Industry Terms

0-9

3D Secure3D Secure - (3DS) A messaging protocol developed by EMVCo that enables consumers to authenticate themselves with their card issuer when making card-not-present (CNP) e-commerce purchases. This additional security layer helps prevent unauthorized CNP transactions and protects merchants against fraud. 3DS authentication requires communication between three domains: the merchant/acquirer domain, issuer domain, and the interoperability domain (i.e. payment systems).

A

Account UpdaterAccount Updater - (AU) A card network-provided service that keeps the cards you have on file for your customers up-to-date. Every time an issuing bank changes a card's details—such as the card number or expiration date—you'll receive a notification through this tool of the new card details. This ensures customer payment method data updates automatically without the customer needing to manually enter their new card details. (AU)
acquirer reference numberacquirer reference number - (ARN) The unique number assigned to a card transaction when it goes from the merchant’s acquiring bank through the card network to the cardholder's bank (the issuer). Issuing banks use this number to trace a transaction with an acquirer (i.e. refunds). This value is also commonly referred to as a trace ID. (ARN)
acquiring bankacquiring bank - A bank or financial institution, licensed as a member of a card brand, that creates and maintains merchant accounts. Acquiring banks also take the risk and responsibility for processed transactions, such as any liability for credit risk in the event of merchant insolvency, chargebacks, card brand assessed fines, and penalties. These banks are also commonly referred to as acquirers or merchant banks.
acquiring BINacquiring BIN - The bank identification number (BIN) assigned to an acquirer by a card brand, licensing that acquirer to create and maintain merchant accounts within a specified country. Issuers use this BIN to identify the acquirer and allow them to clear and settle transactions in the country in which they're licensed.
address verification serviceaddress verification service - (AVS) A card network-provided service used to verify the address of the person claiming to be the cardholder. The service attempts to confirm that the billing address provided by the customer/cardholder matches what the issuing bank has on file for that card. (AVS)
application programming interfaceapplication programming interface - (API) The method for communication between an application and another application, system, or program. It defines how software components should interact and is meant to simplify the implementation and maintenance of software. In technical terms, an API is a set of tools, protocols, and routines developed for designing and building software applications. (API)
authorizationauthorization - The process of acquiring approval from a card issuer for the purchase of a product or service. This can be facilitated by a processor, payment service provider (PSP), or acquirer on behalf of a merchant, but is ultimately the function of the acquiring bank. The primary purpose of the authorization is to ensure the card is valid and/or there are sufficient funds to make the purchase.

B

bank chargebackbank chargeback - A chargeback filed by the issuing bank against a merchant. The issuing bank generally files the chargeback because of a merchant processing error on the transaction, or merchant fraud.
billing descriptorbilling descriptor - The description of a transaction that appears on a cardholder's bill or list of pending transactions, identifying the merchant who processed the transaction, sometimes alongside the name of the product or service purchased.
bank identifier numberbank identifier number - (BIN) The first 6-8 digits on all credit, debit, prepaid, or even commercial cards, used to identify the bank that issued the card. This value is also commonly referred to as the IIN, or Issuer Identification Number. (BIN)

