Payments Glossary

Terms

• ACH: Automated Clearing House; a payment method where a payer uses their routing and account numbers to pay electronically.
• Batch Processing: Batch processing (also known as batch clearing) involves the exchange of transaction information twice, which is why it is also referred to as dual message processing. In dual message processing, the authorization occurs at the time of the transaction, through only one message, and then the clearance is done later through another message. The clearing messages from the daily transactions are typically collected into a batch for the point-of-sale (POS) devices. At the end of the day, the batch is sent to the processor as part of the end-of-day processing. Device-capture and processor host-capture systems typically use dual message processing. 
• Card Brands: Types of cards that fall under the headings of Visa, MasterCard, American Express, and Discover. 
• Card-Not-Present: This is when a transaction takes place but the card is not verified in person. This often refers to eCommerce and MOTO payments.
• Card-Present: Card-present transactions take place in person or where the card is physically verified. These payments are typically captured through an EMV / Chip-reader or PIN-pad device.
  • Retail: The EMV chip or magnetic strip is read and processed by a point-of-sale terminal. Do not include magnetic stripe readers that post the information into another form for submission. (See MO/TO)
• Chargeback: The return of funds to a consumer, initiated by the issuing bank of the instrument used by a consumer to settle a debt. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account, line of credit, or credit card. 
• Check-Not-Present: Where a consumer provides banking information to make a payment (ACH/XCHECK). 
• Consumer: The purchaser of goods or services. 
• Contactless Payments: Capturing payments through a contactless method is referred to as contactless payments. The most common are Apple Pay, Google Pay, and Samsung Pay.
• Dispute: A transaction reversal initiated by the Payer directly with the Issuer of their payment account. Can be contested by merchants.
• Doing Business As (DBA) Name: This is the business name that appears on a consumer's statement. It is often similar to or the same as the Merchant's name. 
• E-Commerce: Transactions completed online using the internet.
• Encoded: This means that the data has been transformed into another format using a scheme that is publicly available so that it can be easily reversed. Encoding does not require the use of a "key". 
• Encrypted Swipe Reader: This is a device that reads MSD and encrypts the information before sending it to the payment gateway.
• Encryption: This means that the data has been transformed into another format in such a way that only specific individuals can reverse the transformation. Encryption uses a "key" to accomplish this process. 
• Europay, Mastercard, and Visa (EMV): A global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.
• Financial Institution: The institution that manages the funds for the Merchant. 
• Gateway: An entity that receives payment requests from software, securely directing them to a processor. Payment gateways facilitate these transactions by transferring key information between payment portals such as web-enabled mobile devices/websites and the front-end processor/bank. Payment gateways fulfill a vital role in the e-commerce transaction process, authorizing the payment between merchant and customer. 
• Issuer: The financial institution that creates and manages a payer's payment account.
• Magnetic Stripe Reader (MSR): This is a device that can read data off of a magnetic stripe. 
• Magnetic Stripe Data (MSD): This is the data that is read off a card that has a magnetic stripe. 
• Merchant: The entity (such as a local government) that accepts payment in exchange for goods or services.
• Merchant Account: A unique identifier (MID) for any entity wanting to accept electronic payments. This is used to ensure the processor properly attributes the funds.
• Merchant of Record: A merchant of record is the organization that assumes the overall liability of any outstanding credit or debit balance on a merchant account. The merchant of record typically handles the administrative duties of the merchant account, such as statements, and PCI compliance, in addition to the fiduciary liability held. 
• Merchant Processing: The ability of a merchant to accept a transaction payment through a secure channel. The types of payments that are covered include: 
  • Credit cards 
  • Debit cards 
  • ACH transactions (sometimes called EFT)
  • E-checks
• MO / TO (MOTO): MOTO refers to mail order and telephone orders. This is a type of card-not-present transaction where the payment is placed over the phone or by mail. 
• Payment Card Industry (PCI): The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment. 
• Plain Swipe Reader: This is a device that reads magnetic stripe data (MSD) but does not encrypt the cardholder data.
• Point of Sale (POS) Device: The terminal where a card is inserted.
• Processor: An entity (often a third party) appointed by a merchant to handle transactions from various channels such as credit cards and debit cards for merchant-acquiring banks. These entities manage settlement and funding.
• Real-Time Processing: In real-time processing, all transaction information flows online. If the final amount is known at the time of the authorization request, the same online message also provides the issuer with all the data needed to clear the transaction and post it to its cardholder’s account. This convenience is why real-time processing is also referred to as single-message processing.
• Refund: The voluntary return of funds to the end consumer from the merchant after the funds are settled.
• Software or Application Provider: What the merchant utilizes to offer services or products to consumers. Web Central and CivicRec are solution suites provided by CivicPlus.
• Void: The cancellation of a transaction before the funds are settled. Also referred to as a reversal.