Menu
Menu
Menu
The FinTech (payments/Point of Sale) industry is flooded with terminology that you may not be familiar with. So, we’ve compiled a glossary of relevant payment terms and phrases from A to Z to help you navigate the payments landscape.
An acquiring bank (also known as the merchant bank, merchant account provider, or acquirer) is a bank that manages the merchant’s account. An acquirer enters into an agreement with the merchant and enables them to accept credit and debit card transactions. Acquiring banks assume the risk and responsibility for these transactions. Because of this assumed risk, acquirers usually charge various fees for their service. Fees vary by acquiring bank, and are usually based on the number of transactions, chargebacks and refunds.
Address Verification Service (AVS) is a means of security that checks to see if the billing address of a credit card used in a transaction is the same as the one provided by the credit card holder at the time of purchase. The AVS system used often depends on the type of credit card that is chosen in the transaction. The numbers that AVS systems verify depend on the credit card, but may include the street address, zip code or both. If the numbers match, the transaction is processed. Cards may be denied if the numbers are different or incomplete. The purpose of AVS is to deter fraud or prevent a purchase from taking place if a credit card has been stolen.
Examples of when AVS systems may be utilized are at gas stations when paying at the pump, via the internet or over the phone.
Although not as widely accepted as Visa, the American Express Company preceded it by about 100 years, founded in Buffalo, New York, and today is headquartered in New York City. Thanks in part to its lengthy tenure and variety of credit and charge card offerings, American Express boasts 110 million cardholders overall. However, it represents only about 8 percent of all credit lines, according to data compiled by Nerdwallet.
For more about American Express, check American Express’ history.
Launched in September 2015, Android Pay is a mobile wallet that can store your credit cards, debit cards, loyalty cards, and more. Android Pay can be used at millions of stores around the world, wherever [NFC] contactless payments are accepted.
In January 2018, Google merged Android Pay and Google Wallet into one entity, Google Pay. According to Google, apps like Airbnb, Dice, Fandango, HungryHouse, and Instacart already support Google Pay, with more sites and stores set roll out soon over the coming weeks.
Launched in 2014, Apple Pay is a mobile payment service that allows individuals to purchase goods and services on a wide variety of devices the multinational tech company produces, such as the iPad, iPhone, or Apple Watch. By syncing debit cards with their mobile devices, users can buy virtually anything they want, so long merchants accept Apple Pay, which an increasing number of companies do.
An authorization code is a method of security corroborating that users are who they say they are upon entering the appropriate password. These alphanumeric passcodes provide the clearance merchants or vendors needed to ensure users are authorized to use specific accounts, whether to transfer, purchase or sell goods and services. Merchants and vendors will frequently use certain types of passwords to enhance security – such as using a combination of letters, numbers and symbols – making them harder for unsanctioned users to crack. Authorizations codes may also be case sensitive. The codes differ from passwords in that authorization codes are usually automatically generated and often temporary Additionally, the function of authorization codes generally depends on the vendor and circumstances of the transaction. Credit card companies, banks and telecommunication providers are among those that may require authorization codes to access security-restricted information.
Average ticket is a term typically used by business owners who accept credit card transactions and refers to the average size or percentage of individual sales customers purchase by credit card. In order to calculate this, the total amount of sales over a specific span of time is divided by the number of periods in which the credit purchases were made, measured either in days, weeks, months, quarters or years.
Batch processing refers to the method of processing multiple payment transactions simultaneously. Instead of processing each transaction individually in real-time, batch processing allows merchants to collect transactions over a set period, such as a day, and submit them as a batch for processing in bulk. This approach improves efficiency by reducing the number of separate connections to the payment processor, thereby optimizing resources and reducing processing costs. Batch processing is commonly used for handling large volumes of transactions, such as those in e-commerce or retail environments, where processing efficiency is essential. Additionally, batch processing enables businesses to streamline reconciliation and reporting processes, as they can easily track and reconcile batches of transactions rather than individual transactions.
BOPIS, or Buy Online, Pick Up In Store, is a retail strategy that allows customers to purchase items online and then retrieve them from a physical store location at their convenience. This convenient service offers shoppers the flexibility to browse and buy products online while still enjoying the immediacy of in-store pickup. BOPIS not only streamlines the shopping experience for consumers but also benefits retailers by driving foot traffic to brick-and-mortar stores and fostering additional sales opportunities. By blending the digital and physical realms of retail, BOPIS represents a strategic approach to meeting evolving consumer demands for convenience and flexibility in the shopping process.
Biometric authentication in fintech refers to the use of unique biological characteristics, such as fingerprints, facial recognition, or iris scans, to verify the identity of individuals during payment transactions or access to financial services. This technology offers a highly secure and convenient method of authentication, replacing traditional methods like passwords or PINs, which can be susceptible to theft or fraud. By leveraging biometric data, fintech companies can enhance the security of transactions and protect customer data, while also streamlining the authentication process for users. With advancements in biometric technology and widespread adoption of smartphones equipped with biometric sensors, biometric authentication is becoming increasingly prevalent in fintech applications, providing users with a seamless and frictionless experience while ensuring robust security measures.
PopID, a Datacap partner, uses biometric authentication (facial recognition) for applications such as loyalty, payment, and entry.
A card not present transaction is a payment identification method wherein the physical card – usually a credit or debit card – was not present at the time of purchase. More specifically, a CNP transaction means a credit or debit card was not physically swiped or inserted into a payment terminal. While convenient, CNP transactions may be more susceptible to fraud, not having the same kind of security protections as CP.
Examples of CNP transactions include electronic payments, automated payments, purchases made by mail, over the phone or online checkouts, mobile pay applications and mobile devices.
