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The following terms, organised alphabetically, are either mentioned in the text available on or throughout this website, or are otherwise of relevance to credit cards. We thought we'd give you the formal definitions to make things absolutely clear.
- Acquirer
- A bank having a business relationship with merchants, retailers and other service providers to process their plastic card transactions. Acquirers obtain financial settlement for the card issuers, typically via the card schemes, which maintain the clearing systems, and pay the proceeds to the merchant, charging a fee.
- American Express
- An international card scheme.
- Authentication
- A process where a cardholder proves that they are the genuine cardholder. In the case of a card present transaction, a cardholder will be authenticated by inputting their Personal Identification Number (PIN) which is checked against the one held in the chip on the card. In the case of an internet transaction, the cardholder will be authenticated using either MasterCard’s SecureCode or Visa’s Verified by Visa.
- ATV (Average Transaction Value)
- The average value for each card transaction and is calculated by dividing the total value of card transactions by the number of transactions.
- Authorisation
- An authorisation is provided by a cardholder’s issuer and confirms that the card number is valid, that the funds were available at the time the transaction took place and the card had not been reported as lost or stolen at the time of the transaction. It is not a guarantee of payment.
- Authorisation Call
- A telephone call made, having been prompted by the terminal or point-of-sale to obtain authorisation for a transaction.
- Authorisation Code
- Generated by a card issuer or by an acquiring bank on behalf of a card issuer when an authorisation request is approved.
- AVS (Address Verification Service)
- Fraud prevention tool that verifies a cardholder’s address against the record held by the card’s issuer.
- Banking Window
- This is an agreed period (for example, 2200 - 2300) in the business day between an acquiring bank and its merchant when a merchant performs its end-of-day action.
This procedure will prompt a merchant's terminal to print out the number of transactions and the value they have taken through their terminal that day and download any stored transactions to the acquiring bank. - Card Authorisation Centre (CAC)
- A merchant will call the CAC when their terminal has requested them to or they are suspicious about a card transaction they have been asked to accept.
The CAC operator will take the merchant through the next steps. - Card Issuer
- A bank, building society or other organisation issuing payment cards, ATM cards or cheque guarantee cards to it customers. For payment and ATM-only cards the card issuer undertakes responsibility to settle transactions made with the card (except in some cases where fraud has occurred).
- Card Remotely Present
- A transaction where the merchant, retailer or other service provider does not have physical access to the payment card, but where the card is inserted in a device by the customer and the card details are verified by an electronic process. Examples are transactions at unattended payment terminals, by telephones equipped with card readers, or via the Internet when a card reader is in use.
- Card Scheme(s)
- Card schemes set the business rules that govern the issue of the payment cards that carry their logo. Typically these rules apply throughout the world to ensure that a cardholders card can be used anywhere. In many countries, domestic schemes also operate. The schemes operate the clearing and settlement of payment card transactions. In the UK, banks and building societies must be members of the appropriate scheme to issue cards and acquire card transactions. Examples of international card schemes are Visa, MasterCard, American Express, Diners Club International and JCB.
- Charge Card
- A payment card that allows a cardholder to make purchases and to draw cash up to a pre-arranged credit limit. The terms include the obligation to pay the account in full at the end of a specified period. Cardholders are normally charged an annual fee.
- Chargeback
- A transaction that has been returned by an issuer to the acquiring bank because it has been disputed by the cardholder and/or found to be improper by the issuer. The acquiring bank will deduct the value of the chargeback from the merchant’s bank account.
- Chargeback Reason Codes
- These are a set of prescribed codes used by the card schemes that give a reason as to why a transaction has been charged back.
- Chip and PIN Card
- A payment card containing a chip that requires use of a PIN as the preferred method of cardholder verification at the point-of-sale and at cash machines.
- Chip Card
- A chip card holds details on a secure computer chip that can store and process information.
- Closed loop
- A store card may only be used in designated shops which, typically, are part of the same group or chain of shops and this is know as a "closed loop" card.
- CNP (Card Not Present)
- A transaction where the merchant, retailer or other service provider does not have physical access to the payment card; examples are transactions by telephone, mail order or Internet.