C

card brandscard brands - The payment networks linked to payment cards (e.g. debit or credit cards) of which a bank or any other eligible financial institution can become a member. Members of a card brand have the possibility to issue or acquire cards operating on the network of that card brand. Card brands manage payment transactions—including operations and settlement—between cardholders and merchants according to a set of procedures, rules, and arrangements. They come in two main varieties: a three-party scheme (or closed scheme) or a four-party scheme (or open scheme). Visa and MasterCard are considered four-party schemes. Card brands are also commonly referred to as card associations, card networks, or card schemes.
cardholdercardholder - The owner/account holder of the card used for a purchase. When the cardholder is the same individual making a purchase, they are also the customer.
cardholder initiated transactioncardholder initiated transaction - (CIT) A payment initiated by a cardholder who actively selects which previously-stored card value to use for the transaction. (CIT)
card-not-presentcard-not-present - (CNP) A card transaction made where the cardholder doesn't or can't physically present the card for a merchant's visual examination at the time that an order is given and payment effected (e.g. online purchases, and transactions by mail, fax, or over the telephone). (CNP)
card presentcard present - A card transaction where the cardholder physically presents the card for a merchant's visual examination at the time of a purchase.
channelchannel - Where a transaction happens (e.g. on a website, mobile device, external platform, in-person, or via a subscription).
chargebackchargeback - An issuing bank’s claim when a cardholder challenges a transaction’s authorization or authenticity. Also known as disputes, chargebacks often originate when customers deny a purchase, site issues with product delivery or quality, have objections about marketing claims, or declare the transaction fraudulent. The merchant is typically responsible for defending the transaction as per their agreement with their acquirer. Card brand rules determine whether the issuer or acquirer has ultimate liability for the chargeback.
chargeback reasonchargeback reason - The reason the issuing bank assigns to a chargeback case based on the cardholder’s description of the issue. Examples include "fraud" or "canceled recurring transaction."
chargeback reason codechargeback reason code - The code (number) that is assigned to a chargeback reason description by card brands for efficiency in reporting and monitoring by the players in the card payment ecosystem.
credential-on-filecredential-on-file - (CoF) Any cardholder account data, including but not limited to PAN or token, that is stored by merchants. Merchants may store credentials-on-file to initiate merchant initiated transactions and cardholders may use their credential-on-file to create cardholder initiated transactions
customercustomer - The individual purchasing a good and/or service. A customer can be the same individual as the cardholder.

D

disputedispute - An issuing bank's claim when a customer questions the validity of a charge that appears on their account. A dispute can be a non-financial event—often referred to as an inquiry, retrieval or request for information (RFI)—by which the cardholder asks their card-issuing bank for more information about a charge. When a dispute is a financial event, it's known as a chargeback.

E

European Banking AuthorityEuropean Banking Authority - (EBA) An independent EU Authority established in 2011 that regulates and supervises the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. The EBA has significant influence over Card Brand regulation changes, as well as privacy and data protection regulations. (EBA)
European Economic AreaEuropean Economic Area - (EEA) Established in 1994, EEA refers to the economic market comprised of the EU, its member states, and Iceland, Liechtenstein, and Norway. (EEA)

F

friendly fraudfriendly fraud - A form of fraud that occurs when a cardholder purchases a product or service with their own card, but later issues a fraud chargeback against the charge. Friendly fraud can be innocent, such as when a cardholder forgets about a purchase or doesn't recognize the billing descriptor for a purchase on their bill, or more nefarious, including attempts to get something for nothing or to force a refund when a merchant’s transaction policy won’t allow for one. Friendly fraud is also commonly referred to as chargeback fraud.

I

issuer identification numberissuer identification number - (IIN) The first 6-8 digits on all credit, debit, prepaid, and commercial cards, used to identify the bank that issued the card. This value is also commonly referred to as the BIN, or Bank Identifier Number. (IIN)
issuing bankissuing bank - A bank or financial institution that offers payment cards to consumers on behalf of card brands, such as Visa, MasterCard or American Express. The issuing bank extends a line of credit to consumers and is responsible for providing the financial backing for transactions made with the card. They assume responsibility for cardholder’s ability to pay off any debt accumulated with the credit card or line of credit. This bank is also commonly referred to as the issuer.
intentintent - The objective of a transaction, agreed upon by both the customer and the merchant (e.g. one-time payment, single payment from a stored card, repeat payment from a stored card, subscription-based payment, or installment).
interchange feesinterchange fees - Fees paid between banks for the acceptance of card-based transactions.

