Emerging Technologies & Trends
FinTech
Innovative technologies that improve and automate financial services, enhancing efficiency, accessibility, and user experience in the finance industry. It includes solutions like digital payments, peer-to-peer lending, robo-advisors, and blockchain technology, transforming traditional financial operations.
Embedded Finance
The integration of financial services into non-financial platforms or products, enabling companies to seamlessly offer banking, lending, or payment solutions directly within their existing customer interfaces, enhancing user experience and streamlining transactions.
BaaS (Banking as a Service)
A model where fintech companies and various businesses leverage APIs from traditional banks to offer banking services, facilitating seamless integration of financial products and services via third-party platforms, enhancing customer experiences.
Payments Optimisation
Strategies and technologies used to enhance the efficiency, cost-effectiveness, and success rates of payment processing. This involves smart routing of transactions and robust fraud prevention measures to minimize declines and improve customer experience.
Financial Inclusion
Efforts to ensure that individuals and businesses, particularly those underserved by traditional financial institutions, can access affordable and secure financial services. This includes banking, credit, insurance, and investment opportunities, promoting economic empowerment and stability.
Unified Commerce
An integrated approach to commerce that ensures a seamless customer experience across all channels, including physical stores, online platforms, and mobile devices, allowing businesses to deliver consistent messaging, personalized interactions, and streamlined transactions for enhanced customer satisfaction.
E-commerce Marketplace
An online platform that connects multiple sellers with customers, enabling them to showcase and sell products or services. These platforms facilitate transactions, often providing integrated payment processing, inventory management, and customer support services.
Merchant & Acquirer Services
Acquirers / Acquiring Bank
Financial institutions that process credit and debit card transactions on behalf of merchants. They handle authorization, settlement, and transfer of funds, ensuring seamless payment processing and risk management for businesses.
Merchant Services
Financial services enable businesses to accept and process payments efficiently. This includes credit card processing, point-of-sale systems, and payment gateways, facilitating seamless transactions both in-store and online for improved customer experience.
Merchant Agreement
A contract between a merchant and an acquiring bank or payment processor, outlining the terms and conditions for processing transactions, including fees, chargebacks, compliance requirements, and transaction handling protocols to ensure secure operations.
Merchant Category Code (MCC)
A four-digit code assigned to merchants by credit card networks, categorizing their business type and transactions. It plays a crucial role in determining transaction fees, risk assessment, and rewards program eligibility.
Merchant Discount Rate
The fee charged to a merchant by the acquiring bank or payment processor for processing card payments. This fee, usually a percentage of each transaction, covers transaction processing, payment gateway costs, and associated risk.
Merchant of Record
The entity is responsible for processing payments, maintaining the merchant account, managing financial liability for chargebacks and refunds, ensuring compliance with payment regulations, and handling customer transactions for e-commerce operations.
Merchant Plug-in
A specialized software that enables merchants to seamlessly integrate payment processing capabilities into their websites or applications, facilitating secure online transactions, enhancing customer experience, and supporting various payment methods for increased flexibility.
Merchant Initiated Transaction (MIT)
A payment transaction initiated by the merchant rather than the customer, often used for recurring payments or subscriptions, allowing automatic billing without requiring additional customer authorization each time.
Fulfilment
The process of completing a customer's order, which includes not only packaging, shipping, and delivery of goods, but also inventory management and tracking, often seamlessly integrated with payment processing for efficiency and accuracy.
ISO (Independent Sales Organization)
A third-party company that partners with acquiring banks to facilitate merchant accounts and payment processing services, offering businesses tailored solutions for payment acceptance, including transaction management and customer support.
Payment Infrastructure, Networks & Schemes
Four Party Card Schemes
A payment model involving four entities: the cardholder, the issuing bank, the merchant, and the acquiring bank. This framework facilitates transactions, with major card networks like Visa and Mastercard ensuring secure processing and communication among them.
ISO 2022
An international messaging standard for financial institutions, facilitating the secure exchange of financial information across borders in a standardized format. It enhances interoperability, reduces errors, and streamlines global transactions by promoting consistency in messaging protocols.
National Payment Switch
A centralized infrastructure, enabling seamless interbank exchanges of electronic payment transactions within a country. Typically managed by the central bank, it enhances efficiency, security, and interoperability among various financial institutions.
ACH
A network that processes electronic financial transactions in the United States, facilitating direct deposits like payroll, bill payments, and other automated transfers, ensuring secure and efficient money movement between bank accounts.
EFTPOS (Electronic Funds Transfer at Point of Sale)
A payment system that enables customers to pay for goods or services directly from their bank account at the point of sale using a debit or credit card, ensuring secure transactions and immediate fund transfers.
