3D Secure
The programme jointly developed by Visa and Mastercard to combat online credit card fraud.
Cardholders introduce their pass word to verify
their identity whenever they make an online
purchase. E-merchants willing to offer this security
service to their customers must be registered as a
participating merchant in the programme. Only
cardholders registered at Verify by Visa or
Mastercard SecureCode can actually be requested
to verify their data when purchasing online.
Accessto Accounts(XS2A)
The term refers to access to payment accounts by
third parties acting on behalf of the Payment
Service User. European Banking Authority sets the
basic requirements, defining how data from bank
accounts is accessed for PSD2. It makes it
mandatory for banks to set up access to bank
account data via API, although there are multiple
standards for APIs. This will enable consumers to log
on to their bank accounts on a third-party provider’s
plat form without exposing their bank login data to
them.
Acceptor
A merchant or other entity that accepts a payment
instrument presented by a client in order to transfer
funds to that merchant or other entity.
Account Information Service Provider (AISP)
An authorized entity that provides aggregation
services related to payment accounts such as bank
accounts. PSD2 allows AISPs authorized access to
bank account data through an API. An example of a
service an AISP could provide is personal financial
management: a single platform where an account
holder can login to view and manage multiple bank
accounts from multiple providers. AISPs can be
existing banking providers or third parties.
Alternative Payment Methods(APM)
All those payment solutions that are not cards
running on global scheme networks such as Visa,
Mastercard, or American Express.
Account Servicing Payment
Service Provider (ASPSP) The term means a
Payment Service Provider (PSP) (bank or card
issuer) that provides authorized access to bank
account information. For PSD2 they are allowing
API access to bank account data for AISPs and
PISPs.
Automated Clearing House (ACH)
An electronic clearing system in which payment
orders are ex changed amongst participants
(primarily via electronic media) and handled by a
data-processing center.
ACH Network
The Automated Clearing House (ACH) Network
facilitates E-commerce, by serving as an efficient,
reliable, and secure payments system. NACHA, led
by member depository financial institutions and
payments associations, fulfils this purpose by
managing the
development, administration, and governance of
the ACH Network, and by providing superior
services and value to its members as the industry
association responsible for ACH payments. The ACH
Network connects the originating depository
financial institutions with the receiving depository
financial institutions.
Acquirer (card acquirer)
In point of sale (POS) transactions, the entity
(usually a credit institution) to which the acceptor
(usually a merchant) transmits the information
necessary in order to process the card payment. In
automated teller machine (ATM) transactions, the
entity (usually a credit institution) which makes
banknotes available to the cardholder (whether
directly or via the use of third-party providers).
Arbitration
The process by which card companies determine
whether an issuer or an acquirer has ultimate
responsibility for a chargeback. Either member
initiates his process after the re-presentment
process is completed.
Acquiring scheme member
A licensed member of Mastercard and/or Visa who
receives all bank card transactions from the
merchant (the entity that sells goods or services in
an online or physical environment, sometimes
referred to as a retailer) or merchant aggregator (an
entity that pools transactions from retailers to pass
through for acceptance) and initiates that data into
the scheme for settlement.
Anti-Money Laundering (AML)
A set of procedures, laws, or regulations designed
to stop the practice of generating income through
illegal actions. In most cases,
money launderers hide their actions through a
series of steps that make it look like money coming
from illegal or unethical sources was earned
legitimately.
Authorization
The consent given by a participant (or a third party
acting on behalf of that participant) in order to
transfer funds or securities.
API (Application Programme Interface)
A set of programming techniques (web API, remote
API, SDKs, libraries, frameworks, and more) that are
available for software developers when they
integrate with a particular service or application. In
the payments industry, APIs are usually provided by
the participants in the money flow (e.g. payment
gateways, processors, service providers) to facilitate
the money transferring process.
Bank Identification Numbers(BIN)
The first four to six digits on a credit card, which can
be used to
identify the issuing bank that released the card.
BINs are traditionally used by online merchants as a
way to detect fraud by matching the geographic
area where the cardholder is located to the
geographic area identified in the Bank Identification
Number.
Bill payment
A bank provided service that allows customers to
receive and pay bills by means of a computer or a
smartphone.
Back-end processor
A data processing company that partners with
acquirers to provide
communication and processing systems that
connect with the interchange systems for clearing
and settlement services on behalf of those
acquirers. (In some cases, the acquirer may act as its
own back-end processor.)
Balance inquiry
A transaction used to determine the available
balance on a card. Cardholders can typically conduct
a balance inquiry online or by telephone via an IVR
or via SMS text messaging services.
Some merchants may be able to use their electronic
cash registers/point of sale terminals to conduct a
balance inquiry on a network branded or closed
loop card presented for payment. Such capability
can reduce authorization declines when the amount
of a purchase is greater than the available balance
of the card. This is particularly relevant for cards
that work on a balance rather than a credit limit,
such as prepaid cards.
