card details are securely stored to simplify future checkout processes for returning customers. This functionality is often utilized for one-click payments, pay-per-use services, or recurring payments that do not adhere to a fixed schedule.
Recurring payments following a fixed schedule are commonly referred to as subscriptions.
Merchants compliant with PCI standards at Level 1/Level 2 can independently store card details. Alternatively, non-compliant merchants must rely on a payment service provider like Monek to securely store card information.
Cardholder
A cardholder is a customer who utilizes a card issued by a bank to make electronic payments to merchants.
Cardholder Verification Method (CVM)
CVM refers to the method used to authenticate the cardholder during a transaction, confirming possession of the payment instrument, such as a credit card.
Contactless Payment (NFC)
Contactless payment technology enables shoppers to make transactions without physically swiping or inserting their card. NFC (Near Field Communication) facilitates contactless payments at point-of-sale terminals. Popular digital wallets like Apple Pay, Google Pay, and Samsung Pay utilize NFC and are widely accepted, offering secure transactions suitable for high-volume usage.
E-commerce Payments
Electronic payments conducted by shoppers through online platforms (e.g., websites, webshops, social networks) for goods or services provided by merchants. These transactions primarily involve card payments or locally optimized payment methods.
In-app payments and point-of-sale transactions represent other electronic payment types, typically requiring merchants to engage a payment service provider for processing. Monek supports omnichannel payments, encompassing e-commerce, in-app, and in-store transactions.
Europay, Mastercard, Visa (EMV)
A globally recognized standard for integrated circuit cards (ICCs).
Floor Limit
The maximum transaction value permitted by a terminal when operating offline. This limit, applied to individual transactions, allows the terminal to defer the decision to approve or decline transactions to the card issuer if offline and below the configured floor limit. Debit cards often decline transactions, while many credit cards approve small transactions offline.
Integrated Circuit Card (ICC)/Chip
In payments, an EMV credit card containing an embedded chip storing card information.
Interchange Fee
A fee paid by the acquirer to the issuer for each transaction processed via a card network. Interchange fee amounts are determined by the card network and scheme, impacting transaction costs.
A further fee is then deducted from the total by the acquirer before paying into the merchant's account.
Issuer (or Issuing Bank)
An issuer is a bank responsible for providing cards to shoppers, enabling cashless payments across various channels such as e-commerce websites, mobile apps, or physical stores. To issue cards, a bank must be a member of one or more card networks or subscribe to card services like ICS.
In some cases, a shopper's bank may be referred to as an issuer even if no card is issued. This distinction is made between the shopper's bank (sending funds) and the merchant's bank (acquiring funds).
Know Your Customer (KYC)
Know Your Customer (KYC) refers to the process of identifying and verifying the identity of customers, as mandated by payment industry regulations. This is a prerequisite for individuals or business entities to receive payments.
Local Payment Methods (or Alternative Payment Methods)
Local payment methods allow merchants to accept e-commerce and in-app payments without utilizing cards. These methods include bank transfers, direct debit, e-wallets, mobile payments, and more.
Magnetic Stripe Reader (MSR)/Swipe
A device used to read card data from the magnetic stripe on the back of a card.
Mail Order/Telephone Order (MOTO)
MOTO transactions are card-not-present transactions where payment details are provided to a merchant by a shopper via mail, fax, or telephone. These transactions are typically conducted offline, with shoppers communicating their credit card numbers via phone or mail instead of online forms.
With Monek's MOTO features, you can integrate webshop payments with call center payments and enjoy unified reporting.
Manual Keyed Entry (MKE)/Keyed
Manual key entry involves manually entering card details from a customer's card into a POS app or payment terminal.
Merchant
A merchant is a party selling goods or services to shoppers across various channels like e-commerce websites, mobile apps, or physical stores. To accept card or local payment method payments, merchants need an acquiring bank account and must subscribe to services provided by payment service providers.
Merchant Back-end
The merchant back-end stores orders after product selection and total calculation by the POS app. Payment outcomes are stored alongside orders. Refunds for existing orders are managed from the POS app to the merchant back-end, which communicates with the Monek payments platform via API calls and receives webhooks from it.
Merchant Category Code (MCC)
The Merchant Category Code (MCC) categorizes a merchant's business based on the goods or services they offer. Each merchant is assigned an MCC by the acquirer during onboarding. MCCs are maintained by the International Organization for Standardization (ISO) but may be modified by card schemes.
Merchant of Record (MoR)
The Merchant of Record (MoR) operates a platform and manages interactions with sub-merchants or suppliers. The MoR oversees all commercial activity on the platform, ensuring compliance with regulations and providing customer support.
Mobile Payments (In-App Payments)
Electronic transactions conducted by shoppers through mobile applications, often involving card payments or localized payment methods. These payments may utilize native mobile APIs or mobile-optimized web pages.
Other electronic payment types include e-commerce payments and point-of-sale transactions, leveraging similar infrastructure and typically necessitating engagement with a payment service provider for automated processing and management. Monek supports omnichannel payments, covering e-commerce, in-app, and in-store transactions.
