Card machines glossary
2FA (Two-Factor Authentication)
This is a security measure that requires two individual and distinct forms of identification in order to approve a transaction. The first step involves a password, while the second factor could include a code sent to the customer by text message or email, or biometric verification via fingerprint or face ID etc.
3-D Secure (3DS) Processing
Developed by Visa, 3-D Secure (or 3DS) introduces an extra layer of security for customers when making online payments. If a card has been enrolled in the 3DS programme, during checkout customers will be redirected to a 3DS page and asked to enter a unique password or one-time authorisation code (sent to their registered email or phone number) before the purchase is validated.
Acquirer or Acquiring Bank
Also known as a merchant acquirer, this is a bank or financial institution that processes payments on your behalf.
Acquisition
This is the term for the process of signing up new customers for acquirers.
AmEx
A commonly used alternative name for American Express — who provide international payments as one of the major global card schemes (Visa and MasterCard being other examples).
APACS (the Association for Payment and Clearing Services)
The UK's national body responsible for clearing payments and international money transfer.
ATV (Average Transaction Value) or AOV Average Order Value
Take the total monetary value of transactions and divide by the total number of transactions over the same period to calculate this figure.
Authorisation
This is the initial request made by a merchant to a card issuer to release customer funds, verifying the payment card has sufficient resources to cover the transaction. During authorisation, checks will also be made to ensure the card hasn't been reported lost or stolen, and a referral (additional check made by the bank) may be made if the transaction is particularly large or unusual.
Authorisation Call
This is the initial request made by your payment terminal for payment authorisation.
Authorisation Code
Every transaction will have a unique code assigned to it once approved. This will be generated either by the card issuer or by the acquirer on the issuer's behalf. It will be printed on the merchant copy of the receipt, which you should keep.
AVS (Address Verification Service)
AVS is used to determine whether the billing address submitted by the customer matches the one associated with the cardholder's account. This process was introduced as a fraud prevention measure and to reduce card chargebacks.
BACS (Bankers' Automated Clearing System)
An automated electronic system used to clear Direct Debits and credits. Payments take three business days to clear.
Banking Day
This is simply a term for any other day than Saturday/Sunday or a bank holiday.
Banking Window
Merchants are allocated a specific daily time slot (by their acquirer) in which to submit end-of-day reconciliation to the acquirer's system. Any card transactions not made by the end of this window will roll over to be made the next trading day.
Bluetooth Terminals
Usually found in restaurants, pubs and other places offering payment at table, these are chip and PIN terminals that connect via a Bluetooth hub (typically placed at the bar) to conduct authorisations.
Card Declined
A terminal may display this message if the issuing bank can't authorise the transaction. There are a number of reasons this might happen, such as a new card being used that is yet to be activated, suspicion of fraudulent activity or insufficient funds.
Card Issuer
The bank or financial institution that provides the card(s) for use by the cardholder.
Card Scheme
This is the network that facilitates authorisation and settlements between acquirers and card issuers. Examples are Visa, MasterCard and AmEx.
Card Scheme Rules
These are the instructions laid down by the card schemes that control how merchants, acquirers and card issuers carry out transactions using their services.
Card Turnover
A business owner's total value of transactions, taken on a yearly or monthly basis.
Cardholder
This is the person authorised as the owner of the card being used in a transaction.
Chargeback
Usually undertaken as part of a disputed sale, this is when a card issuer charges part — or even all — of a transaction back to the acquirer. The acquirer may then charge this back to the merchant. Both credit and Visa debit card transactions can be charged back. Note: if you, as a merchant, are sent a chargeback, you can dispute it.
Chargecard
Transactions using a chargecard are initially paid for by the card issuer, with the balance to be paid in full by the cardholder by a specified date.
Chip and PIN (Personal Identification Number)
The most common method of payment in the UK, this allows customers to conduct transactions by inserting their card into the payment terminal before entering their PIN (Personal Identification Number).
CLI (Call Line Identity)
Basically a telephone number, CLI is used by card issuers to identify merchants during the authorisation process.
CNP (Cardholder Not Present) Transactions
CNP transactions are undertaken if/when a customer wants to make a payment without being physically present. These are most commonly done online (when the customer completes a payment form) or over the phone. In the latter case, the merchant must manually enter the customer's card details into their payment terminal.
Contactless Payments
Contactless cards, phones and other devices with RFI (radio-frequency identification) technology can be used to make payments without the need for PIN entry or signatures. Transaction limits are uncapped when using Apple Pay or Google Pay, as these services use 2FA as an additional security layer. As of writing, the limit when using other contactless payment methods is £100.
