Money can be a tricky thing, especially in the Indian ecosystem, which is highly regulated as well as an efficient system governed by a system of well-placed laws in place.
What happens when you operate a business in India and have to deal with new payments-related jargon on a day-to-day basis. Moreover, when a new person joins your team with little-to-no experience in the payment sector in India.
Being a marketer, I am fairly decent with the craft of promoting and attracting prospects with the brands I’ve worked with, but payments are a different ball-game altogether. So, one of the first things at Cashfree for me was to enlighten myself with all the payment jargons that came my way and be ready for the ones that haven’t taken me by surprise.
As I learned more, I discovered that it’s not only new employees in the payment sector who face this issue but everyone who runs a business and is involved with collecting money across the entire industry.
So, today we are sharing a Payment Jargon Dictionary, the only guide you will ever need whenever you need to learn about new terms without going through the feeling of being tormented.
So without further ado, let’s dive in –
Two-factor authentication (also known as 2FA) provides unambiguous identification of users by means of the combination of two different components What you have – Card (number, expiry date and CVV that is printed on the card) What you know – PIN (either static or One time generated) to validate
3-D Secure is an XML-based protocol designed to be an additional security layer for online credit and debit card transactions. It was originally developed by Arcot Systems, Inc. It is also known as Verified by Visa, MasterCard Secure Code or American Express SafeKey.
ACH (Automated Clearing House)
An NPCI managed offline payment solution that enables member banks to transfer funds between member banks. ACH works on a paper-based mandate and used by merchants to collect recurring payments such as insurance premiums, loan amounts, etc.
An acquiring bank is a bank that processes credit or debit cards. Acquiring bank usually supports multiple card schemes such as Visa, MasterCard, Maestro, RuPay.
Address Verification Service (AVS)
A system established by the credit card processing associations to verify customer billing addresses submitted with e-commerce payment transactions. AVS does not verify the legitimacy of a transaction. Card Not Present merchants can use AVS to accept or decline transactions based on the validity of the billing address information provided by the customer.
Address Verification Status
A value that indicates the results of an Address Verification Service (AVS) comparison. Code and description are provided by the merchant’s processor.
Admin Module that helps the merchant to run day-to-day operations related to online payments such as Marking refunds, view & download reports.
AMEX is an acronym for the financial institution named American Express. American Express provides consumer and business level credit-cards and credit line. It is a complete payment ecosystem where AMEX is the acquirer, issuer and provides diverse schemes.
An open-source operating system for smartphones and other devices, developed by Android, Inc. and later purchased by Google.
API (Application Programmable Interface)
A set of functions and procedures that allow the creation of applications which access the features or data of an operating system, application, or other services.
Acquirer Reference Number (ARN), a unique number that tags a card transaction when it goes from acquiring bank through the card scheme to the cardholder’s bank.
The response from a card-issuing bank to a merchant’s transaction authorization request indicating that payment information is valid and funds are available on the customer’s credit card.
The transaction amount that’s submitted to the card-issuing bank for funds approval. This amount is reserved against the available balance of a customer.
A credit card transaction request to authorize and capture, or settle, funds for a purchase. The payment gateway submits the request to the card-issuing bank for authorization and upon approval, will automatically submit the transaction for settlement.
A code assigned to a credit card transaction by the card-issuing bank along with a message to convey the authorization or decline of the card transaction
The person appointed by the company by executing business resolution as authorized signatory for vendor engagement. The authorised signatory can sign on agreements
Bank Account Number
The account number assigned by a bank to a current or savings account holder
A payment card issued to a consumer by a financial institution or bank; a credit or debit card.
Bank Identification Number (BIN)
An identification number assigned by Visa and MasterCard to each of its member financial institutions, banks and processors
Bank Transaction ID
Please check UTR below for details.
Base 1, launched in 1973, is the world’s first electronic payment authorization system. It is used to verify if a given card XXXX will allow deduction of any given amount.
Base 2, is the world’s first electronic clearance and settlement system. This system is used to do batch settlements by merchants with the help of card networks like Visa and MasterCard.