Monek Account
Merchants intending to utilize Monek as their payment service provider must register for a Monek account. Upon approval, this account grants access to Monek's payment services, which can be managed and tailored through the Customer Portal or the Monek API.
Monek Payments Platform
Monek's PSP service and acquiring host. Your integration interfaces with the Monek payments platform to obtain authorisations and submit capture data. Processes like DCR (Dynamic Currency Conversion) and DCC (Direct Customer Charging) are managed within the Monek payments platform. In point-of-sale scenarios, payment terminals connect to the Monek platform for registration in the Customer Area (CA), and configuration of both terminals and accounts is conducted here.
No CVM (Cardholder Verification Method)
A transaction without owner verification for a credit card. No CVM payments have a low transaction threshold.
Offline Enciphered
A CVM method that encrypts the cardholder's PIN before transmission to the card for verification. Terminals supporting this method must also support the less secure offline plain-text PIN method.
Offline Processing
While Monek payment terminals typically process transactions online, offline processing is optional and requires specific configuration.
Offline Transaction
Offline transactions refer to the acceptance of payments when no network connection is available. Debit cards typically decline offline transactions, while most credit cards are configured to approve a limited amount offline.
Omnichannel Payment Solution
An omnichannel payment solution comprises services and technical tools provided by a payment service provider, enabling merchants to accept cashless payments across all channels, including online, within a mobile app, or at a point of sale.
Payment Cards
Physical cards issued by shoppers' banks enabling cashless transactions, whether at a point of sale, on an e-commerce platform, or within a mobile application. These cards, including debit, credit, or prepaid varieties, are typically affiliated with card networks. While some cards may be linked to e-wallets or local payment methods, they are predominantly used for cashless payments or cash withdrawals.
A standard card includes a unique card number for identification, along with a security code. This code, combined with other details like the card's expiry date and the cardholder's name, is essential for verifying card-not-present transactions, such as online or mobile app purchases.
Payment Dispute
A request from a shopper to their card issuer for a refund of funds paid to a merchant. Typically, disputes arise after a merchant denies a refund request.
Upon initiating a chargeback, merchants may dispute it under certain conditions. If disputing is permitted, merchants must furnish all relevant documentation to either the acquiring bank or payment processor.
Monek offers support to merchants in automatically contesting chargebacks, along with extensive risk management services (RevenueProtect) to analyze fraudulent transactions and mitigate chargeback occurrences.
Payment Dispute Resolution
When a shopper seeks a refund from a merchant for a transaction already processed, the merchant may refuse, prompting the shopper to request a chargeback from their issuer. Merchants can dispute chargebacks if necessary.
If disputing is an option (refer to Payment Methods for details), merchants must provide documentation confirming product/service delivery, submitting these documents to the acquiring bank or payment service provider.
Monek assists its merchants by automating chargeback disputes and offering comprehensive risk management services to identify and reduce fraudulent transactions.
Payment Facilitator (PayFac)
A payment facilitator is authorised to onboard merchants to an acquirer's platform and receive settlement funds on their behalf. PayFacs, also known as aggregator merchants, perform actions including onboarding sub-merchants, processing transactions, and distributing settlement funds.
Payment Fraud
In the context of payments, fraudulent activity involves attempted transactions by criminals targeting either merchants or shoppers.
Fraud prevention is a critical aspect of the payment process, often provided as a service by payment providers like Monek, which offers RevenueProtect for comprehensive risk management.
Payment Gateway
A payment gateway assists merchants in initiating online, in-app, and in-person payments. While not directly involved in the financial transaction, it serves as a web server connected to a merchant's website or POS system.
Payment gateways may be provided by banks or offered as a separate service connecting to one or more payment processors. Monek functions as both a payment gateway and processor, alongside a risk management system and an acquirer, making it a comprehensive payment service provider.
Payment Modifications
Payment modifications involve actions such as capturing or canceling an authorised payment. Additionally, if a payment has already been captured, it can be refunded. These actions, including capture, cancel, and refund, are termed modifications as they alter the payment's state.
Modifications can be performed manually via the Customer Area interface or automatically using the Monek payments platform API. Upon API call, merchants receive an acknowledgment in the response, and Monek processes the modification, subsequently sending the result asynchronously through webhooks.
Payment Processor
A payment processor facilitates payment transactions between a shopper's bank and a merchant's bank on behalf of the merchant. Typically, payment processors retrieve payment information from a payment gateway.
Monek combines the functionalities of a payment gateway and processor, along with risk management and acquirer services, as a full-stack payment service provider.
Payment Service Provider (PSP)
A PSP integrates the functions of both a payment gateway and processor, connecting to multiple acquiring and payment networks. Additionally, it may serve as an acquirer and provide risk assessments and financial services.
For merchants, utilizing a PSP is often more cost-effective and convenient than managing separate contracts with various payment gateways, processors, and acquiring banks.