ATM (Automated Teller Machine)
A self-service machine that allows bank customers to perform basic transactions, such as withdrawing cash, checking balances, and transferring funds, without the need for a teller, enhancing convenience and accessibility.
Payment Terminal
A specialized device used by merchants to securely accept payments from customers. It typically supports various payment methods, including card transactions, NFC (Near Field Communication), and mobile wallets, ensuring efficient and versatile payment processing.
EDC (Electronic Data Capture) Terminal
A specialized device used by merchants to securely capture and transmit payment card information electronically. Typically utilized at the point of sale, it ensures efficient, real-time processing of transactions.
PIN Pad
A secure device that allows cardholders to enter their personal identification number (PIN) during a payment transaction. It is typically integrated with payment terminals, ensuring that sensitive information is encrypted and protected from unauthorized access.
NFC (Near Field Communication)
A specialized device used by merchants to securely capture and transmit payment card information electronically. Typically utilized at the point of sale, it ensures efficient, real-time processing of transactions, enhancing customer convenience and reducing transaction times.
TID (Terminal Identification)
A unique identifier assigned to each payment terminal or point-of-sale device, enabling merchants and processors to track transactions, manage terminal configurations, and ensure secure communication within payment networks effectively.
Network Token
A digital representation of a card's primary account number (PAN), replacing the actual card number to enhance security in online and mobile transactions, reducing fraud risk and safeguarding sensitive payment information during processing.
BIN (Bank Identification Number)
The first six digits of a payment card number. It uniquely identifies the issuing bank or institution, allowing payment processors to accurately route transactions and mitigate fraud.
BIN Sponsor
A financial institution that partners with entities, such as fintech companies, allowing them to utilize its Bank Identification Number (BIN). This enables the issuance of payment cards and the processing of transactions, facilitating seamless financial services.
Dynamic Descriptor
A feature that allows merchants to customize the description appearing on a cardholder's statement. This capability helps clarify the nature of the transaction, enhancing transparency and reducing chargebacks by providing specific details.
Card Issuance
The process by which financial institutions produce and distribute payment cards, such as credit, debit, and prepaid cards to customers. This includes designing the cards, personalizing them with account information, and ensuring secure delivery.
Cardholder
An individual issued a payment card, such as a credit or debit card, by a financial institution. They are authorized to use this card for various transactions, including purchases and cash withdrawals.
Account Updater
A service that automatically updates stored card information for recurring payments when a card is reissued or replaced. This proactive approach minimizes payment failures, ensuring uninterrupted services and enhancing customer satisfaction by streamlining the payment process.
Non-Bank Financial Institution
A financial entity that provides certain banking services, such as lending and investments, but does not hold a full banking license or accept deposits from the public, often focusing on niche markets.
Payment Facilitator
An entity that allows smaller merchants to accept payments by processing transactions under a single master merchant account. This structure streamlines the onboarding process, reducing time and complexity for merchants to start accepting payments efficiently.
Mastercard Wholesale Program
A specialized initiative that offers select merchants and industries a reduced rate of interchange fees, enhanced transaction processing efficiency, and additional resources aimed at optimizing payment solutions and driving growth within their sectors.
Payment Methods & Instruments
Cryptocurrency
A decentralized digital currency secured by cryptography, making it nearly impossible to counterfeit. Examples include Bitcoin and Ethereum, which operate on blockchain technology without the need for intermediaries like banks.
E-Wallet
An e-wallet is an electronic device or online service that enables users to make electronic transactions, often linked to their bank account or credit card. For example, apps like PayPal or Apple Pay store payment information securely for quick access.
Alternative Payment Methods
Payment options that differ from traditional credit and debit cards. These include digital wallets like Apple Pay, bank transfers, and emerging technologies like cryptocurrencies, offering consumers more flexible and secure transactions.
Payment Card
A card issued by a financial institution, enables cardholders to make purchases or withdraw funds. Examples include credit cards that allow borrowing, debit cards linked to checking accounts, and prepaid cards loaded with a specific amount.
Programmable Money
A digital money that can be programmed with conditions, rules, and logic to automate its use. It can release payments only when specific contract terms are met, often using blockchain-based smart contracts.
CBDC (Central Bank Digital Currency)
A digital version of a country's national currency, issued and controlled by its central bank. Unlike cryptocurrencies, it carries the same backing as physical cash and bank reserves.
Tap to Pay
A contactless payment method where a card or mobile device with NFC technology is tapped near a point-of-sale terminal to complete a transaction, enabling fast, secure payments without inserting or swiping a card.