A card present transaction (CP) is a payment identification method that indicates whether a tangible credit card was used at the time of purchase. This is generally determined when card readers capture data through the magnetic strips featured on the back of credit cards or in EMV (Europay Mastercard and Visa) chips once cards are swiped or inserted into payment terminals. The presence or non-presence of a card at the time of purchase can also affect whether the merchant charges a transaction fee.
Examples of CP transactions include portable card readers, mounted credit card machines – typically found at checkout registers – and contactless payment terminals.
If you look at the front of a credit card and turn it over, you’ll probably see three or four numbers slightly separated from the other numbers. These digits represent a credit or debit card’s CVV, or card verification value. To better protect credit or debit cards from being tampered with, CVV’s provide an extra layer of protection that helps guard against fraud, particularly for purchases made online. Most CVVs are three digits in length, but some – like American Express – have a four-digit CVV. It’s found both on the back of cards as well as on the front, usually on the far middle-side right portion, just above the last five digits of the card number itself.
Shopping has never been easier or more convenient for consumers with online payment methods, but with this ease can come silly mistakes, when buyers unintentionally hit the “buy” button or make two purchases after clicking twice. Chargebacks serve as the solution by reversing a charge, in effect canceling out the transaction so consumers don’t spend what they don’t intend. Chargebacks also help guard against unauthorized transactions should debit or credit cards be stolen.
Even the mPOS system in the world won’t do you much good if you’re not familiar with the terminology that governs its use. Datacap offers intuitive integrated payment solutions that meet the computational and purchase method preference of your sales force and customers.
Convenience fees are charges imposed by businesses to cover the cost of providing additional or expedited services to customers. These fees are typically applied when customers choose to utilize certain payment methods or services that offer added convenience or flexibility, such as online payments, express processing, or alternative payment channels. Convenience fees are distinct from surcharges, as they are intended to offset the cost of providing convenience rather than covering the cost of processing a specific payment method. While convenience fees can vary depending on the nature of the service provided, they are often justified as a means for businesses to recover operational expenses associated with offering enhanced payment options.
However, it’s essential for businesses to ensure transparency and compliance with regulations when implementing convenience fees, as excessive or hidden charges can lead to customer dissatisfaction or legal issues. Additionally, businesses must clearly communicate the existence and terms of convenience fees to customers to maintain trust and transparency in their pricing practices.
Datacap partners can utilize convenience fees (Payment Fee) in addition to other elements of Datacap’s Payment Fee Suite.
Credit card fraud is an umbrella term that indicates a credit card has been used in an unauthorized fashion. Fraudulent actions as they pertain to credit cards may include theft of the credit card number or card itself, making false statements when applying for a credit card or assuming a the cardholder’s identity. CNP fraud is another type, usually carried out through e-commerce, mail. Address verification service (AVS) can help reduce the risk of credit card fraud.
A term used to refer to financial transactions paid with credit cards. Credit card issuers may be affiliated with credit card processing or companies may specialize in processing services. Examples include Square, Payline and TSYS.
A specific variety of payment gateway services provider, credit card processors are companies that handle transactions that are made via plastic. Typically a third party, credit card processors are usually exclusive to credit-based purchase methods, although more firms are expanding their services to bring added options and convenience to customers. Any business that wishes to sell products or services and accept credit cards as payment goes through a credit card processing company. Integrated payment middleware products already have affiliations with credit card processing entities, eliminating this step for business owners. Organizations that provide these services include Chase, Elavon, TSYS, Worldpay among others.
A debit card is a form of payment that allows individuals to draw money from a bank account to pay for goods and services. A convenient alternative to cash, debit cards are similar to credit cards in that they’re typically the same size, contain identification numbers and are frequently swiped or inserted into machines at checkout counters. Unlike credit cards, however, the cost of the item is deducted from an account that holds a set amount of funds, rather than contributing to debt.
Debit cards can also be used at ATMs. After punching in the required PIN number – usually four to six digits – debit card holders can draw cash from their checking account in dollar increments. There may be a service fee if the ATM used is not associated with the bank that issued the debit card.
An electronic system or process that enables debit cards to be used for their intended purpose, making it possible to deduct funds from saving or checking accounts attached to the debit cardholder. Debit networks aren’t a single entity but a combination, including payment terminals, debit card issuers and processors.
Direct End-to-End Encryption (DirectE2EE) and PCI Validated P2PE are two closely related terms. DirectE2EE refers to data that is encrypted at the point of interaction (POI) and decrypted outside of the Point of Sale environment (at the processor). DirectE2EE utilizes proprietary encryption format specific to each processing platform.
PCI Validated P2PE is similar to DirectE2EE, but with PCI Validated P2PE there are more procedures in place to help reduce PCI Scope requirements for merchants. Both DirectE2EE and PCI Validated P2PE are secure because they encrypt sensitive data and make it unusable to environments outside the credit card processor’s host.
Discount rate is an umbrella term used to describe what merchants that accept credit card or other forms of alternative payment involving a processor will be charged when customers pay with plastic or mobile device. The fee amount is determined by several different contributing factors, but the overarching component of the discount rate – meaning the fees attached to each credit card sale – is the sticker value of the goods or services. The discount rate is a percentage of the sale, the amount of which hinges on several factors like credit risk and the type of card used. Generally speaking, low risk sales receive a “qualified” discount rate, customarily the lowest fee. Fees tend to be higher for “mid-qualified” and “non-qualified” sales.
Discover is one of the major credit lenders. It came on to the credit card scene in 1986, launched by Sears, Roebuck & Company, which at the time was the largest retailer in the U.S. in terms of domestic earnings. With competing credit card companies already well established, Discover gained a foothold with the consumer public by not charging any annual fees. This may be part of the reason why Discover has been No. 1 in customer loyalty 21 years in a row, according to research firm Brand Keys, Inc., which surveyed nearly 49,200 consumers.