Payment Terminal (or POS Terminal, Pin Entry Device (PED))
A payment terminal communicates with a shopper's card at the point of sale. Typically, the card is tapped, inserted, or swiped at the terminal, prompting the shopper to enter a PIN or sign. Sometimes referred to as a Pin Entry Device (PED).
Monek utilizes various terminal types optimized for seamless integration with the Monek payments platform.
Payout
In the payments industry, a payout refers to a significant sum of money paid at once to either an individual or a business entity. For instance, an online marketplace may issue payouts to sub-merchants for the products or services they provide.
PCI Compliance
PCI DSS compliance entails meeting all relevant requirements of the Payment Card Industry Data Security Standard (PCI DSS) continuously. Established by major card networks, PCI DSS aims to enhance cardholder data security and mitigate fraud risks. All organizations involved in payment card processing must adhere to PCI compliance, which involves strict measures for securing cardholder data.
Merchants finding it challenging or costly to achieve full PCI DSS compliance may opt for encrypted methods (such as hosting the CSE library) or outsourcing card processing to PCI-compliant payment service providers like Monek, effectively reducing their PCI DSS compliance scope.
PIN Bypass
PIN bypass allows merchants to skip PIN entry for shoppers, typically used when the merchant trusts the shopper. However, it is advisable to compare the signature and cardholder name with some form of identification when bypassing PIN entry.
Plain Text PIN
Plain Text PIN verifies the cardholder's PIN by sending the unencrypted PIN to the card. This method is commonly used by cards unable to support the more secure Offline Enciphered PIN.
Point of Sale
A point-of-sale solution enables shoppers to make cashless in-person payments at a merchant's physical location using cards, NFC wallets like Apple Pay, QR code wallets like Alipay, or prepaid and gift cards.
Point-of-Sale Entry Mode
The means by which the card number (PAN) is transmitted to the payment terminal, such as Keyed, Swiped, or NFC.
Point-of-Sale Payments (or In-Person Payments)
In-person payments made by shoppers via POS systems to purchase products or services from merchants at physical locations like stores or ticketing booths. These payments are typically made using cards, whether swiped, inserted (ICC), or contactless.
Point-to-Point Encryption (P2PE)
P2PE secures card data communication from one point to another.
Process Data Quickly (PDQ)
A legacy term indicating that reading the Primary Account Number (PAN) from the Magnetic Stripe Reader (MSR) was faster compared to Manual Keyed Entry (MKE).
Recurring Payments
Monek securely stores payment details to enable recurring payments, requiring merchants to enable the recurring contract during the initial authorisation call to the Monek payments platform. Merchants receive a token corresponding to a specific shopper and their payment data, facilitating future recurring payments.
Refund
Refunds occur when a shopper cancels a purchase after payment. Funds are returned from the acquirer to the issuer. If authorised but uncaptured, a payment can be canceled; otherwise, a refund is processed. Merchants can dispute chargebacks if they refuse refunds, and refunds are considered modifications as they alter the payment's state.
Scheme Fee
A fee paid by the acquirer to the card scheme for each payment transaction processed.
Sensitive Authentication Data
Security-related information used to authenticate cardholders or authorize payment card transactions, including card validation codes, full track data, PINs, PIN blocks, etc.
Shopper
A customer who makes cashless payments using cards or local payment methods.
Signature
Accepted POS Entry Modes and CVMs can be configured depending on the merchant's business model.
Stored-Value Card
A payment card with a stored monetary value, such as gift cards or prepaid cards, which can either be reloadable or disposable.
Strong Customer Authentication (SCA)
Mandated in PSD2 to enhance online payment and banking transaction security, SCA requires shoppers to provide two out of three authentication factors: something they have, know, or are.
Sub-merchant
A merchant onboarded to an acquirer through a payment facilitator. The payment facilitator handles all transactions for the sub-merchant.
Subscriptions
Subscriptions are recurring payments occurring on a fixed schedule, often seen in services like music and TV streaming.
If a recurring payment doesn't follow a fixed schedule, it falls under Card on File (CoF) or Unscheduled Card on File (UCoF) payments.
Tender
At Monek, tender encompasses the entire process on payment terminals: initiating the transaction, receiving card information, adjusting the amount if needed, awaiting authorisation, printing the receipt, and receiving final status, all linked to a tenderReference.
Tokenization
Tokenization replaces sensitive data with non-sensitive data (a token), preserving privacy. In payments, it secures card data by substituting it with a unique string, enabling safer recurring payments. Combined with Client-Side Encryption, it allows merchants to securely transmit shopper data to providers like Monek.
Transaction (or Tx)
A financial exchange between a shopper and a merchant for products or services, typically via card or local payment methods.
Tx is a common abbreviation for a financial transaction.
Unscheduled Card on File (UCoF)
UCoF payments are recurring but irregular transactions, often with varying amounts or schedules, like automatic top-ups.
A scheduled recurring payment is termed a subscription.