Taking the first steps in the world of payments? Here you can find definitions of payment terms involved in card issuing and processing transactions. Read through our glossary to understand how modern payment systems function in discussions among users and experts.
Acquirer (the merchant’s bank) – bank or institution responsible for receiving, processing and / or switching transactions on behalf of a merchant.
Authorization – the process in which a merchant requests approval for a transaction.
Bank Identification Number (BIN or issuer identification number IIN) – a six-digit number assigned in association with an ICA number; typically used to identify an issuing or acquiring portfolio for transaction authorization and clearing purposes.
BIN Sponsorship / BIN Sponsor Partner – the institution that is already associated with one or more credit card brands (Visa or Mastercard), and provides their clients with BINs through the partnership. It streamlines the process for businesses which need a quick go-to-market strategy, without the need for an exclusive BIN.
Chargeback – a complaint procedure initiated by the bank after receiving a notification from a customer using a payment card. Allows you to pursue claims on its behalf against an entity that failed to properly (in whole or in part) perform the operation.
Corporate Card – a payment card issued to companies for the use of company employees.
Debit Card – a payment card that deducts money directly from a consumer's checking account when it is used.
3D Secure (3DS) – a protocol designed to be an additional security layer for online credit and debit card transactions.
EMV® (Chip and PIN) – a global standard for credit and debit payment cards, based on chip card technology. EMV chip-based payment cards (smart cards) contain an embedded microprocessor with all the information needed to use a card for payment, protected by various security features.ż
Forex Trading (FX) – currency exchange, the process of changing one currency into another for a variety of reasons, usually for commerce, trading, or tourism.
International Bank Account Number (IBAN) – international system of identifying bank accounts across national borders to facilitate the communication and processing of cross border transactions; used for fast and secure payments both domestically and internationally.
Interchange – part of the merchant discount fee, a fee paid by a merchant’s bank (the acquiring bank) to the cardholder’s bank (the issuing bank) to compensate the issuing bank for a portion of the risks and costs it incurs. Interchange fees represent a sharing of a portion of payment system costs among financial institutions participating in a four-party payment card system.
Issuer – bank or institution responsible for issuing the cardholder their card (debit, credit, prepaid) and PIN. The cardholder’s primary relationship is with the issuer, the entity which also extends credit, and sets the fees, rates and rewards.
KYB / KYC (Know-Your-Business / Know-Your-Customer) – the process of customer identification at the beginning of the customer relationship, as well as periodical checks during the customer relationship. The purpose of KYC/KYB is to mitigate risk related to money laundering and other criminal activity.
Limit / Spending Limit – prepaid cards have a spending limit based on a money balance pre-determined by the cardholder.
Mastercard Network – Mastercard facilitates the authorization, clearing and settlement of transactions (e.g. credit, signature and PIN debit, prepaid) through the Mastercard Network, a global telecommunications network. The Mastercard Network links issuers and acquirers around the globe for transaction processing services and, through them, permits Mastercard cardholders to use their cards at millions of merchants worldwide.
MDES (Mastercard Digital Enablement Services) – service allowing the use of any device with connection to the Internet for commission and acceptance of payments with the due security level.
Non-Bank Financial Institution – a financial institution that does not come under the definition of a bank.
Open Banking – a banking practice that provides third-party financial service providers open access to consumer banking data, transactions, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs).
PAN – Payment card number, primary account number (PAN), or simply a card number, is the card identifier found on payment cards, such as credit cards and debit cards, as well as stored-value cards, gift cards and other similar cards.
Payment Wearable Devices (Contactless Payment Wearables) – gadgets and accessories used to make contactless payments. E.g. rings, bracelets, and smartwatches equipped with the near-field communication (NFC) technology.
PCI-DSS – Payment Card Industry Data Security Standards, a set of requirements to protect cardholder information and reduce the risk of data theft.
Prepaid Card (Prepaid Debit Card) – enables loading funds onto a card and spending the money wherever the card is accepted.
Processor – a company that communicates with the card issuer to authorize and settle payment card transactions.
Purchase Transactions – the number of transactions using a Mastercard-branded card to make a purchase at a retail or service point-of-sale or virtually (e.g., e-commerce).
Recurring Payments – funds are automatically deducted from a customer's account at scheduled intervals to cover the customer's subscription fees for products or services.
Settlement – ensuring accounts are credited and debited appropriately.
SSL (Secure Sockets Layer) – a standard security technology for establishing an encrypted link between a server and a client; used for encrypting data sent, incl. securing e-commerce transactions and passwords.
Tokenization – the process of replacing sensitive information with non-sensitive information. Payment companies use tokens to securely transfer sensitive data by replacing them with a unique string of numbers and letters.
User Fee – transaction fee set by the card issuer and paid by the cardholder to the issuing institution for card payments or ATM cash withdrawals.
Virtual card – a digital payment card which has a number, a CVC2/CVV2 code and an expiry date. You can pay with a virtual card online, as well as after connecting it to the appropriate application in stationary branches (smartphone with NFC or smartwatch required).