Dual or multi-pricing refers to the practice of offering different prices for the same product or service based on payment method. This strategy allows businesses to tailor pricing to different market segments or optimize revenue by charging higher prices to customers willing to pay more. For example, businesses may offer discounts for bulk purchases, loyalty program members, or customers paying with cash rather than credit cards. While dual/multi-pricing can help businesses increase revenue and appeal to different customer segments, it requires careful consideration to avoid discrimination or backlash from customers. Transparency and clear communication of pricing policies are essential to maintain compliance, trust and avoid customer dissatisfaction.
Dual/Multi-Pricing solutions generally work best for brick-and-mortar merchants where a payment device can display different prices per tender-type to the consumer at checkout. As with any fee structure/program, merchants should contact their payment processor for guidance surrounding cash-discounting.
Datacap’s configurable Dual/Multi-Pricing solution combines Datacap’s “Surcharge With Lookup” function and optional Convenience Fee adjustment to create a Dual/Multi-Pricing display with up to six tender-type options. Available on select PIN pad OEMS.
Check Datacap’s Developer Portal for implementation options.
Derived from the phrase “electronic commerce,” e-commerce or eCommerce refers to businesses that sell their products and/or services by way of the internet, frequently exclusively but not always. These transactions online transactions can derive from consumers or other businesses, with the two most common forms being from business to consumer (B2C) and business to business (B2B). Though e-commerce is typically associated with the internet, its origins originate from the 1960s, after the creation of the Electronic Data Interchange. EDI made the B2B or B2C communication process possible via electronic means as opposed to in person or on paper.
EFT (Electronic Funds Transfer) is a product of the paperless era that allows for the transference of money from one account to another. Regulated by the 1978 Electronic Funds Transfer Act, EFT helps streamline the transaction process, in effect circumventing the traditional payment method that involved collecting cash or writing one a check. EFT can be used for making a payment on a regularly occurring basis or for payroll purposes, with an automated clearing house serving as the go-between.
Short for Europay MasterCard and Visa, EMV chips have helped resolve security issues through computer chip technology, making it more difficult for credit terminals to be compromised. EMVs are embedded in all credit cards nowadays, though they’ve long been the norm in other countries, especially those located in Europe. Instead of swiping a credit card through, EMV-ready credits cards are used by inserting them into terminals. Because the authentication process is a bit more involved, transactions typically take slightly longer to complete when compared to the magnetic stripe method.
The purpose of EMV is to reduce on-site credit card fraud by confirming that the card is both valid and in the hands of the correct owner. EMV does not however, protect data after the transaction, so it does nothing to prevent site-wide data breaches. For this reason, merchants should utilize processors that support end-to-end encryption and tokenization to protect themselves from data breaches.
EMV chip cards are used in Europe, Latin America, Asia, Canada and the United States.
Tokenization and encryption are often used interchangeably. While they are both related to security, encryption is a much more nuanced process that converts massive amounts of information into a mathematical code through the use of an encryption key. Also, unlike tokenization – which typically stays in the same silo – encryption is used as a means to protect data during the transmission process.
While this list is hardly exhaustive, these five key terms should provide you with a solid base of integrated payment verbiage so you’re more familiar with the lingo.
Fallbacks in the context of payment gateways refer to alternative payment methods or authentication processes used when the primary method fails or encounters issues. These can include backup payment cards, alternative authentication protocols, or manual verification procedures. Fallback mechanisms are crucial for ensuring transaction success and providing a seamless payment experience for customers, especially in scenarios where primary methods like contactless payments or biometric authentication may not be available or fail due to technical reasons. By implementing effective fallback strategies, payment gateways can mitigate transaction disruptions, reduce customer frustration, and maintain business continuity.
Fees associated with payment processing encompass a range of charges levied on merchants for facilitating transactions through payment gateways. These fees typically include interchange fees, assessed by card networks, and payment gateway fees, which cover the services provided by the gateway provider. Additionally, merchants may encounter other fees, such as chargeback fees, currency conversion fees, and statement fees. Understanding and managing these fees is crucial for merchants to optimize their costs and profitability. Payment processors often offer transparent fee structures and tools to help merchants analyze and mitigate their fee expenses effectively.
Fintech, short for financial technology, encompasses a broad range of innovative solutions that leverage technology to enhance and streamline financial services. These technologies include mobile banking apps, digital payment platforms, robo-advisors, blockchain-based cryptocurrencies, and peer-to-peer lending platforms, among others. Fintech solutions aim to democratize access to financial services, improve efficiency, reduce costs, and enhance user experiences. By harnessing the power of data analytics, artificial intelligence, and automation, fintech companies are transforming traditional financial sectors such as banking, insurance, investment management, and payments. The rapid evolution of fintech is reshaping the financial landscape, driving digital transformation, and paving the way for a more inclusive and efficient financial ecosystem.
Fraudulent chargebacks occur when a customer falsely claims that a transaction was unauthorized or fraudulent, resulting in a chargeback request initiated with the payment gateway or financial institution. These chargebacks can lead to financial losses for merchants and payment gateways, as they may be required to refund the transaction amount and incur additional chargeback fees. Fraudulent chargebacks are often orchestrated by dishonest individuals seeking to exploit the chargeback process for personal gain, such as obtaining goods or services without payment. To combat fraudulent chargebacks, merchants and payment gateways implement robust fraud detection and prevention measures, including transaction monitoring, authentication protocols, and documentation of evidence to dispute illegitimate claims.
Gateways, otherwise known as payment gateways, are a system of technologies that allow for electronic transactions to proceed. The purchase process is just that – a multi-stop journey where payments are launched into the e-commerce ether before arriving at their final destination, which are merchants’ bank accounts. Gateways serve as the middleman, relaying transactions to credit card networks that then process and determine authorization. In short, if credit, debit cards and mobile wallets serve as the payment method, gateways are the payment means.
