Acquirer: The party recognised by the network as the financial sponsor for a merchant (typically a regulated financial institution like a bank). The network holds the acquirer responsible for transactions processed by the merchant and to ensure that the merchant operates under the rules laid out by the network.

Authorisation: The process by which a transaction is approved by the issuer or by Visa/MasterCard on behalf of the issuer. Permission is given to (or denied) the merchant, via the acquirer, to accept a specific transaction from the cardholder account.

Average ticket size: The average dollar (or applicable currency)  amount of a merchant’s typical sale. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

Cardholder / Cardmember: The end product user; someone who possesses a payment card.

BIN (Bank Identification Number): A unique series of numbers assigned by Visa/MasterCard to a member institution, which identifies that institution in transaction processing and settlement. The BIN comprises the first six digits of a standard card number

Acquirer processor: Third-party service provider that acquires and processes payment transactions for merchants, manages the relationship with the payment networks on behalf of the merchants (including interchange qualifying, chargeback disputes and fees to networks and issuers), and manages the transaction database. The acquirer connects merchant transactions to payment networks by (1) providing the point-of-sale (POS)/ATM terminal; and/or (2) securely routing transactions from the POS/ATM terminal or from the POS/ATM payment gateway to the payment network; and/or (3) managing transactions from authorisation to clearing to settlement.

Card Present: A type of transaction in which the card is present and is swiped or inserted into the POS terminal that reads the contents of the magnetic stripe or chip on the card.

Card Not Present: A type of card transaction in which the card is not present at the point of sale for the magnetic stripe or chip to be read. Where card data is manually entered transactions (internet or mail order/telephone order purchases) – they are all called CNP transactions.

Card Network: The card network or scheme describes the business of Visa, Mastercard, American Express, JCB, etc. A card network can also be known as a card scheme or card association.

Card reader:  The part of the payment terminal where the chip card is inserted or tapped to initiate a chip transaction and the magnetic stripe is swiped. There are three types of card readers: motorized contact, manual contact and contactless. A motorised reader has a mechanism that transports the card into, and ejects the card from the reader – eg, an ATM. A manual reader requires the card to be manually inserted into and then removed from the reader. A contactless reader requires the cardholder to hold or tap the card near the device.

Card Security Code: The CSC (CVV for Visa and CVC for MasterCard) is a 3 or 5 digit numeric codes written on the payment card magnetic stripe or printed on the card that is used by the payment networks for validation of transactions and authentication of the card.

Cardholder Verification Method:  The method used to authenticate that the person presenting the card is the valid cardholder. EMV supports four CVMs: offline personal identification number (offline enciphered & plain text), online encrypted PIN, signature verification, and no CVM. The issuer decides which CVM methods are supported by the card and the merchant chooses which CVMs are supported by the terminal. The issuer sets a prioritised list of methods on the chip for verification of the cardholder.

Contactless payments: Payment transactions that require no physical contact between the consumer payment device and the POS terminal. In a contactless payment transaction, the consumer holds the contactless card, device, or mobile phone in close proximity (less than 2 to 4 inches) to the terminal and the payment account information is communicated wirelessly via radio frequency.

Debit payment network: A debit payment network provides POS and ATM services principally for debit, ATM and prepaid card issuers and corresponding transaction acquirers. Such networks generally operate at a country level or regional level. It establishes participation requirements, operating rules and technical specifications under a common brand or brands for the purpose of receiving, routing, securing authorisation for, settling, and reporting domestic payment transactions.

Dynamic data authentication: Information that is used during a transaction to generate the cryptogram used to verify the card participating in the transaction and that changes from transaction to transaction.

Expiry date: The embossed date on a card after which the card becomes invalid and will no longer be accepted. All network branded cards have an expiry date.

EMV: Specifications developed by Europay, MasterCard, and Visa (EMVCo) that define a set of requirements to ensure interoperability between payment chip cards and POS terminals and now Ecommerce gateways.

EMV Compliant:  Cards and terminals that meet security, interoperability, and functionality requirements outlined by EMVCo.

Hardware Security Module (HSM):  A hardware device used to securely generate and store encryption keys and perform cryptographic processes of verification of keys/PINs.

Host:  Centralised computer systems for aggregating and processing transactions. Payment terminals connect to and are “hosted by” these systems. The issuing processor’s back-end transaction processing systems are sometimes also included in the definition of “host”.

Interchange fee: This is the compensation paid by the acquirer to the issuer via the card networks (also known as card schemes or associations) for the  transaction passing through interchange. Interchange is an expense for the acquirer and revenue for the issuer.

Issuer:  The financial institution, usually a bank or credit union, that issues payment cards and holds the account or credit line behind the card.

Magnetic stripe card: A plastic card that uses a band of magnetic material to store data. Such cards are swiped at the POS.

Merchant: The entity that accepts payments from customers in exchange for goods and/or services and connects to a payment network through an acquirer. May also be known as a retailer.

Merchant Category Code (MCC): A universal four-digit merchant classification code that identifies the merchant by type of processing, authorisation and settlement.

Merchant Discount Rate: The Merchant Discount Rate, sometimes known as the Merchant Fee or Transaction Discount Rate, is the percentage rate that merchants pay on each credit or debit card transaction they accept. The interchange fee is part of the Merchant Discount Rate.

Member: A financial institution that is a member of Visa and/or Mastercard. A member is licensed to issue cards to card-holders (as an issuer) and/or manage merchants (as an acquirer).

NFC: Near Field Communication (NFC) is a set of standards for smartphones and chip cards used to establish communication with each other by touching them together or bringing them close.

Payment processor: A business that processes electronic or digital payments between merchants and their customers. A merchant will choose a payment processor so that the merchant does not need to engage different acquirers for different payment channels such as credit cards, debit cards, bank payments, buy now pay later, mobile wallet and so on. PayPal, Stripe and Adyen are examples of new payment processors.

Payment Card Industry Data Security Standards (PCI DSS): The PCI DSS is a multifaceted security standard that includes requirements for security management, policies and procedures. Established by the major payment brands, including American Express, Discover, JCB, Mastercard and Visa, the PCI DSS is now managed by the PCI Security Standards Council.

PIN: Personal identification number. A 4 to 6 digit numeric code. It is a secret code or number that the cardholder has to use to authenticate the identity of the card and enable validation of the transaction.

Payment Service Provider: These are businesses that help merchants or retailers accept payments through cards and online portals.

Real time gross settlement: Real Time Gross Settlement (RTGS) systems effect final settlement of interbank funds transfers on a continuous, transaction-by-transaction basis throughout the processing day. More than 90 countries have RTGS systems.

Settlement: The process in which a merchant transmits batches of transactions to the acquirer. In interchange, it is the process by which acquirers and issuers exchange financial data resulting from sales transactions, cash advances, merchandise credits, etc; the process of sending a merchant’s batch to the network for processing and payment.

USSD: Unstructured Supplementary Service Data is a protocol for mobile phones that can be used to send money.