Basis Point (BP)
Equivalent to .01 percent, or one-hundredth of one per cent, and is used as a measurement of fee rates. Rate changes are often expressed in basis points instead of the hundredth percent, For example, a fee rate increase of 1.95 per cent to 2.0 percent is expressed as an increase of 5 basis points.
A group of transactions that have been gathered over a certain period of time and are submitted together to the appropriate processing networks for clearing and Batch Upload A merchant interface tool for uploading multiple transactions at once from a spreadsheet or proprietary business application.
Process of checking the BIN of the card against the participating BIN list Black Listing The practice of collecting information to detect deceitful buyers or high-risk merchants with the purpose of preventing frauds
Business Continuity Plan
BCP is a risk management process under which business entity creates secondary backups if primary service shuts down temporarily
Business resolution is a document executed by a company for appointing a person(s) to sign on behalf of the company. Business Resolution appoints an authorized Signatory who will sign the agreement (and KYC docs).
Payment networks linked to payment cards, such as debit or credit cards, of which a bank or any other eligible financial institution can become a member. By becoming a member of the scheme, the member then gets the possibility to issue or acquire cards operating on the network of that card scheme.
Card capture page
Secure page on which card details are captured. Entities that have PCI DSS certification are allowed to capture card details. Examples of entities that have a card capture page
- Acquiring Bank (E.g. IMSL)
- Aggregator (E.g. PayU)
- Merchant (E.g. Flipkart)
- 3rd Party service provider (JusPay)
A consumer to which a credit or debit card is issued by the credit card associations or by the consumer’s bank.
Card Not Present (CNP)
During transaction card is not present physically (e.g. online shopping) CNP transactions are risky, so an additional layer of security (2nd Factor Authentication) is mandatory Usually TDR/MDR is CNP cases are higher than CP as risk is higher is CNP (rates are adjusted for risks)
The account number assigned by a credit card association or card issuing bank to a cardholder. This information must be provided to a merchant by a customer in order to make a credit card payment.
The string of digits printed on the front of the card (these digits signifies band identification number, category, currency etc.)
Visa, MasterCard, Maestro, RuPay: 16 digits
Amex: 15 digits
Card Present (CP)
During the transaction the cardholder or card is present at the point of sale Example: Card swipe has done at grocery store Usually TDR/MDR is CP cases are lower than CNP as risk is lower in CP transactions (rates are adjusted for risks)
Process of storing the card details (card number and CVV) and show the stored card details during subsequent transactions Card can be stored by PCI DSS certified entity (acquiring bank, aggregator or merchant) [Learn more]
Card Verification Value (CVV), Card Verification Code (CVC), Card Security Code (CSC)
Card verification value (CVV) is a combination of features used in credit, debit cards for the purpose of establishing the owner’s identity and minimizing the risk of fraud.
CVV is also known as card verification code (CVC) or card security code (CSC) and it has two parts –
- CVV1: Part of magnetic stripe
- CVV2: 3 or 4 digits on the backside of the card
Visa, MasterCard, Maestro, Rupay: 3 digits and Amex: 4 digits (Card Identification Number)
A promotional way in which merchant or banks return part of the transaction amount to the cardholder to incentivize the customer.
Prepaid Cards, the cards have a set amount stored in it for financial usage.
A dispute raised by credit cardholder with issuing bank.
There can be various reasons for a chargeback to take place:
- Service/product not delivered,
- upon cancellation refund is not issued,
- suspected fraudulent transactions
- Card being hacked
In such circumstances, the issuing bank will send the chargeback to acquiring bank and acquiring bank reaches out to merchant directly (if acquiring bank has direct integration with merchant) or through aggregator (if transaction is processed through aggregator) to provide proof to support delivery or refund within stipulated time else chargeback will be considered valid and merchant will be obliged to return chargeback amount.
Chargeback Reason Code
A code provided to the merchant by the card-issuing bank that indicates the reason for the chargeback transaction.
Closed-loop prepaid cards/wallet
Cards/wallet that can be used at only one merchant and funds cannot be withdrawn to source account or through ATM.