M

merchantmerchant - A business or individual that sells products and/or services to customers in-store or online.
merchant accountmerchant account - A type of bank account merchants establish with an acquiring bank in order to securely process card-based payments. After transactions settle and clear through card brands and issuers, the funds from those transactions are deposited into this account before being transferred to a merchant’s business bank account. Generally, a merchant gets access to the funds 1-2 business days after the transactions occur; in some cases, funds are available sooner. Merchant accounts are also assessed a variety of fees that are usually defined as part of the required agreement with the acquiring bank.
merchant category codemerchant category code - (MCC) A 4-digit numerical code card brands assign to businesses to categorize what industry they belong to. A company's MCC often corresponds with their standard industrial code (SIC), but not necessarily. Card brands sometimes lump multiple MCCs into one SIC, or create an SIC that doesn't have a corresponding MCC. (MCC)
merchant initiated transactionmerchant initiated transaction - (MIT) A payment initiated without a cardholder's active participation, made using previously stored payment credentials (e.g. a recurring payment). (MIT)

N

network tokenizationnetwork tokenization - A type of payment card tokenization whereby card brands replace a physical card's primary account number (PAN) and other details with an encrypted code that merchants can then save on file for their customers. Network tokenization removes sensitive cardholder data from the payments ecosystem, thus reducing fraud risk, declines, and chargebacks.

P

payment authenticationpayment authentication - The process of confirming a customer's identity through at least one of these authentication factors: knowledge, inherence, ownership, and user location.
payment gatewaypayment gateway - The technology provider that facilitates payment processing for e-commerce sites and traditional brick and mortar stores by securely validating card payment details and obtaining authorization for purchases from a payment processor/acquirer. The payment gateway sits—or acts as an interface—between the merchant and the payment processor/acquirer, ultimately enabling the merchants to generate revenue from successful payments.
payment service providerpayment service provider - (PSP) Third-party organizations that act as a full-service solution for merchants to accept and process online payments. PSPs provide merchants with a payment gateway, as well as a broad offering of other services including multi-currency payment processing, risk management, settlement and reconciliation, and chargeback management. Examples include Braintree, Stripe, and Adyen. (PSP)
Payment Services Directive 2Payment Services Directive 2 - (PSD2)The European Union’s second directive aimed at regulating the payments industry in the EU and European Economic Area (EEA). Included in the directive is the requirement for Strong Customer Authentication (SCA), which ensures ecommerce payments are processed with multi-factor authentication. PSD2 also allows for the emergence of two types of new regulated payment providers, designed to promote increased competition and innovation in banking and finance. (PSD2)
Payment Card Industry Data Security StandardPayment Card Industry Data Security Standard - (PCI DSS) A set of 12 security standards designed to ensure that merchants process card payments safely. (PCI DSS)
primary account numberprimary account number - (PAN) The unique number on a credit or debit card that identifies the cardholder account and credit card issuer associated with that card. (PAN)
processing feesprocessing fees - Fees imposed by card associations or any number of processors (for example, to perform 3DS or AVS which are required in certain circumstances). They're typically charged as either a percentage of volume or a flat fee per transaction. Some fees apply to all transactions, while others apply to specific situations. Processing fees are also sometimes referred to as card association fees.
processorprocessor - A catch-all term in the payments industry, used to reference a merchant's payment gateway, acquiring bank, or the acquirer or issuer's processor. Technically, a pure processor securely analyzes and routes transaction data among all pertinent key players from authorization to settlement on behalf of either the acquirer or issuer. Some acquirers and issuers are also processors. It is also sometimes referred to as a payment service provider (PSP).

R

recurring paymentsrecurring payments - Transactions a customer authorizes a merchant to charge them for on a repeating, prearranged schedule (monthly, weekly, daily or annually) in exchange for a good or service. Subscription products or services result in recurring payments.
representmentrepresentment - The process through which merchants can submit evidence back to their acquirer or processor to prove that a chargeback is not valid. If successful, the representment results in a reversal of the chargeback.