Bancontact
Mister Cash The domestic debit card scheme in
Belgium, allowing consumers to pay in real-time and
guarantee payment to (online) merchants and
businesses. Bancontact payments are immediately
debited from the consumer’s bank account. The
seller’s account will be credited the next working
day. Today, there are more Bancontact Mister Cash
cards in circulation (15 million) than there are
Belgian citizens (10.5 million).
Biometrics
The utilization of a computer user’s unique physical
characteristics such as fingerprints, voice, and retina
to identify that user.
Bank-as-a-Platform
A strategy used to allow third parties to develop
applications and services around the financial
institutions via open APIs. Banks, as such, become
fully fledged digital players, competing and
collaborating for customer relevance in payment
and information services.
Basel III
A comprehensive set of reform measures designed
to improve the regulation, supervision, and risk
management within the banking sector. The Basel
Committee on Banking Supervision published the
first version of Basel III in late 2009, giving banks
approximately three years to comply with all
requirements. Largely in response to the credit
crisis, banks are required to maintain proper
leverage ratios and meet certain capital
requirements.
Batch load
The addition of funds to cards through processing a
batch (or offline) file. This method is utilized for
loading multiple cards from a single source.
Typically, this occurs daily, weekly, or monthly. The
ACH is often used for batch loads to certain types
of cards such as payroll cards and governmentfunded cards.
Beacon
A small Bluetooth device used by vendors,
merchants, banks, etc. to send information such as
offers, promotions, coupons to the mobile devices
of (potential) customers passing by in close
proximity.
Big Data
Large data sets that may be analyzed
computationally to reveal patterns, trends, and
associations relating to human behavior and
interactions. By developing predictive models
based on both historical and real-time data,
companies can identify suspected fraudulent claims
in the early stages.
Blockchain
A public ledger of all transactions in the Bitcoin
network made of all computers (nodes)
participating and using the cryptocurrency
protocol. A blockchain is a transaction database
shared by all nodes participating in a system based
on the Bitcoin protocol. A full copy of a currency’s
blockchain contains every transaction ever
executed in the currency.
Card (payment card)
A device that can be used by its holder to pay for
goods and services or to withdraw money.
Card acquirer (see acquirer)
Card issuer A financial institution that makes
payment cards available to cardholders, authorizes
transactions at point of sale (POS) terminals or
automated teller machines (ATMs) and guarantees
payment to the acquirer for transactions that are in
conformity with the rules of the relevant scheme.
Card holder
A person to whom a payment card is issued and
who is authorized to use that card.
Card not present (CNP) A card transaction in which
a card is not physically presented to a merchant,
such as over the internet.
Card scheme
A technical and commercial arrangement set up to
serve one or more
brands of cards, which provides the organizational,
legal, and operational framework necessary for the
functioning of the services marketed by those
brands (VISA, Mastercard, American Express,
Diners, Discover, RuPay, UnionPay).
Card Security Code (CSC)
A security feature that ensures the cardholder has
the physical card when making card not present
transactions. There are generally two on a card,
one on the mag stripe and valise when the card is
read in a card present transaction, and one printed
on the card and used in card not present
transactions.
Chargeback
A return of funds to a consumer, initiated by the
issuing bank of the instrument used by a consumer
to settle a debt. Specifically, it is the reversal of a
prior outbound transfer of funds from a
consumer’s bank account, line of credit, or credit
card.
Collecting payment service provider
It is a technical intermediary between the seller’s
website and one or more payment schemes, which
collects the funds for one or more payment
methods. They take away the programming
complexity for the online seller by only having to
integrate with the collector’s payment platform.
The collector takes care of the data processing to
the applicable payment method scheme. In
addition, the collector collects the transaction
funds for one or more payment methods and
settles the amounts.
Cash on delivery
A payment method through which the payment
(cash or by card) takes place when the goods are
delivered.
Contextual commerce
An emerging trend in the payments and retail
industries appeared as a result of the introduction
of buying buttons by the social media
platforms (Facebook, Twitter, and Pinterest) to
enable consumers to purchase products from
digital outlets without having to leave the platform.
Credit card
A card that enables cardholders to make purchases
and/or withdraw cash up to a prearranged credit
limit. The credit granted may be either settled in
full by the end of a specified period, or settled in
part, with the balance taken as extended credit (on
which interest is usually charged).
Credit institution
Any institution that is either (i) a business that
receives deposits or other repayable funds from
the public and grants credit for its own account, or
(ii) a business or any other legal person, other than
those under (i), which issues means of payment in
the form of electronic money.
Cross-border payment
Or “international payment”, is when a payment
method issued in one country is used to make a
purchase from a merchant based in another
country.