Cards that are issued by a financial institution with a card scheme and also has corporate branding
The bank account of the merchant to which proceeds of the payment gateway is credited. The collection account can be a current account, nodal account or escrow account
The cards that allow paying for products or services by borrowing money from a financial institution Credit Limit The maximum amount the cardholder may owe to the issuer on the card account at any time.
Customer Relationship Management (CRM)
The CRM software is a broad set of applications designed to help businesses manage customer data and customer interaction, access business information, automate sales, marketing and customer support and also manage employee, vendor and partner relationships. (like Zoho, Salesforce)
The cards that work through the automatic deduction of available funds in a bank account to make a purchase
Transactions that are not approved by the card-issuing bank are marked as declined. No further action may be taken for declined transactions and customer has to retry to make payment.
Digital Signature An electronic file containing unique information that is used to verify the trustworthiness of an organization or individual. Digital Certificates are issued by a Certificate Authority and are used with the Secure Sockets Layer (SSL) protocol.
Another card association that issues credit cards.
Refer to the word ‘Chargeback’.
Software that provides various functionalities that are required to run an eCommerce business such as website, category management, pricing management, order management and payment management. For example – Shopify, Magento and others.
Electronic Commerce Indicator
ECI (Electronic Commerce Indicator) is the value returned from the Directory Server (Visa, Mastercard and JCB) to show the result of authentication credit card payment from your customer on the features of 3D Secure.
EMI (Equated Monthly Instalments)
A provision is given by a bank to the cardholder (customer) to split the transaction amount to a smaller amount that is payable on a monthly basis. For the service bank may charge a processing fee or interest.
EuroPay, MasterCard and Visa, is a microchip-based technology designed to reduce fraud at the point-of-sale
The process of transforming processing information to make it unusable to anyone except those possessing special knowledge usually referred to as a key.
An escrow account is a temporary pass-through account held by a third party during the process of a transaction between two parties. (Same as Nodal account).
The date on which the validity of a card expires. Transactions will only be approved for cards that are not yet expired.
Transaction charges are per transaction and not the percentage of the transaction amount.
The malicious practice by untrustworthy and dishonest persons to use stolen personal information, credit card information, and/or compromised bank account information for personal gain; not limited to the purchase of merchandise, the submission of fraudulent data or identification also contributes to this act.
Gross Transaction Value; total transaction amount available for processing. Online GTV is total transaction amount available for online processing. GTV is amount measured for a day, week, month or year. Also known as Transaction Payment Volume.
The process by which all parties involved in a card transaction (i.e., processors, acquirers, issuers, etc.) manage the processing, clearing and settlement of card transactions, including the assessment, and collection and/or distribution of fees between parties.
Fees paid by the acquirer to the issuer to compensate for transaction-related costs. VISA, MasterCard and other providers determine the interchange fee rates.
Internet Protocol (IP)
A set of rules governing the format of data sent over the Internet or another network.
Internet Protocol (IP) Address
A unique string of numbers separated by full stops that identify each computer or mobile or other instrument using the Internet Protocol to communicate over a network.
Internet Service provider (ISP)
A company that provides Internet services and resource management to businesses and consumers. (E.g. Airtel) iOS operating system used for mobile devices.
A mobile operating system developed by Apple to run its mobile devices like iPhone, iPads and others. iOS has been further divided into Watch OS, iPad iOS and TvOS.
A financial institution that issues cards to consumers on behalf of the card associations. Also known as Card Issuing Bank.
Japanese Credit Bureau (JCB) is card association.
Know Your Customer (KYC)
Set documents to establish business entities or person’s credentials.
The black stripe on a credit, debit or stored-value card that stores the cardholder account information
The marketplace is a platform that allows various entities to sell their services or products to customers.
A security program created by MasterCard to provide identity authentication for cardholders and transaction protection for merchants. By registering for MasterCard SecureCode, merchants can minimize transaction risks while providing additional security for customers.
The person or business entity that sells goods or services to a customer.
Merchant Account Provider
A financial institution, or bank, that provides a financial account to a merchant for the purpose of collecting proceeds from consumer bank account or card payment transactions.