Merchants aren’t the only ones that get compensated for their products or services. Gateways themselves serve as services, supplied by companies that manufacture or make them available. Think of gateway fees as the price of admission. Fees, like prices, vary considerably and depend on characteristics of the transaction, such as whether the purchase is conducted in store or online, selling value and the average amount of sales for the product or service in question over a week, month or year. Additionally, the type of transaction – such as debit versus credit – can affect gateways fees.
Traditionally offered by businesses, gift cards serve as an alternative form of payment that enables customers to buy a specific dollar amount of good or services, in accordance with the pre-paid fund total already on the card. Sold in varying increments – typically no less than $5 – gift cards function similarly to credit cards, but do not require repayment. Gift cards may be accepted by multiple retailers, depending upon the type and terms and agreements that may or may not be listed on the back of the card.
In 2009, President Barack Obama signed into federal law a bill passed by Congress, called the Credit Card Accountability Responsibility and Disclosure Act, or CARD. The legislation stipulates that gift cards must be honored for no less than five years after they were initially sold or activated. Many merchants, however, place no limit on the length of time in which gift cards are redeemable.
In January 2018, Google announced that Google Wallet and Android Pay would be merged into one entity called Google Pay. With Google Pay, you can check out in Chrome for web purchases, in hundreds of apps, in YouTube for renewing your subscriptions, and at retail outlets with NFC payments without having to enter your payment information. Users can add credit cards to Google Pay by taking a photo of the card, or by entering the card information manually.
The predecessor to both Android Pay and Apple Pay is Google Wallet. First released in 2011, it serves all the mobile functions as its contemporaries and is accessed when mobile phone users download the app. Recipients don’t necessarily need to have the app themselves to receive funds, though, because money can also be transmitted via text, or email address. But of course, for the funds to be accessible, the receiver must have a bank account, similar to how PayPal works to both send and receive financial transactions. While these accounts are typically linked to savings or checking accounts, Google Wallet allows users to make payments with credit cards as an alternative.
High-risk merchants are businesses deemed to have a greater likelihood of encountering payment processing challenges, such as chargebacks, fraud, or regulatory issues. This classification is often based on factors such as the industry the merchant operates in, the business model, or the merchant’s credit history. Industries commonly considered high-risk include adult entertainment, online gambling, and pharmaceuticals. High-risk merchants may face higher processing fees, stricter underwriting requirements, and may need to work with specialized payment processors equipped to handle the unique challenges associated with their business type. Despite the challenges, high-risk merchants can still access payment processing services with the right provider, albeit with additional scrutiny and safeguards in place.
A Hosted Payment Page (HPP) is a secure web page provided by a payment gateway or processor where customers can securely enter their payment information during the checkout process. Instead of handling sensitive payment data directly on their own website, merchants redirect customers to the HPP, which is hosted and maintained by the payment service provider. This reduces the merchant’s PCI compliance burden and helps ensure the security of payment transactions. The HPP typically features branding elements that align with the merchant’s website to provide a seamless checkout experience. Once payment details are entered, the customer is redirected back to the merchant’s site, and the payment is processed securely through the payment gateway.
Credit card issuers can’t make money without business, both from consumers who pay with credit and merchants who accept this form of payment as part of their POS system. Independent sales organizations, otherwise known as ISOs, are hired third-party firms or organizations that bring merchants and credit card issuers together. Credit card companies may attempt to drum up business internally through various marketing efforts or advertising campaigns. ISOs serve as another means by which to obtain a working relationship with a business that previously didn’t accept credit or was only contracted with certain issuers. How ISOs get compensated for their efforts varies based on terms of agreement, but generally get paid on a percentage of sales basis. In other words, ISOs make money when the companies they sign up make money for credit card issuers.
As its title suggests, an integrated point of sales system is one that combines several different transaction options into one unit or bundle. A small-business owner who is just starting out may only have one POS system, which may prevent customers who prefer paying with credit card or smartphones from using anything besides cash or check. An integrated POS system gives both customers and business owners more options by including the technologies that are required for credit or electronic purchases while at the same time eliminating machinery that only served one function.
Interchange refers to the exchanging of funds between two or more entities, usually banks, credit card issuers and merchants. Interchange fees are charges paid by merchants to the card-issuing banks for processing credit and debit card transactions. These fees are set by card networks like Visa and Mastercard and are typically a percentage of the transaction amount plus a flat fee. Interchange fees help cover the costs associated with maintaining payment networks, fraud prevention, and providing cardholder benefits like rewards programs. The exact interchange fee varies depending on factors such as the type of card used, the merchant’s industry, and the transaction method. While interchange fees represent a significant cost for merchants, they are essential for sustaining the infrastructure of the card payment system and enabling secure and efficient transactions.
Also known as a member bank, an issuing bank offers payment cards – such as debit or credit cards – on behalf of other financial institutions. An issuing bank may be affiliated with a card issuer, hence the term “member bank,” and may determine credit limits for cardholders.
JCB Cards, or Japan Credit Bureau Cards, are credit cards issued by the Japan Credit Bureau, one of the major credit card networks in Japan. Established in 1961, JCB has expanded its presence globally and is widely accepted in various countries, particularly in Asia. JCB Cards offer cardholders various benefits, including reward programs, discounts, and exclusive deals, catering to both domestic and international users. With a focus on innovation and customer satisfaction, JCB continues to evolve its offerings to meet the diverse needs of consumers and businesses worldwide.
Klarna is a Swedish fintech company that provides a variety of payment solutions and financial services to consumers and merchants worldwide. Founded in 2005, Klarna offers services such as buy now, pay later (BOPIS) options, installment plans, and online shopping platforms, aiming to simplify the payment experience for both shoppers and merchants. With its innovative approach to payments and focus on customer convenience, Klarna has become a leading player in the global payments industry, catering to millions of users and partnering with numerous retailers to offer flexible payment options.
