Card payments terminology, definitions and meanings
Below we list the most common misunderstoof terms in the card payments industry for those who are new to it. Any questions or clarifications please feel free to get in touch.
Acquiring Banks (also known as Merchant Banks)
An acquiring bank (or acquirer) is a bank that accepts and processes card payments across networks including MasterCard and Visa on a merchant’s behalf. The card network then connects to the issuing bank (the merchant’s own bank) via a payment gateway to verify pending transactions. The acquiring bank assumes full responsibility for any risk involved with processes transactions.
E-commerce is short for ‘electronic commerce’, a term used to describe any commercial transactions conducted across the Internet.
A payment gateway is the software that transmits financial information between the acquiring bank and the issuing bank in order to authorise payments. Security plays an integral part of payment gateways as credit and debit card data needs to be protected during this process to prevent fraud.
Interchange fees describe the fees that the merchant’s bank account pays each time a customer makes a card based transactions. The fees are paid to the acquiring bank to cover the potential cost associated with approving payments.
An issuing bank is the merchant’s bank account provider and is responsible for the customers’ ability to repay the debts accumulated on either credit cards or other sources of credit.
A merchant account is a type of bank account that enables businesses to accept payments in multiple ways, usually credit and debit card transactions. A merchant account is created under an agreement between an acceptor and an acquiring bank and each merchant account has its own account number, meaning the business can take ownership of each transaction.
Point Of Sale (POS)
Also known as POS, point of sale is the physical location a payment for goods or services are carried out – and cover everything from cash payments to card transactions
Electronic Point of Sale (EPOS)
Also known as EPOS, specifically refers to digital or electronic POS systems that encompass transactions made outside of the point of sale (POS) location. EPOS transactions are usually made via computers or specialised terminals that combine hardware such as cash draws, card payment machines and barcode readers to complete transactions. EPOS systems have wide-ranging functionality and companies often use them to draw accurate stock-level statistics or sales data to help run operations more efficiently. Many EPOS systems are cloud-based allowing information to be pulled from anywhere with an Internet connection.
In relation to merchant services, contactless refers to technologies that allow certain types of debit or credit cards to contact wirelessly to an electronic card reader in order to make a card payment or issue a refund. Contactless payments can now also be made using mobile phones using apps such as Apple Pay and Paypal
PDQ stands for ‘Process Data Quickly’ and is often used to describe a chip and pin machine or card reader.
A payment terminal, also known as a point of sale terminal, card terminal or simply a terminal is a device which interfaces with debit or credit cards to make electronic funds transfers. It can also be used to refer to POS and EPOS systems.
Terminated Merchant Account
From time to time acquiring banks serve notice on businesses currently processing with them. This can be for a number of reasons – for a more in-depth explanation we’ve written about it here.
The shopping cart software doesn’t act as a payment gateway itself but rather communicates directly with gateways to process payments.