Merchant Category Code (MCC)
Merchant Category Code – Schemes have different codes for each category (Airlines, Hotel, Hospital, etc.) A merchant will be assigned to specific MCC
Some specific MCCs have different commercials (e.g. education) whereas some MCCs are blocked for CNPs (like online medicine, liquor and more)
Merchant Discount Rate (MDR)
The Fee charged by acquiring bank to the merchant.
Merchant Identification Number (MID)
An identification number assigned to each member merchant of an acquiring organization, such as a financial institution, Independent Sales Organization (ISO), Merchant Service Provider (MSP) or processor. MID identifies the merchant throughout the payment cycle (transaction, settlement, refund, chargeback)
Magnetic Information Character Recognition is the imprinted banking numbers (routing/transit number, checking account number, check number) at the bottom of the check
National Payments Corporation of India (NPCI)
NPCI is a private organization for retail payments in India. It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA). NPCI is spearheading guidelines for various payment modes: NEFT, NACH, RuPay Scheme and UPI
National Electronic Funds Transfer (NEFT) is an Indian system of electronic transfer of money from one bank or bank branch to another. The banks or their branches that support such transactions have to participate in the NEFT network
Nodal accounts are special-purpose accounts created for coordinating a special type of transaction and governed by regulatory bodies. The business opens such account with the bank and this is not an interest-bearing account. So funds parked in the nodal account is not shown on the accounting books of the business entity. A nodal account is used to hold funds belonging to 3rd parties. [Learn more]
EMI conversion is done 5-7 after the transaction date. Customer will make payment for the full amount and bank will convert the amount to monthly payments. Banks have eligibility criteria for such cardholders.
Open-loop prepaid cards
Cards that can be used across all merchants and also funds can be withdrawn at ATMs.
Over the Counter transaction wherein customer makes payment across the counter in a bank.
One Time Password Issuing bank sends this to cardholder’s registered mobile number and same needs to provided in acquiring bank page as part of 2nd Factor authentication.
P2M stands for Person-to-Merchant, where transactions via IMPS network from the customer to the merchant.
P2M functions where the merchant has a relationship with the consumer, and each invoice needs to be approved separately.
Person to Person transfer of funds Options: Card to card, card to the account, account to the card.
A system of technologies and processes that allow merchants to electronically submit payment transactions to the payment processing networks. Payment gateways also provide merchants with transaction management, reporting, and handling of payments.
Payment Card Industry Data Security Standard (PCI DSS) is a proprietary information security standard for organizations that handle branded credit cards (Visa, MasterCard, American Express, Discover, and JCB) PCI DSS mainly covers security aspects about storing and processing card details.
Transactions for which status is not clear in real-time because aggregator has not received the confirmed status from the bank. Such transactions are converted to success, failed or user aborted post status reconciliation (T+1 day).
PIN (Personal Identification Number)
PIN is a unique number to validate the payment instrument holder It can be static or dynamic (OTP) Cards have 2nd Factor authentication password, debit cards or ATM PIN at POS/ATMusage.
Polling the status
Checking for the status of transaction periodically.
POS (Point of Sales)
Point of Sales (POS) is a machine used to process a card-present scenario (fixed POS at the retail store or mobile POS device).
Holding the fund from a debit or credit card transaction until the full transaction is captured is called pre-authorisation. [Learn more]
The cards are loaded with funds and card usage cannot be beyond the loaded amount. Variants of prepaid cards –
- Non-reloadable: Cards can be loaded only once and used multiple times before the expiry date (Gift Card)
- Reloaded: Cards that can be loaded multiple times and used multiple times before expiry (Meal Card, Travel Card, Forex Card).
Reconciliation is an accounting process that uses two sets of records to ensure figures are correct and in agreement. It confirms whether the money leaving an account matches the amount that’s been spent, and ensures the two are balanced at the end of the recording period.
Payments that we make periodically and periodicity may be weekly, monthly, quarterly, half-yearly, yearly Example: Utility bill, insurance premiums
A request posted by the merchant (for the customer) for returning the transaction amount to the customer’s source account or card. A refund can be complete transaction amount or partial amount of the original transaction amount.