Know Your Customer (KYC) is a regulatory requirement imposed on financial institutions and businesses to verify the identity of their customers. The purpose of KYC is to prevent identity theft, fraud, money laundering, and terrorist financing by ensuring that businesses have accurate information about their customers. KYC procedures typically involve collecting and verifying personal information, such as government-issued identification documents, address proof, and other relevant data. By implementing robust KYC processes, businesses can mitigate risks associated with financial crime, comply with regulatory requirements, and build trust with customers and regulatory authorities alike. Additionally, advancements in technology, such as digital identity verification tools, are helping streamline KYC processes, making them more efficient and effective.
Loyalty programs are initiatives businesses frequently use that reward frequent customers for their patronage, while often incentivizing them to buy more. In order to make use of loyalty program benefits – which can include discounts, rebates, free products or exclusive offerings, among others – customers traditionally must sign up for them, supplying their contact information, such as their name, email, and mailing address.
There are several types of loyalty programs, with discounts being among the most common. For example, when customers purchase a predetermined amount of goods and services over a given period – usually a year – they may receive a certain percentage off with each purchase they make. Members of loyalty programs will frequently receive some form of identification that recognizes them as such, be it a number or a card. Grocery stores, toy merchandisers, pet supply companies, clothing retailers, restaurateurs, e-commerce organizations and coffee shops are among those that provide loyalty perks to their regularly returning customers.
Magento is a leading open-source e-commerce platform renowned for its scalability, flexibility, and robust feature set. Developed by Adobe, Magento offers a comprehensive suite of tools and functionalities to create and manage online stores of all sizes and complexities. With powerful customization options, extensive third-party integrations, and advanced marketing capabilities, Magento empowers businesses to create unique and tailored shopping experiences for their customers. Whether it’s managing products, processing payments, or optimizing SEO, Magento provides merchants with the tools they need to succeed in the competitive e-commerce landscape. Its thriving community and ecosystem of developers further enhance its appeal, making Magento a top choice for businesses seeking to establish a dynamic and scalable online presence. Datacap’s eCommerce offering includes an option for Magento.
Credit cards contain copious amounts of data that needs to be read for a transaction to move forward. Enter the magnetic stripe. Typically black in color, magnetic stripes are attached to both credit and debit cards and allow terminals to make sense of the information that they contain. This process is done by swiping the card through the terminal. Each magnetic stripe has details about the account holder, including name, credit card number, when the card is due to expire and the country code in which the card was issued. It may also have specifics regarding the account holder’s billing address, such as the Zip code. The main problem with magnetic stripes is they’re not invulnerable. Indeed, because they contain financial data that’s highly sensitive, hacked terminals can result in identity theft when the property security measures aren’t implemented.
tarted by a group of banks in 1966, MasterCard recently celebrated its 50th anniversary. Originally known as the Interbank Card Association, it went through a name change 13 years later, and shortly thereafter, achieved a milestone by becoming the first credit card issuer to have services in China. Its expanded its global presence ever since, partnering with Europay International in 2002, the first year it became a private share corporation. MasterCard is on par with Visa in merchant acceptance, totaling nearly 10 million, according to Nerdwallet.
Pull out your wallet and you’ll see that the account number on your card starts with a “5”. The first six digits of your account number, otherwise known as the Bank Identification Number (BIN), determine how transactions are routed and identify your issuing bank. Rather than a “5”, MasterCard has started assigning certain issuing institutions a BIN Range starting with “2”.
Mastercard BIN Range is not to be confused with the major industry identifier (MII), first digit of the BIN, which is used to identify the issuer’s industry—airline, travel, finance, etc.
Masterpass is a digital wallet that allows you to check out faster by storing all of your payment (eligible credit and debit cards; this is not limited to Mastercard branded cards) and shipping information in one secure location. With Masterpass, users can also download the Masterpass app for Android devices and use the app to tap and pay on payment terminals in stores to check out faster. Just look for the contactless symbol at checkout.
Merchant Category Codes (MCC) are similar to SICs, in that they’re used primarily for identification purposes. But unlike SICs, which were originally determined and developed by the Commerce Department, credit card companies are the ones that assign these four-digit values. In short, while SIC Codes help identify what activities business engage in, MCCs help credit card card issuers identify the types of goods or services a company sells or provides. As soon as a company begins accepting credit as a form of payment for the first is usually when businesses get their MCC affiliation.
From the DMV to the deli counter at your local grocer, numbers serve as a reliable way to identify where people are in line or in order. A merchant identification number, or MID, serves a similar purpose by providing business entities with a one-of-a-kind code that establishes they have the proper clearance to begin processing credit cards. Business owners should receive this special code as soon as they sign up with their merchant account provider. MIDs establish the corroboration banking institutions and credit card processing companies need to move forward with a transaction. Additionally, MIDs can help business owners save, as processing fees are typically more affordable compared to third-party merchant accounts.
Mobile payments are an alternative form of payment available to business owners and consumers, in which portable devices serve as the purchase method. Traditionally, mobile payments are made via smartphone, personal data recorders and/or tablets. Point of sales (POS) transactions that fall under the mobile payment banner may include text message, photo, app or barcode. The barcode method requires a special scanner that retailers use at checkout, which is usually on the same POS system used for credit and debit card payments. Several mobile device distributors have their own mobile payment programs, such as Apple Pay, Samsung Pay and Android Pay. The same goes for e-commerce retailers, like Amazon.