- Corporate Card
- A payment card typically issued to larger companies for staff to make business-related transactions, for example travel and entertainment (see also Business Card).
- Credit Card
- A payment card enabling the holder to make purchases and to draw cash up to a pre‑arranged ceiling. The credit granted can be settled in full by the end of a specified period or can be settled in part, in which case interest is normally charged.
- CSC (Card Security Code)
- The last three digits of the number printed on the reverse of the card (usually found on the signature strip). In the case of an American Express card, it will be four digits on the front of the card.
- CVM (Cardholder Verification Method)
- The means by which the presenter of the card may be identified as genuine.
- Debit card
- A payment card linked to a bank or a building society account, used to pay for goods and services by debiting the holder's account. It usually comes with other facilities such as cash machine and cheque guarantee functions.
- Delta
- An electronic debit card payment scheme offered by Visa.
- Diners Club
- An international card scheme.
- Dynamic Currency Conversion (DCC)
- In the UK, the Dynamic Currency Conversion service will provide overseas cardholders with the option to be charged in their own currency at the point-of-sale using the latest current exchange rates or to pay in £ sterling.
- Electron
- A Visa debit card. All Electron purchases are subject to electronic authorisation.
- End of Day
- This is an action that a merchant manually performs at the end of their trading day and is at a time or during a period agreed with their acquiring bank. This period is also known as the banking window.
This procedure will prompt a merchant's terminal to print out the number of transactions and the value they have taken through their terminal that day and download to the acquiring bank any transactions that have been stored ion the terminal. - ETU (Electronic Mobile Top Up)
- A merchant can use their terminal, where this functionality is available, to allow users to top up their mobile phone account using their top up plastic card.
- Floor Limit
- A limit on the value of each transaction, agreed between the merchant and acquiring bank, above which authorisation must be obtained by the merchant, from the card issuer.
- Foreign Issued Cards
- A card issued by a non-UK card issuer. These cards may not be chip and PIN compliant and will have to be processed using the magnetic stripe on the reverse of the card.
- Fraud Screening
- Fraud screening forms part of a transaction’s authorisation process flow and is conducted prior to authorisation to help reduce fraud and prevent chargebacks.
- Fuel Card
- A special purchase charge card to pay for fuel on the road. It saves having to carry money and reduces exposure to theft.
- Gratuity
- A customer may wish to leave a tip that is in addition to the bill for the service, e.g. when eating at a restaurant.
- Interchange
- The fee paid by acquiring banks to card issuers for each transaction. The rates are determined by the card schemes and are dependent on the level of risk and expense involved in processing a transaction.
- Issuer
- A bank or building society issuing payment cards, ATM / cash machine cards or cheque guarantee cards to its customers.
- JCB (Japan Credit Bureau)
- An international card scheme.
- Liability
- The obligation to pay an amount owing. In the case of card fraud liability is used to refer to the party that is responsible for covering or absorbing the amount defrauded in respect of a cardholder dispute.
- Liability Shift
- This is where chargeback liability shifts from the party that has the capability to authenticate a cardholder or there card to the one that does not. For example, if a merchant does not have a chip and PIN compliant terminal to process a card present chip and PIN transaction, they would be liable if the cardholder denied the transaction or the card was found to have been counterfeited.
- Maestro
- A MasterCard debit card scheme enabling cardholders to make payments to participating merchants in the scheme.
- Magnetic Stripe
- The stripe that currently appears on the back of all payment cards issued by financial institutions. It contains essential customer and account information, most of which is usually also embossed on the card.
- MasterCard
- An international card scheme.
- MasterCard SecureCode
- The MasterCard brand name for their service that uses the 3D Secure standard (the technical standard developed by Visa and MasterCard to secure card transactions over the internet).
- Merchant
- Any person, firm or corporation that has contracted with an acquiring bank to process transactions.
- Merchant Service Agreement
- An agreement between an acquiring bank and their merchant stating the terms and conditions on which the acquiring bank agrees that the merchant can accept card transactions.
