ACH
ACQUIRERS
AUTHORIZATION

Automated Clearing House. An electronic payment network used most often with direct deposit of payroll checks and recurring payments. Can also be used to clear electronic checks, as well as Demand Deposit Account (DDA) transactions.

An entity that accepts payments for a payments network. The transaction is routed through a number of locations, beginning with the POS at the merchant site, and then moves through a gateway in some instances. The final phases involve networks and issuer processors.

Method by which accounts are verified as having funds enough to facilitate transactions

AVAILABLE BALANCE
AVS

Address Verification Service. Data used to ascertain consumer validity, such as address.

How much is in an account to cover a payment request.

BANKS

The only entities that can work with payments firms, such as Visa or Mastercard. Have the ability to offer their own cards. In addition, banks of all sizes are tied to moving money between accounts when transactions occur.

 

Payments Glossary

Knowledge Base

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AVAILABLE BALANCE
BASIS POINTS
BIN
BITCOIN

Also known as bips. One one-hundredth of a percent, measured against a transaction.

Bank Identification Number. The first several digits — typically the first four digits or first six digits — that are found on a card of an issuing or acquiring bank as unique identifiers.

A decentralized, digital currency not controlled by any company or government.

BASIS POINTS
BOC
BUY BUTTON
BYOD

Back Office Conversion. Check conversion transactions that occur in the merchant's back office instead of in front of the consumer. Notice to the consumer that BOC will occur must be posted at the point of sale or other check receiving locations.

A technology that leverages a single-tap feature in order to make eCommerce easier for consumers. The key lure is direct shopping on a site or an app rather than going through links to get to the retailer who actually sells a desired product.

Bring Your Own Device. A growing trend of employees bringing their own smartphones, laptops or tablets to the office to facilitate work. There is some concern over the security issues present with the use of outside (personal) devices.

CAPTURE
CFPB
CHARGE BACK

The methodology of completing authorizations and fund flows from merchants.

Consumer Financial Protection Bureau. A federal government agency that supervises banks, credit unions and other financial companies in the enforcement of federal consumer financial laws.

A disputed credit or offline debit card sale that is returned to the merchant bank for reimbursement of the cardholder's account. Chargebacks can be initiated by customers or by cardholders' banks.

CAPTURE
CHECK 21
CLEARING
CLOSED LOOP

Check Clearing for the 21st Century Act. Became federal law in 2005 to enable banks to handle checks electronically for faster and more efficient processing. Instead of physically moving paper checks from one bank to another, Check 21 allows banks to clear a printed copy of the original check as a "substitute" check, or IRD.

A system where transactions are done only through a few locations, or parties, predefined.

The exchange of financial information that eventually leads to reconciliation at the back end of a bank’s operations, via settlement.

DDA
DIGITAL WALLET
DIRECT DEPOSIT

Demand Deposit Account. A checking, savings or money market account where the customer has easy access to the funds in the account.

Applications that store a virtual copy of wallet content for use in online or offline payment transactions. PayPal and Apple Pay are examples of digital wallets.

A payment method in which funds are automatically transferred from the account that owes the funds to the account of the payee. Often used in payroll situations, where a "paycheck" is directly deposited into an employee's account.

Interest rates levied by banks that come in addition to interchange fees paid by merchants.

Direct Mobile Billing. A method of paying by charging the purchase to the user's cell phone account.

Electronic Check Acceptance. The process of electronically submitting and processing a paper check.

DISCOUNT RATE
DMB
ECA

Firms that work with rules governing payments. Firms that approve, or deny, requested transactions. The decision on a transaction is communicated at once to both networks and acquirers.

Issues the consumer a payment product – debit or credit card. Also facilitates processing of payments, paying merchants upon transaction approval.

Know Your Customer Verification. Compliance efforts that demand cardholders be verified at the time of transactions.

MCA
MERCHANT REWARDS
MERCHANTS

Initial point of contact for consumers, and typically begin at the very place where a transaction occurs — and in a physical setting, or online. Can be just about anywhere, with the ability to accept different payment mechanisms, ranging from credit cards to debit cards.

Funds tied to loyalty programs offered by merchants.

Merchant Cash Advance. An agreement between a company and a merchant to have a percentage of the sales be directed to the company in exchange for a lump sum payment. Used by merchants who may have trouble obtaining a bank loan, thus the percentage of the MCA will be higher than the interest rate on a conventional loan.

DISCOUNT RATE
DISCOUNT RATE
ECC
EFT
EMV

Electronic Check Conversion. Also known as ECP for Electronic Check Processing. Converts paper checks into an electronic payment for deposit. This can be used directly at the point of sale (POS) at a merchant's cash register or by a business that receives mailed-in checks. Electronic check conversion is a fast and easy way to batch checks and process payments.

Electronic Funds Transfer. A transfer of funds initiated electronically by computer, phone, terminal, ATM or magnetic tape. EFTs transfer money from one bank account directly to another without any paper money. Payroll direct deposits are examples of EFT transactions.

Europay Mastercard Visa. An almost global standard for chip-and-PIN cards (also known as smart cards) developed and backed by four of the major card brands. Europay Mastercard Visa has not yet achieved acceptance in the United States.

GATEWAY
FDIC
ISO

Federal Deposit Insurance Corporation. A United States government corporation operating as an independent agency created by the Glass-Steagall Act of 1933 during the Great Depression. It provides deposit insurance, which guarantees the security of deposits in member banks, up to $250,000 per deposit or per bank, as of January 2012.

A point of contact between merchants and the acquiring firms.

Independent Sales Organization. Can be a one-person operation or a large organization that sells merchant services on behalf of a single acquirer or several processors and acquiring banks. In addition to bankcard services, ISOs may sell payment equipment, check processing services, gift and loyalty cards and software.

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ISSUER PROCESSORS
ISSUING BANK
KYC VERIFICATION
MICR
MOTO
NACHA

Magnetic Ink Character Recognition. A character recognition technology used primarily by the banking industry to facilitate the processing of checks. Makes up the routing number and account number at the bottom of a check. The technology allows computers to read information (such as account numbers) off printed documents. Allows banks to easily process large numbers of checks.

Mail Order/Telephone Order. Also known as card-not-present (CNP) accounts. May have higher rates than POS accounts with the consumer present. Because the signature is not required, these accounts are generally higher risk.

National Automated Clearing House Association. Manages the development, administration, and governance of the ACH Network. As a not-for-profit association, NACHA represents more than 10,000 financial institutions via 17 regional payments associations and direct membership.

NFC
ODFI
OMNICHANNEL

Near Field Communication. A short-range wireless technology that is often used in mobile and electronic payment transactions.

Originating Depository Financial Institution. Institution that confirms that a transaction is in compliance with regulations and thus can proceed.

Seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a brick-and-mortar store.

NFC
OVERDRAFT
P2P

Near Field Communication. A short-range wireless technology that is often used in mobile and electronic payment transactions.

A check or draft that is in excess of the account balance.

Peer-to-peer or person-to-person. Payments by individuals to friends, family members and other individuals for goods and services.