Near Field Communication (NFC) is a process that allows for the communication between two or more devices so long as they’re close. A product of Radio Frequency Identification Technology, NFC works similarly by enabling multiple devices – such as smartphones, laptops and tablets – to share data even without an internet connection. Proximity to one another makes this possible, so long as they’re equipped with an NFC. How close devices have to be to share data largely depends on the manufacturer. POS terminals may use NFC technology to enable contactless payments. An increasing number of products and manufacturers make use NFC technology, including Microsoft, Nokia, Apple, Samsung, Hewlett Packard, Motorola and Apple.
Offline Transaction Processing, also known as a signature debit transaction, is a payment method that uses a debit card to transfer funds from a checking account to a merchant across a digital credit card network.
When you pay for goods or services with your debit card, you have the option to process your payment in one of two ways: as an offline transaction via a credit card processing network, or as an online transaction via an electronic funds transfer (EFT) system. Offline transactions are processed much like credit card transactions. They are sent over one of the major credit card networks — Visa, MasterCard, Discover, etc — depending on which credit card network your bank is associated with as a member bank. The cost of the transaction, called an “interchange fee,” is typically 2-3% of the total purchase.
(Via Investing Answers)
If you break down the actual word into parts, omnichannel is almost self-explanatory. In short, omnichannel businesses provide their customers with the ability to purchase goods and services through virtually all avenues, be it online, in person, by phone or through apps, among others. The overarching goal of omnichannel retailing is to synchronize the shopping experience so buyers have the same type of buying access in one medium they would have in another, whether physically in store or online.
Not only is omnichannel retailing beneficial for customers, but it’s a business-friendly strategy as well, as studies have shown shoppers tend to spend more compared to those who only have one channel. According to the Harvard Business Review, omnichannel shoppers spend an average of 4 percent more than single-channel shoppers every time they buy, and 10 percent more online. Additionally, the more payment channels they use, the more they tend to buy, when compared to individuals who only have one channel available to them, such as in-store.
Omnichannel also refers to the ease with which the buying experience lends itself, or as Frost & Sullivan defines it, “seamless and effortless, high-quality customer experience that occurs within and between contact channels.”
Omnichannel payments refer to the integration of various payment channels, including online, mobile, and in-store, into a seamless and unified payment experience for consumers. This approach allows customers to initiate and complete transactions across multiple channels, choosing the most convenient option for their needs. By adopting an omnichannel payment strategy, businesses can provide a cohesive and consistent payment experience across all touchpoints, enhancing customer satisfaction and loyalty. Additionally, omnichannel payments enable businesses to gain valuable insights into customer behavior and preferences, leading to more personalized and targeted marketing strategies. Overall, embracing omnichannel payments is essential for businesses looking to stay competitive in today’s interconnected digital landscape.
Pay-at-the-table (Pay-At-Table), a variety of line busting, is a POS system that prioritizes convenience for the customer. Widely used by restaurants, pay-at-the-table allows diners to conduct a transaction without ever leaving their table, as mobile devices – like tablets – are within arm’s reach. Alternatively, servers may come to patrons with a smartphone or tablet in hand, enabling customers to pay for their meals electronically, including the tip if they so choose. Pay-at-the-table mPOS systems for restaurants can often be found in fast-casual restaurants, bringing greater convenience to the consumer and added dexterity to restaurateurs. Tableside payment options have proven popular among diners, with nearly two-thirds saying they enjoy using them to pay via check when they’re available and 54 percent for ordering their meals, according to polling conducted by the National Restaurant Association.
Payment Facilitators, often abbreviated as PayFacs, are entities that simplify the process of accepting payments for smaller merchants by aggregating their transactions under their own merchant account. This allows smaller businesses to start accepting payments quickly without the need to establish their own merchant accounts with acquiring banks. PayFacs handle the underwriting, risk management, and payment processing for these merchants, offering a streamlined onboarding process and simplified pricing structures. By serving as intermediaries between merchants and payment processors, PayFacs play a crucial role in democratizing access to payment acceptance services, particularly for small and medium-sized businesses.
A payment gateway is a technology solution that facilitates the secure processing of online transactions between merchants and customers. Acting as a virtual bridge between the merchant’s website or point-of-sale system and the payment processor, a payment gateway encrypts sensitive payment information, such as credit card details, to ensure secure transmission. It authorizes transactions in real-time, verifying the availability of funds and enabling seamless payments. Payment gateways play a crucial role in e-commerce by enabling businesses to accept various payment methods, including credit cards, digital wallets, and alternative payment options, thus providing customers with a convenient and secure checkout experience. Additionally, payment gateways often offer features such as fraud detection, recurring billing, and reporting tools to help merchants manage their payment processes efficiently.
Payment processors are financial institutions or third-party service providers that handle the processing of transactions between merchants and customers. They play a vital role in the payment ecosystem by securely transmitting payment information, authorizing transactions, and transferring funds between bank accounts. Payment processors enable merchants to accept various forms of payment, including credit cards, debit cards, and digital wallets, both online and in-person. They often offer additional services such as fraud prevention, dispute resolution, and reporting tools to help merchants manage their payment operations effectively. Overall, payment processors facilitate seamless and secure transactions, allowing businesses to efficiently manage their revenue streams and provide a positive experience for customers. WorldPay, Heartland, Moneris, TSYS, Elavon are just a few of the payment processors out there.
PCI Validated P2PE is similar to DirectE2EE, but PCI-validated P2PE solutions secure transactions by encrypting all data within a PCI-approved point of entry device, preventing clear-text cardholder data from being available. PCI Validated P2PE reduces PCI scope for the merchant (reducing SAQ questions by 90%).
As defined by the PCI Security Standards Council (PCI SSC), “Building upon the solid data and environmental security foundation established and promulgated by the PCI SSC for the payments industry via the PCI DSS, PA-DSS, and PTS, the P2PE Standard is a comprehensive set of requirements focused on providing the requisite security requirements necessary to support the deployment of secure P2PE solutions.”