Buy Now Pay Later
A financing option that allows consumers to make purchases and pay for them over time, often interest-free, without using a credit card. Popular Buy Now Pay Later vendors include Afterpay, Klarna, Affirm, and Zip.
Cash on Delivery
A payment method where the customer pays for a product or service upon delivery rather than in advance. For example, a customer orders a package online and pays the delivery driver in cash upon receipt.
Card Present
It occurs when the physical payment card is swiped, tapped, or inserted at a point of sale, like a retail store or restaurant, allowing for real-time authorization and often enhanced security measures.
Card on File
A service where a merchant securely stores a customer's payment card information for future transactions, facilitating convenience in repeat purchases, such as automatic billing for subscription services like streaming or monthly deliveries.
Real-Time Payment
A payment method where transactions are processed and settled almost instantly, providing immediate funds availability to the recipient, enhancing cash flow and facilitating quick transactions for urgent needs.
Recurring Payment
A method where a customer authorizes a merchant to automatically charge their card or account on a regular basis, usually for subscription services like streaming platforms or software licenses, ensuring seamless billing without manual intervention.
Recurring Billing
A process of automatically charging a customer at set intervals for ongoing products or services, such as subscriptions to software, gym memberships, or magazine deliveries, ensuring convenience and consistent revenue.
Bill of Exchange
A written, unconditional order directing the drawee to pay a fixed sum to another party the payee on a specified future date, such as for settling commercial transactions.
Electronic Bill Presentment and Payment (EBPP)
A service that enables businesses to present bills to customers electronically via email or online portals, allowing customers to view, manage, and pay those bills securely online, improving efficiency and convenience.
Cross-Border Payment
A transaction between parties in different countries, such as a consumer purchasing goods from an overseas seller. This typically involves currency conversion and may incur additional fees like transaction or foreign exchange fees.
Dynamic Currency Conversion (DCC)
A service that allows international cardholders to pay in their home currency rather than the local currency at the point of sale, providing convenience and transparency regarding exchange rates during transactions.
Multi-Currency Pricing
A service that allows merchants to display prices and accept payments in multiple currencies, providing convenience for international customers. This enhances the shopping experience by reducing conversion uncertainty and fostering customer trust.
Mail Order/Telephone Order (MOTO)
A service that allows merchants to display prices and accept payments in multiple currencies, providing convenience for international customers. This enables transactions without requiring customers to be physically present, enhancing global sales opportunities.
Pricing & Fees
Interchange+ / IC+ / IC++
Pricing models for processing fees that transparently pass the interchange fee set by card networks directly to merchants. These models also include an additional markup or fixed fee, simplifying cost structures and enhancing pricing clarity for merchants.
Interchange Reimbursement Fees
Fees paid by the acquiring bank to the issuing bank during a card transaction. It typically covers the cost of processing, fraud risk, and potential chargebacks associated with the transaction.
Earning Credit Rate (ECR)
A rate used by banks to calculate the value of a business's account balance, effectively offsetting fees for banking services by allowing funds to earn interest or credits against service charges.
Security, Compliance & Risk Management
PCI DSS
A comprehensive framework of security standards aimed at ensuring that all companies accepting, processing, storing, or transmitting credit card information maintain a secure environment to protect sensitive data from breaches.
PCI SAQ (Self Assessment Questionnaire)
A validation tool designed for merchants and service providers. It allows them to demonstrate compliance with PCI DSS by answering specific questions regarding their payment security practices and ensuring proper safeguarding of cardholder data.
PCI PA-DSS (Payment Application Data Security Standard)
A security standard specifically designed for payment applications. It ensures that software used in processing payments adheres to rigorous security protocols, safeguarding cardholder data and maintaining compliance with PCI DSS requirements.
PCI SSC (Payment Card Industry Security Standards Council)
An independent body that develops and manages the PCI DSS, overseeing the global adoption and enforcement of payment card security standards. It collaborates with stakeholders to enhance payment data security, ensuring consumer protection against fraud.
KYC (Know Your Customer)
A process where businesses verify the identity of their customers through documentation and risk assessment to comply with legal requirements, prevent fraud, and ensure they are engaging with legitimate individuals or entities.
Credit Limit
The maximum amount of credit that a financial institution extends to a borrower. This limit is determined by evaluating the borrower's creditworthiness, income, debt-to-income ratio, and overall financial stability.
Collateral
An asset pledged by a borrower to secure a loan or credit. This can include property, vehicles, or other valuables, which the lender can seize if the borrower defaults on repayment, mitigating their risk.
