While us folks over at Forte pride ourselves on being premier payment geeks, we understand not everyone has the 411 on all payment lingo. So we’ve decided to put together this list of some of key terms you should know when it comes to payment processing. We hope it’s helpful for you.
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Terms to Know
An acquiring bank (or acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. The term acquirer indicates that the bank accepts or acquires credit card payments from the card-issuing banks within an association.
Bank Identification Number (BIN)
The first four to six digits of a credit card. The bank identification number identifies the institution issuing the card. It is critical to the correct matching of transactions to the issuer of the charge card. This prefix system also applies to debit cards. Although it is called a bank identification number, BINs are also used by other institutions, such as American Express. As increasing numbers of issuers are opting into the BIN network, the term issuer identification number (IIN) is increasingly used interchangeably with BIN.
A customer initiated dispute related to a financial transaction. Account holders can ask the issuing bank to charge back the purchase to the merchant. (Want to know more about chargebacks? Check out this post.)
Chip and PIN Cards
AN EMV enabled card that uses a PIN for authentication. US-based chip and PIN cards are becoming more mainstream stateside, but they’re common overseas.
Payment transactions that require no physical contact between the consumer payment device and the physical terminal. In a contactless payment transaction, the consumer holds the contactless card, device or mobile phone in close proximity (less than 2-4 inches) to the terminal and the payment account information is communicated wirelessly (via radio frequency [RF]).
EMV is a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them. EMV cards are smart cards (also called chip cards or Integrated Circuit (IC) cards) which store their data on integrated circuits rather than magnetic stripes, although many EMV cards also have stripes for backward compatibility. They can be contact cards which must be physically inserted (or “dipped”) into a reader, or contactless cards which can be read over a short distance using radio-frequency identification technology. Payment cards which comply with the EMV standard are often called chip-and-PIN or chip-and-signature cards, depending on the exact authentication methods required to use them. EMV stands for Europay, MasterCard, and Visa, the three companies which originally created the standard. The standard is now managed by EMVCo, a consortium with control split equally among Visa, Mastercard, JCB, American Express, China UnionPay, and Discover. Check out this infographic to learn more about EMV.
National Automated Clearinghouse Association (ACH) Provides regulations for processing bank draft payments. They can issue penalties, fines or terminate accounts that are violating NACHA rules. One of the latest major NACHA changes relates to same-day ACH – read more about it here.
Payment Card Industry Data Security Standard (PCI DSS)
A framework developed by the PCI Security Standards Council (SSC) for developing a robust payment card data security process – including prevention, detection, and appropriate reaction to security incidents. To learn how Forte takes strides to run our Level 1 PCI Compliance Program, check out this page.
Payment Facilitator (PayFac)
A merchant account that is processing on behalf of other merchant accounts; they also control and distribute funding and reporting.
The use of unique identifiers to manage payment method data on behalf of merchants for their customers.