A PIN pad (PIN entry device or payment device) is a device used in a credit, debit or smart card-based transaction to accept and encrypt the cardholder’s PIN data. PIN pads are normally used with integrated or semi-integrated Point of Sale. The Point of Sale is responsible for taking the sale amount and initiating the transaction. Some PIN Pads can be configured in standalone mode, which allow the PIN Pad to act as a stand beside terminal, that is completely separate from Point of Sale systems. Stand bedside terminals require all sales to be manually entered into the terminal. A Point of Sale system cannot communicate with a stand beside terminal.
A point of sale is a manner or place in which a financial transaction has occurred, where money is exchanged in return for a product or service. A point of sale – or POS – can be in reference to a particular transaction method, like via a cash register or checkout counter, or location, such as a mall, farmer’s market or brick-and-mortar store. The advancement of technology has led to an explosion in POS options, where instead of a money box or basic cash register, other methods include credit and debit card terminals, electronic card or mobile device scanners or self-checkout counters. The popularity of mobile devices has spawned more mPOS systems as well, in which sales associates can go to the customer, a process to make checking out faster and more streamlined, a methodology colloquially known “line busting.”
P2PE is a security method that helps keep highly sensitive financial data – like credit card numbers – behind the technological equivalent of closed doors. Commonly utilized for POS purposes, P2PE makes it harder for data theft to take place because the encryption process makes data virtually impossible to decipher without some type of key to make sense of coding.
P2PE is categorized in two ways: Direct End-to-End Encryption (DirectE2EE) and PCI-Validated Point to Point Encryption.
Purchase cards, also known as procurement cards or P-cards, are a type of corporate credit card used by businesses and organizations to streamline the purchasing process for goods and services. Unlike traditional credit cards, purchase cards are specifically designed for business expenses and offer features tailored to the needs of corporate buyers, such as spending controls, transaction reporting, and vendor management tools. Purchase cards allow businesses to centralize and track procurement spending, improve cash flow management, and simplify reconciliation processes. They offer businesses greater flexibility and convenience in making purchases while providing enhanced visibility and control over expenditures, ultimately leading to increased efficiency and cost savings.
QIR stands for Qualified Integrators and Resellers. It refers to individuals or companies who have been certified by the Payment Card Industry Security Standards Council (PCI SSC) as qualified to install, configure, and support Payment Application Data Security Standard (PA-DSS) compliant payment applications. QIR certification ensures that these integrators and resellers have the necessary knowledge and expertise to properly implement secure payment solutions for merchants, thereby reducing the risk of data breaches and ensuring compliance with PCI standards. QIR certification is essential for businesses seeking to deploy payment systems securely and maintain compliance with industry regulations.
As previously referenced, discount rates relate to the fees charged to merchants when customers spend electronically. Qualified discount rates are one of three types – the others being mid-qualified and non-qualified – and are the rates most often charged. Credit card issuers have their own definitions qualification for transaction that fall in one of the three tiers, but generally speaking, qualified discount rates are the most highly sought after and cost the least. In addition to credit risk, when transactions were captured – compared to when they were authorized – can influence discount rate status. The type of card used can play a role as well, such as rewards cards compared to traditional credit or charge cards.
QuickChip is a technology developed to accelerate the processing of EMV chip card transactions at point-of-sale terminals. It aims to reduce transaction times by optimizing the chip card authentication process, typically known for its slower processing compared to magnetic stripe or contactless transactions. QuickChip allows cardholders to dip their EMV chip cards into the terminal and remove them quickly, without waiting for the entire transaction process to complete. This technology helps improve the customer experience by minimizing wait times and increasing throughput at checkout, while still maintaining the security benefits of EMV chip cards. As a result, QuickChip has gained widespread adoption among merchants seeking to enhance the efficiency of their payment processing systems.
Recurring payments refer to transactions where funds are automatically debited from a customer’s account at regular intervals, typically on a predetermined schedule. These payments are commonly used for subscription-based services, memberships, utility bills, and other ongoing expenses. Recurring payments offer convenience for both customers and merchants, as they eliminate the need for manual payment processing and ensure timely payments for goods or services rendered. Merchants benefit from predictable revenue streams and improved cash flow, while customers enjoy hassle-free billing and uninterrupted access to products or services. However, managing recurring payments requires careful attention to customer preferences, billing cycles, and payment security to maintain customer satisfaction and compliance with regulatory requirements.
Software-as-a-Service is a cloud-based software delivery system that enables online users to take advantage of a specific type of service remotely. Prior to cloud-based computing, software could usually only be accessed if users were physically present or had already downloaded the desired information to their computers or devices. SaaS increases convenience and frees up hard drive space that may be taken up upon installing software. SaaS providers may require users to pay a subscription fee in order to access software that is delivered remotely.
Solution-as-a-Service (SAAS) is a step beyond software-as-a-Service. It provides businesses with the hardware, software, and knowledge necessary to manage effectively. Solution-as-a-Service, as the name implies, is a complete solution. Its simplified subscription service empowers businesses with a comprehensive support team, taking the worry and stress out of management.
With SAAS, businesses pay a set monthly-fee for the entire solution. Instead of paying multiple vendors or trying to manage part of the solution in-house, businesses only have one bill to pay. The contractual nature of the subscription also allows businesses to budget for the monthly expense—with no hidden fees or unexpected IT support charges.
Otherwise known as a digital certificate, an SSL certificate (Secure Socket Layer) is a form of internet security. Used for authentication purposes, an SSL certificate provides certain guarantees that when internet users log on to a certain site, the information they enter – such as credit card, debit card and Social Security numbers or other types of personal data – cannot be stolen by identity thieves or hackers. This is done via encryption. The business or website itself also gains protection through SSL certificates.
Businesses generally have to obtain an SSL certificate if they wish to sell online. Some of the more well-known SSL providers include Verisign, GeoTrust, Comodo, and GoDaddy, among others.