Corporate Cards
These are issued to businesses for the purposes of corporate expenditure, be that company purchases, travel or entertainment costs.
Credit Cards
These are issued to individuals to allow them to make purchases 'on credit'. The balance of this credit can be paid in full by a specified date or may be repaid over time, usually subject to minimum monthly payments and interest added to any outstanding balance.
CSC (Card Security Code) / CVV (Cardholder Verification Value)
These are the last three digits found on the signature strip of a card; there is an exception to this rule, as AmEx cards feature four CSC/CVV digits along the front.
Customer Present Transaction
As the name suggests, these are face-to-face transactions, completed using a point-of-sale (POS) terminal.
Debit Card
Designed to allow the cardholder to pay for transactions by transferring money from their current account.
Dynamic Currency Conversion (DCC)
This service allows a cardholder to have the cost of a foreign transaction converted into their local currency. The cardholder is charged a commission, the value of which is then usually shared between the merchant and acquirer.
Ecommerce
This is the term for retail transactions conducted online.
EFT (Electronic Fund Transfer)
The digital movement of currency from one bank account to another.
End-of-Day Reconciliation
The process of comparing terminal transactions with those recorded by the acquirer, with the value credited to the merchant account.
End-Of-Day Report
Completed on a terminal in order to enable it to be 'polled' (see definition). Depending on the terminal being used, this process may be carried out automatically.
ETU (Electronic Top-Up)
Usually of prepaid mobile phones and household utility cards.
Fallback
A general term used for the systems in place to complete a transaction if/when an electronic terminal cannot be used.
Fallback Voucher
A document used to record transaction details when a terminal is out of use. Information is registered using a card imprinter.
Fixed-Line Terminal
As apposed to its mobile counterparts, this is a chip and PIN terminal that can only be used where installed.
Floor Limit
This is a figure agreed between acquirer and merchant, above which authorisation must be sought. If a transaction falls below this figure, it will be automatically approved.
Fulfilment Period
The time between a transaction being charged and the product/service being delivered.
GPRS (General Packet Radio Service) Readers
This technology allows cards to be read wherever there is a mobile signal. This is then used to send transactional data to complete payment.
Gratuity
This functionality can be added to a terminal in order to collect tips and/or service charges.
Interchange
This is the per-transaction cost charged by card issuers to the acquirer. For debit card payments, this is a fixed figure, while credit card interchange is based on a set percentage of the transaction value.
ISO (Independent Sales Organisation) / MSP (Merchant Service Provider)
These are organisations that act as resellers of card processing or acquisition services. They are authorised by acquirers and processors to represent them when enrolling merchants. (We are one of them).
IVC (Identification Verification Certificate)
A document issued when an individual's identity has been digitally checked and verified.
IVR (Interactive Voice Response)
You may have come across this service when calling to book cinema tickets etc. and being asked by the computer-operated voice system to provide the name of the film you'd like to see.
JCB (Japan Credit Bureau)
This is the issuer of the JCB card, a major Japanese card issuer and the only international payments company from that country.
KYC (Know Your Customer)
KYC policies are used by financial institutions to gather and verify customer information ahead of conducting business with them. They are increasingly used to prevent identity theft and money laundering. KYC will be carried out before offering card services to merchants.
Maestro
A Debit Card scheme that, although still active, has declined in use within the UK.
MasterCard
International payment systems company and one of the major card schemes accepted worldwide.
MCC (Merchant Category Codes)
This is a four-digit code used by card issuers when organising merchants by trading activity, operating models and business risks.
Merchant
Any business that accepts card payments from customers.
Merchant Account / Internet Merchant Account
This is a specific bank account required in order to accept card payments. Such accounts can be set up to facilitate MOTO transactions, and a separate internet merchant account is needed for ecommerce activities.
Merchant Cash Advance
This allows future credit card sales to be substituted for cash. In order to carry out repayment, a fixed percentage is taken from the merchant account via card processing receipts.
Merchant Service
This is the process provided by acquirers that allows credit and debit payments to be taken via terminals.
MID (Merchant ID)
A unique number assigned to merchants by the acquirer for identification purposes.
MMSC (Minimum Monthly Service Charge)
This is an additional charge made only if total monthly merchant service charges don't reach an agreed level (normally £15-£25).
MOTO (Mail Order Telephone Order)
These are CNP transactions where a merchant takes payment over the phone or in writing.
MSC (Merchant Service Charge)
A cost placed on each transaction, set by the acquirer. Debit card transactions face a fixed fee per transaction, while credit card MSCs are based on a fixed percentage of the transaction value.
Multi-Currency Processing and Settlement
This is a service provided by acquirers to allow merchants to process transactions in non-domestic currencies and settle with the acquirer in a currency of their choosing (usually their own country's).
