The Top 25 Payment Processing Terms

• The payments industry can be a challenge tounderstand, as there are many terminologies that mostpeople are not familiar with.

• In addition, with technology evolving at a rapid pace,new products are emerging that the public needs tobecome familiar with.

• Whether you are a consumer, merchant, or bank, thefollowing terms will help educate and inform you aboutthe payments industry.

• Acquiring Bank: A bank that processes debit/credit cardpayments for the products or services bought from amerchant. “Acquirer” implies that the bank acceptscredit card payment from the card-issuing bank inside anassociation (Visa, MasterCard, American Express, ect.)

• Acquiring Processor: A non-bank firm that processescredit card transactions on behalf of a merchant.

A

• Breach: Corruption of security measures that is used toaccess and compromise a merchant’s sensitivecardholder data information.

B

• Card Reader: Part of the point of sale (POS) or creditcard terminal that reads the card data either by swipingthe card or inserting it for EMV transactions.

• Cardholder: The person who possesses a credit or debitcard.

• Chip Capable Terminal: A payment terminal with a chipcard reader that is able to accept an EMV transaction.

C

• Chip Card: A plastic card (debit/credit card) that has achip that will communicate information to a payment

• Contactless Payments: Payment transactions that requireno physical contact between the physical terminal andthe consumer payment device. During a transaction, theconsumer holds the contactless device, (smartphone), inclose proximity to the terminal and the paymentinformation is communicated wirelessly.

C

• EMV: EMV (Europay, MasterCard, Visa) is a fraud-reducing technology helped to protect issuers,merchants and consumers against losses from the use ofcounterfeit or stolen payment cards at the point-of-sale.With EMV technology, cardholder information is storedin a chip that is embedded in the card.

E

• EMV Compliant: Terminals and cards that meet security,functionality, and inoperability requirements outlined byEMVCo.

• EMV Terminal: The Point-of-Sale (POS) device or creditcard terminal that is able to process EMV (chip)transactions.

• Encryption: Process of encoding or scrambling data thatcan only be read by authorized people or programs thathave a decryption key.

E

•  Independent Sales Organizations (ISOs): Third-party organizations that partner with payment processors or acquirers to find, open, and manage merchant accounts.

•  Issuer: The financial institution that issues the payment cards. They also hold the account or credit line behind the card.

I

• Loyalty Program: Process of offering incentives for theuse of a specific card. Many retail and restaurants useloyalty programs to attract new and returning customers.

L

• Magnetic Stripe Card: A payment card that does nothold a chip and can only be used by swiping the card ona terminal or point of sale system.

• Malware: “Malicious Software” that is designed todamage a computer system or POS system without theowner’s consent or knowledge.

• Merchant: The retailers or business that accept paymentsfrom customers in exchange for services and/or goods.

• Mobile Payments: A payment made to a merchant whoprocesses it using a mobile device or a payment madeby a customer using their smartphone.

M

• Near Field Communication (NFC): A method of contactlesscommunication and data exchange between electronicdevices like smartphones and tablets to other devices such ascredit card terminals. Once it is initiated by another chip,being held just a few centimeters from each other can transfersmall quantities of data among the two without even needingan Internet connection.

N

• Phishing: The act of attempting to obtain information likepasswords, usernames, and credit card data by hiding as atrustworthy entity in an electronic communication.

• PIN: A numeric code between 4 to 12 digits that an individualuses to authenticate his/her identity for card usage.

• Point-To-Point Encryption (P2PE): A payment security solutionthat transfigures confidential credit card data into an obscurecode when a card is swiped to avert fraud from occurring.

• POS: Stands for Point-of-Sale. A computerized network thatfunctions as a cash register.

P

• Tokenization: Process of replacing a debit or credit cardnumber with a valued “token.” Tokenization takes personalinformation, or the primary account number, and replaces itwith non-sensitive data, such as symbols, letters, or anyrandom sequence of tokens.

T

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