Short for Standard Industry Classification, SIC code is a numerical way of identifying what product and services business provide for their customers. The SIC system began in 1937, when the federal government – specifically the Department of Commerce – determined it to be a smart strategy that streamlined the classification of business activities in a more uniform manner. It also helped foster communication and identification for companies in foreign countries dealing with businesses based in the U.S. While SIC coding is still in use, they’ve largely been replaced by a six-digit identification method, implemented by the North American Industry Classification System (NAICS).
The classification process itself is quite complex, but when business owners know what number their industry starts with, it’s a bit easier. For example, as noted by SICCode.com, the first two digits of an SIC code are for the establishment’s general industry group, the third represents the subsector of the overall industry group and the fourth is the number that contains the most specificity as to what the business does in terms of product or services.
Store and forward offline payment processing is a method used when a payment transaction cannot be processed in real-time due to the absence of a stable internet connection. In this process, the payment terminal temporarily stores transaction data and forwards it to the payment gateway or processor once an internet connection is restored. This allows merchants to continue accepting payments even in remote locations or during network outages, ensuring business continuity and customer satisfaction. While store and forward offline processing offers convenience, merchants should be aware of potential risks such as delayed transaction processing and the need for proper security measures to safeguard sensitive payment data during storage.
A surcharge is an additional fee imposed on a transaction, typically by a merchant, to cover the cost of processing credit cards. Merchants may apply surcharges to offset the fees charged by payment networks or processors, which can vary depending on the type of card used and the terms of the merchant agreement. While surcharges can help merchants recover processing costs, they are subject to regulation in many jurisdictions, with laws governing when and how surcharges can be applied. Merchants must comply with these regulations to ensure transparency and fairness in pricing, as excessive surcharging may lead to customer dissatisfaction or legal repercussions.
A Terminal Identification Number (TIN) is a unique identifier assigned to a payment terminal or point-of-sale (POS) device. It helps differentiate one terminal from another within a payment network or processing system, facilitating the routing of transaction data to the appropriate destination. The TIN is typically programmed into the terminal during setup and configuration, enabling merchants and acquirers to track terminal activity, monitor transaction performance, and manage terminal-related issues effectively. This identifier is essential for ensuring the accurate and efficient processing of payment transactions at the point of sale, contributing to the smooth operation of businesses and financial transactions.
To put it as simply as possible, tokenization relates to swapping out one piece of information for something else, mainly due to the security advantages that this strategy fosters.
Cybersecurity breaches have become increasingly common, as hackers will stop at nothing to outwit security installations. Though tokenization, however, these attempts can be foiled because the data they’re after has been replaced with unique identification symbols that serve as substitutes for the real thing. As noted by NerdWallet, the principle is similar to what tokens serve in an arcade or casino, as proxies for actual money. This way, should sensitive information fall into the wrong hands, the data can’t be used because its “value” is exclusive to the arena in which it operates. This is one of the reasons why integrated payments systems are effective because tokenization is traditionally utilized to strengthen security measures.
Transaction fees are fees that a processor charges the merchant associated with each credit card transaction. Some examples of transaction fees include authorization fees, return fees, AVS fees and gateway fees. More than one transaction fee may be applied to an individual credit card transaction.
A per transaction fee is an expense a business must pay each time it processes a payment for a customer transaction. Per transaction fees vary across service providers, typically costing merchants from 0.5% to 5.0% of the transaction. (via Investopedia)
Headquartered in California, Visa is a financial services firm that has been around since 1958. It’s become so big, in fact, six of the seven continents have Visa cardholders, which explains why it processes billions of transactions every year. Not only is it the biggest credit payment organization in the U.S., it’s the second-largest financial services corporation in the world. In short, if businesses only accept one form of credit card, Visa is likely the one.
When customers are struggling financially and can’t afford to buy certain necessities, WIC offers a helping hand. Created by the U.S. Department of Agriculture in 1974, the Women, Infant and Children’s program (WIC) is funded by the federal government and provides eligible recipients with money to purchase various essentials. Many small businesses and most major retailers accept WIC but there are very specific requirements that customers have to meet to qualify. Based on the most recent statistics available, families’ take-home pay must be 185 percent of the U.S. poverty level or lower to participate. Recipients once paid for their groceries items primarily through paper-based vouchers, but today use electronic benefit cards. All state agencies must be electronic benefit transfer (EBT) compliant by October 2020.
WooCommerce is a powerful open-source e-commerce plugin designed for WordPress, enabling users to create and manage online stores with ease. Developed by Automattic, the company behind WordPress.com, WooCommerce offers a flexible and customizable platform suitable for businesses of all sizes. With a wide range of features and extensions, WooCommerce allows users to sell physical and digital products, manage inventory, process payments, and customize the look and feel of their online stores. Its user-friendly interface and extensive community support make it a popular choice for entrepreneurs and businesses looking to establish a robust online presence and grow their e-commerce ventures. Datacap’s eCommerce offering includes a WooCommerce WordPress plugin.
Short for “cross-border payment,”x-border payments refers to financial transactions that occur between individuals, businesses, or financial institutions in different countries. These transactions involve the transfer of funds across international borders, often involving currency conversion and complying with regulations specific to each country involved. X-border payments are common in global trade, remittances, and cross-border e-commerce, facilitating the movement of money between entities in different geographic locations.
100 New Britain Blvd.
Chalfont, PA 18914
Phone: 215-997-8989
E-mail: sales@dcap.com
Hours of operation:
Monday – Friday 8:30am to 5:30pm EST
Datacap supports regulatory best practices in ADA and EMV with support of the Kiosk Industry Group and the Kiosk Association (KMA). The KMA works directly with the U.S. Access Board and is a participating organization with PCI SSC.