S

settlementsettlement - The distribution of funds to a merchant after an authorized transaction. It's typically equal to the amount of the sale minus interchange, fees, and assessments.
standard industrial codestandard industrial code - (SIC) A 4-digit numerical code the United States government assigns to businesses to categorized what industry they belong to. These codes are used in SEC and EDGAR filings to classify a company's type of business, and businesses use them for taxation and accounting purposes. Each card brand has their own Merchant Data Standards manual, and they use SICs as a key data point for governing what data they expect businesses to collect, transmit, and store about a merchants transactions. A company's SIC often corresponds with their merchant category code (MCC), but not necessarily. (SIC)
stored credentialstored credential - A customer's card number or token that a business keeps on file for the customer to use for future purchases.
Strong Customer AuthenticationStrong Customer Authentication - (SCA) A payment requirement established by the PSD2 directive to reduce fraud and protect consumers. SCA requires customers to provide an additional proof of identity during a payment transaction, known as multi-factor authentication. The authentication must use at least two of the following:(a) Knowledge – Something the customer KNOWS (such as a password), (b) Possession – Something the customer HAS (such as a pre-registered smartphone), (c) Inherence – Something the customer IS (such as a fingerprint) (SCA)

T

token requestor IDtoken requestor ID - (TRID) The 11-digit numeric identifiers merchants use to request network tokens from card networks to replace payment card PANs.

Chargeback Reason Codes

The definitions for the following chargeback reason codes were pulled directly from Visa's Dispute Management Guidelines for Visa Merchants:

  • Declined authorization - You processed a transaction where you received a Decline or Pickup response, but you completed the transaction anyway.
  • Incorrect transaction code - You sent a transaction with an incorrect transaction code (i.e. you meant to send a credit, but you actually sent a sale, or you meant to process a sale and sent a credit).
  • Late presentment - The transaction was completed past the required time limits.
  • Incorrect currency - You sent a transaction that was processed with an incorrect currency code or one of the following: (a) the transaction currency is different from the currency transmitted through the card brand; (b) the cardholder was not advised or did not agree that Dynamic Currency Conversion (DCC) would occur.
  • Incorrect amount - The cardholder submitted a claim to their bank that says one of the following things happened: (a) the transaction amount is incorrect; (b) an addition or transposition error was made when calculating the transaction amount; (c) you altered the transaction amount after the transaction was completed without the consent of the cardholder.
  • Duplicate processing - The cardholder claims that a single transaction was processed more than once.
  • Merchandise/services not received - The cardholder claims that merchandise or services that they ordered were not received or that the cardholder cancelled the order as the result of not receiving the merchandise or services by the expected delivery date (or merchandise was unavailable for pick-up).
  • Canceled recurring - A recurring transaction was processed after it was cancelled or the cardholder’s account was closed.
  • Canceled merchandise/services - The cardholder’s bank received a notice from the cardholder stating that they returned merchandise or cancelled services, but the credit has not appeared on the cardholder’s Visa statement.
  • Not as described/defective - The cardholder’s bank received a notice from the cardholder claiming that the goods or services were one or more of these: (a) merchandise or services did not match the description on the transaction receipt or other documentation presented at the time of purchase; (b) merchandise or services are not the same as your verbal description (for a telephone transaction), (c) the merchandise was received damaged or defective, (d) the cardholder disputes the quality of the merchandise or services.
  • Credit not processed - The cardholder’s bank received a notice from the cardholder claiming that they received a credit or voided transaction receipt that has not been processed.
  • Fraud - card present environment - A cardholder is claiming that they did not authorize or participate in a key-entered or unattended transaction conducted in a card-present environment.
  • Fraud - card absent environment - The cardholder’s bank has filed a dispute stating that their cardholder did not authorize or participate in a transaction conducted in a card-absent environment (i.e. internet, mail-order, phone-order, etc.).

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