- Minimum Monthly Service Charge
- A minimum fee applied by an acquiring bank for processing a merchant’s card transactions.
- MO/TO (Mail Order/Telephone Order)
- An acronym for mail order / telephone order that refers to card not present transactions.
- MSC (Merchant Service Charge)
- The pricing for transactions or card acceptance that a merchant will negotiate with their acquiring bank.
- Off-line Terminal
- A specialised terminal that can store accepted card transactions through the day and then transmit their details to an acquiring bank at night.
- Open loop
- A card that has been issued by a store and which is supported by a card scheme. The card can be used in any shop that is displaying that card scheme’s logo.
- PAN (Primary Account Number)
- The cardholder number, usually a sixteen digit sequence, that is embossed on a card and encoded on the card’s magnetic stripe.
- PAN Key Entry (PKE)
- A service which may be provided at a merchant terminal where a card’s details are keyed into the terminal instead of the terminal reading the card’s magnetic stripe.
- Payment Card
- A generic term for any plastic card (such as credit, debit and charge cards) used to pay for goods and services.
- PIN (Personal Identification Number)
- A set of characters, usually a four-digit sequence, used by cardholders to verify their identity.
- PIN Pad
- The numeric pad into which a cardholder enters their PIN to authorise a transaction.
- Polling
- The collection of data stored in a terminal by a central computer or polling service.
- POS (Point of Sale)
- A physical location where a customer makes a purchase.
- Pre-authorisation
- Allows the cardholder/merchant to obtain advance approval or verification that sufficient funds are available to make a subsequent purchase using a payment card.
- Pre-Paid Card
- A stored-value card used to pay for goods and services, mainly as an alternative to cash.
- PSP (Payment Service Provider)
- An organisation which provides a secure payment page for a merchant’s customer to enter their card details and passes these on to the merchant’s acquiring bank for processing. The PSP may also offer a 3D Secure service such as MasterCard’s SecureCode or Visa’s Verified by Visa.
- Purchasing Card
- A payment card issued to businesses, companies or government departments to make supplier and/or trade payments. Also known as a procurement card.
- PWCB (Purchase with Cashback)
- An optional transaction type where a merchant may allow a cardholder, who has already used their card to purchase goods or services from the merchant, to draw cash up to a limit agreed with their acquiring bank.
- Referral
- When a merchant is processing a card transaction their terminal may prompt them to make a manual authorisation call to the cardholder’s issuer.
- Restaurant Configuration
- Enables the merchant to enter a gratuity after a transaction has been completed at the terminal.
- RFI (Request for Further Information)
- A request by either the card issuer or cardholder wishing to obtain further information about a particular transaction.
- Settlement
- This is when an acquiring bank pays the value of a merchant’s card payments into their nominated bank account.
- Signature Verification
- Checking a cardholder’s identity by comparing his/her signature with the one on the back of a card.
- Swipe
- A card is swiped when it is passed through an electronic POS terminal and the magnetic stripe is read.
- Terminal
- A terminal is a device that a merchant uses to place a cardholder’s card into and transmit its details, including and PIN authentication, to an acquiring bank for authorisation and receive the acquiring bank’s reply.
- Third Party Solution Providers
- These are companies that can provide products / services to merchants to help reduce potential card fraud.
- Verified by Visa (VbV)
- The Visa brand name for their service that uses the 3D Secure standard (the technical standard developed by Visa and MasterCard to further secure card transactions over the internet).
- Visa
- An international card scheme.
- Voice Authorisation
- Authorisation by means of communication between merchant and authorisation centre by normal telephone.
A merchant may use this service if they do not have a terminal, have a terminal that is unable to obtain an automatic authorisation, or are prompted to seek a telephone authorisation by their terminal. - Voice Referral
- The procedure which may follow an authorisation request where the merchant is requested to contact its acquiring bank for further instructions or the communication of further information about the cardholder or transaction.
- Zip-Zap Machine
- A device, which is becoming increasingly rare to see, used to manually process card payments at point-of-sale using paper vouchers and by taking an imprint of a cardholder's card.