AVS (Address Verification Service)
A fraud prevention tool that cross-verifies the billing address provided by the cardholder with the address on file at the issuing bank, helping merchants identify and reduce fraudulent transactions.
Encryption
The process of converting information or data into a code, especially to prevent unauthorized access. This technique employs algorithms to transform readable data into unreadable formats, ensuring confidentiality and integrity in securing payment transactions and sensitive information.
Dynamic CVV
A security feature where the card verification value (CVV) on a payment card is dynamically generated for each transaction, enhancing security against fraud by ensuring that even if the CVV is intercepted, it becomes unusable for future transactions.
EMV Transaction
A payment process utilizing EMV chip technology, which enhances security by generating a unique code for each transaction. This code prevents fraud, making it difficult to clone cards and ensuring safer consumer payments.
Chargeback
A transaction reversal initiated by the cardholder's bank, typically due to a dispute, fraud, or unauthorized transactions. This process compels the merchant to refund the transaction amount, impacting their financial standing and reputation.
Chargeback Prevention
Techniques and services aimed at reducing the occurrence of chargebacks, where a cardholder disputes a transaction and requests a refund from the issuing bank, ultimately safeguarding merchants from potential revenue loss and reputational damage.
Counterparty Credit Risk
The risk that the other party in a financial transaction will not fulfill their obligations, potentially leading to financial loss. This risk is particularly significant in derivatives and other complex instruments, where exposure can vary greatly.
Fraud Prevention
A range of strategies and tools designed to detect and thwart fraudulent activities, particularly in financial transactions. This includes utilizing AI algorithms to continuously monitor transactions for unusual patterns, flagging anomalies for further investigation.
False Positive
In fraud detection, a false positive occurs when a legitimate transaction is mistakenly flagged as fraudulent, resulting in unnecessary declines and potential customer dissatisfaction, loss of sales, and increased scrutiny of future transactions by the customer.
SSL Certificate
A digital certificate that provides authentication for a website and enables an encrypted connection. This ensures secure data transmission between the server and the user's browser, protecting sensitive information from interception.
HSM (Hardware Security Module)
A physical device that manages digital keys and provides cryptographic services, ensuring secure payment transactions and data protection by safeguarding sensitive information and performing encryption, decryption, and authentication processes securely.
PCI Penetration Testing
A security test conducted to identify vulnerabilities in payment systems by simulating potential attacks. It ensures compliance with PCI DSS standards, helping organizations protect sensitive cardholder data from breaches and cyber threats.
EMV Liability Shift
A policy shift where liability for fraudulent transactions transfers to the issuer, acquirer, or merchant that is least EMV-compliant, thus incentivizing the adoption of EMV chip technology to enhance transaction security. This shift encourages stakeholders to upgrade their systems, fostering a more secure payment environment and reducing overall fraud risk.
Counter Terrorist Financing
Regulations and practices designed to prevent the exploitation of financial systems for terrorist activities, often emphasizing Know Your Customer (KYC) procedures and transaction monitoring to detect suspicious financial behavior and mitigate risks.
Transaction Processing
Payment Processor
A payment processor is a company that facilitates the processing of payment transactions between merchants, acquiring banks, and issuing banks, ensuring secure, efficient transfer of funds while managing transaction data and compliance with financial regulations.
Payment Gateway
A technology used by merchants to securely accept debit or credit card purchases from customers. It facilitates the transfer of transaction information to the payment processor, ensuring authorization, data encryption, and fraud detection during transactions.
Transaction Processing
The handling of payment transactions, covering authorization to verify funds, settlement for transferring money, and clearing to finalize the transaction, ensuring secure, timely completion from the moment a transaction is initiated to when it concludes.
Batch Processing
A method of processing transactions in bulk at a scheduled time, rather than in real-time. This approach optimizes efficiency, reduces costs, and is commonly used in settlement processes, payroll, and data backups.
Batch Settlement
The process of settling a batch of payment transactions, typically conducted at the end of a business day, where funds are aggregated and transferred from one bank to another for efficient processing. This method helps streamline transaction management and ensure timely fund availability.
Gross & Nett Settlement
Gross settlement refers to the transfer of funds where each transaction is settled individually, ensuring immediate and finality of payment. In contrast, net settlement combines multiple transactions, calculating the net amount owed, reducing the number of actual fund transfers.
Smart Routing
A payment processing feature that optimizes the routing of transactions across multiple processors, allowing businesses to reduce costs, improve approval rates, and ensure compliance with specific regulatory or operational requirements by dynamically selecting the best route for each transaction.