Not Authorised
This error warning is displayed on the terminal if a customer is at or over their credit limit. This may also be flagged as 'declined' on your device.
Online Authorisation
Any transaction approved or declined by a card issuer (or acquirer on their behalf) where the authorisation process involves online communication between a merchant terminal and the acquirer's system.
Online Terminal
Any terminal where the authorisation and data capture of a transaction is conducted online.
OTAC (One-Time Authorisation Code) / OTP (One-Time Password/PIN)
A password or numeric code usually sent to a customer's registered phone number or email and valid for just one transaction.
P2PE (Point-to-Point Encryption)
A security standard introduced to ensure credit card information is instantly encrypted for transfer to the payment processor where it can then be decrypted.
Pan Key
This terminal feature enables card details to be entered into the device.
Payment Card Industry (PCI) Compliance
The act of following the laws, regulations, standards and ethical practises needed to keep customer card data secure.
Payment Page
This is the area on a website where details such a debit card numbers are entered in order to complete an online payment.
Payment Provider
A generic term for an organisation that allows merchants to take card payments, covering: acquirers, processors, PSPs and ISOs.
PCI DSS (Payment Card Industry Data Security Standard)
This is the industry-wide standard you must follow in order to ensure cardholder data security and meet PCI compliance.
PDQ (Process Data Quickly or Parallel Data Query)
A generally accepted term for any card machine.
PIN (Personal Identification Number)
Usually a four-digit sequence of numbers used by customers to authenticate transactions on payment terminals.
Polling
This is the collection of transactional data, taken in batches, that is stored within a terminal.
POS (Point of Sale)
Literally the physical location where transactions are conducted.
POT (Predominantly Offline Terminal)
These terminals operate using a local server so that in the event of an internet outage merchants can continue to take card payments, with the data transferred once connection is regained.
Processing Day Settlement
A processing day is the next available 'banking day' for transactions taken outside of this period. Transactions undertaken outside banking days are combined to be settled together on the next available processing day.
Processor
This is the owner of the platform used for processing and settling card transactions.
PSP (Payment Service Provider)
PSPs allow merchants to accept payments via a number of different methods such as credit and debit cards, Direct Debits and bank transfers. PSPs work with acquirers to enable card acceptance.
PWCB (Purchase With Cashback)
Facilitated by the Maestro and Visa debit card schemes, this optional transaction type allows merchants to offer cashback to customers when conducting a transaction. The maximum amount is £50 and is subject to the acquirer agreeing to offer this service.
Recurring Transaction
A debit which the cardholder has agreed to be taken on a regularly repeating basis (such as monthly) or on given dates. Subscriptions are prime examples of recurring transactions.
Refund
When a merchant agrees to debit a previously authorised amount (part or whole) back to the cardholder's card.
Reserve Account
An amount of settlement funds agreed between the merchant and acquirer to be held back in order to meet credit risk requirements.
Settlement
The transfer and total value of funds from the acquirer to a merchant account once transactions have been finalised and reconciliation calculated.
Set-Up Fee
A one-off charge by some payment providers when arranging card-processing services.
Statement
A monthly invoice issued by the acquirer to the merchant, detailing all transactions (volume and type) undertaken during the time period covered. The statement will also include per-transaction charges deducted by the acquirer as well as other costs (if applicable) such as terminal hire and chargebacks.
TCP (Transmission Control Protocol)
This is a standard that allows applications to communicate and exchange data over a network.
Terminal
A terminal is a device used to take card payment details and securely send them for transaction processing and authorisation. These can be static, mobile, wireless or Bluetooth operated.
TID (Terminal Identification Number)
A unique number given to a card machine, used by merchants, issuers and/or acquirers etc. to identify the source of a sale when a fraudulent transaction is suspected.
Travel and Entertainment Cards
Similar to corporate cards, this is a general term for (typically) a chargecard used when paying for the transport and entertainment of clients by businesspeople.
Turnover
This is the gross value of a merchant's transaction(s) — for example, annual turnover is the total value of transactions processed in a year.
UK GDPR (General Data Protection Regulation)
GDPR (General Data Protection Regulation) European GDPR rules how customer data is acquired, stored, shared and disposed of. This includes directly asking for permission when capturing said data.
Visa
One of the major global card schemes and a worldwide payment systems provider.
Voice Authorisation
Authorisation done verbally over telephone between the merchant and authoriser.
Voice Referral
When processing a payment, the merchant may be required to contact the acquirer by telephone, in order to provide further information about the cardholder or transaction. See 'Authorisation' for more details on referrals.