Reserve Bank of India (RBI)
RBI is India’s central banking institution which controls the monetary policy of the Indian rupee. RBI also regulates the payment modes and methods.
Risk Monitoring System
The RMS is a powerful, rules-based set of transaction filters, Internet Protocol (IP) address and other often proprietary tools designed to help Web merchants identify, manage and prevent fraudulent transactions.
Real-Time Gross Settlement: Electronic payment mode that enables the customer to transfer Rs.2 Lakh above to other parties
Same as Card Association
A software development kit (SDK or “devkit”) is a set of software development tools that allow the creation of applications software
Secure Socket Layer (SSL)
An Internet protocol that safeguards electronic communications between two or more computers by transmitting encrypted data that is difficult to be tampered with. Websites that use SSL technology are indicated by an “https” in their Web address and a lock icon at the bottom right of the browser window.
Semi-closed loop prepaid card/wallet
Cards/wallet that can be used at multiple merchants and funds cannot be withdrawn to source account or through ATM
The amount that is paid from one party to other -Acquiring bank (cards) or issuing bank (net banking) or wallet issuer will make payment to an aggregator for a successful transaction that is processed on respective entities (T+1 day) – Aggregator makes payment to the merchant for the successful transaction (T+2 day)
An Internet or software company that provides e-commerce tools and payment form solutions for merchant Web sites.
Sub-Merchant Transaction ID
A unique ID that is generated by the merchant for every sale. Each merchant transaction id is mapped to transaction-id
The measurement of performance of payment gateway. Usually, the percentage of successful transactions.
Transaction charges that are added to the transaction amount. In this model, usually customer bears the transaction amount and the merchant receives a full settlement.
Turn Around Time: Time committed for delivering a particular service (e.g. TAT for Settlement is T+2 day.
Transaction amount. An average ticket size help companies to make business decisions as used in various calculations related to the pricing.
Transaction Per Second; the measure of acquiring bank or aggregators transaction processing capacity.
Transaction Payment Volume; see GTV.
TPV (Third Party Validation)
Process in which bank account used for online payment is validated against the account that is registered or allowed for the payment. Applicable only for brokerage and MF industry.
Transaction Discount Rate (TDR)
The fee charged to a merchant by the payment gateway for each transaction.
Transaction ID (aggregator Transaction ID)
A unique identification value assigned to each payment processed. A transaction ID will be allotted both successful and failed transactions. Transaction ID connects Sub-merchant transaction id and bank transaction Id. This id can be traced complete payment life cycle (transaction, refunds, chargeback etc).
Status of the transaction of online payment. Status can be a success, failed, pending, user aborted or refunded.
Process of accepting the liability under and thus guaranteeing payment in case of loss or damage occurs.
Unified Payment Interface (UPI)
UPI is a digital payment initiative by NPCI to boost digital payments in India and provide interoperability. Once customer registers for UPI with the bank, a unique virtual identifier is created and that is mapped to mobile phone To initiate the payment, UPI invokes this virtual identity of the beneficiary and transfers money in real-time. It works on single-click 2-factor authentication. UPI will allow a customer to have multiple virtual ids and can use a mobile number or aadhar number as a virtual id. [Learn more]
UTR is Unique Transaction Reference number that is generated in IMPS, NEFT and RTGS system for uniquely identifying any transaction. The format of UTR is predefined and is generated by the bank initiating the transaction.
Transaction charges are deducted from the transaction amount and net settlement amount is credited to merchant’s collection account.
Verified by Visa
A security program created by Visa to provide identity authentication for cardholders and transaction protection for merchants. By registering for Verified by Visa, merchants can minimize the risk of chargebacks and returns by providing additional security
A wallet is an account for holding the funds and can be used for various purchases. A wallet can be virtual (e.g. mobile wallet such as PayTM, Vodafone m-pesa) or physical (prepaid cards)
Business days for banks as defined by RBI. Sundays, 2nd & 4th Saturday are banking holidays apart from the list of holidays [Share Link]