Chip and PIN
A UK government-backed initiative to implement
the EMV (short for Europay, Mastercard, and Visa)
standard for smart payment cards. The name of this
initiative stems from the presence of a
semiconductor chip and associated circuitry in the
smart card, which is used in tandem with a PIN
(personal identification number). In use, the smart
card is placed into a PIN pad terminal or a modified
swipe-card reader, which accesses the chip in the
card. The user enters a 4-digit PIN that is checked
against the information stored on the card. If the
entered PIN matches the stored value, the
transaction is permitted to proceed.
Clearing
The process of transmitting, reconciling, and, in
some cases, confirming transfer orders prior to
settlement, potentially including the netting of
orders and the establishment of final positions for
settlement. Sometimes this term is also used
(imprecisely) to cover settlement. For the clearing
of futures and options, this term also refers to the
daily balancing of profits and losses and the daily
calculation of collateral requirements.
Clearing House
A common entity (or a common processing
mechanism) through which participants agree to
exchange transfer instructions for funds, securities,
or other instruments. In some cases, a clearing
house may act as a central counterparty for those
participants, thereby taking on significant financial
risks.
Contactless payments
Contactless payments are transactions that use
chip-based techno logy and require no physical
connection between the payment device (a card or
mobile device) and the physical merchant terminal.
CVV
A unique check value encoded on the magnetic
stripe and replicated in the chip of a card or the
magnetic stripe of a Visa card to validate card
information during the authorization process.
CVV2
A unique 3-digit check value generated using a
secure cryptographic process that is indent ‐ printed
on the back of a Visa card or provided to a virtual
account holder.
Cross-border E-commerce
International E-commerce, when consumers buy
online from merchants located in other countries
and jurisdictions. Online trade
between consumers and merchants, which share
one common language and border or which make
use of the same currency, are not always perceived
as cross-border by consumers. EU neighbors that
speak a common language, united by SEPA, are just
one example.
Cross-channel
Implies merchants who interchangeably use
multiple channels to market, sell, and interact with
customers. For instance, when a customer uses the
mobile app of a merchant platform to look at a
product but does not complete the purchase, the
merchant can use a cross-channel approach to
remarket that product by serving up ads for it even
when the customer is on another channel or plat
form (say email or social media).
Decentralized e-money technology
Decentralized e-money technology implies storing
and transferring through a peer-to-peer computer
network that directly links users, much like a chat
room. No single user controls the network. There is
no centralized issuer of such products or a trusted
third party that manages them. This means that they
are independent of central banks, financial
institutions and internet platforms. Decentralized emoney is not backed by any particular good or
service and is not redeemable into national
currencies.
Digital money
Electronic money or e-money is an evolving term
that can have different meanings, but, in principle,
involves the use of computer networks and digital
stored value systems to store and transmit money. It
may have official legal status or not.
Digital identity (e-ID)
A collection of identity attributes, an identity in an
electronic form (e.g. electronic identity).
Digital Single Market
A market in which the free movement of goods,
persons, services, and capital is ensured and
where citizens, individuals, and businesses can
seamlessly access and exercise online activities
under conditions of fair competition and a high
level of consumer and personal data protection,
irrespective of their nationality or place of
residence.
Digital wallet (E-wallet)
A digital tool (software or app) for consumers to
store their payment methods. It stores credentials
of e.g. debit cards, credit cards, and alternative
payment methods. Some E-wallets also store
loyalty programs.
Direct Carrier Billing
A payment method for purchasing items or
services by charging the purchase to mobile phone
account. At the time of checkout, the customer
selects the mobile billing option on a smartphone
and follows a two-factor authentication
procedure. After the authentication, the
consumer’s mobile account is charged for the
amount of the purchase, plus applicable taxes and,
in some cases, a processing fee.
Direct debit
A payment instrument for the debiting of a payer’s
payment account whereby a payment transaction
is initiated by the payee on the basis of
authorization given by the payer.
Dispute transaction (card-based)
A dispute initiated by the cardholder. In the card
bank industry, the dispute can be in the form of a
chargeback.
Dunning
The process of insistent demands for the payment
of a debt. In the business context, it refers to the
collection processes, whereby a business
communicates with customers who have failed to
pay their bills.
Dynamic currency conversion (DCC)
Dynamic currency conversion refers to the
situation whereby the shopper is offered a choice
to pay in either the home currency of the
merchant or the shopper’s home currency. This
offer is instantly generated by the PSP platform
(often in conjunction with a DCC provider), as the
DCC software recognizes the home currency of the
shopper based upon the first six digits of the card,
and results in a conversion wherein a mark-up has
been included. If conversion can be applied
depends on the fact whether the DCC provider
supports currency conversion for a particular
currency.
EBA CLEARING
A bank-owned provider of pan-European payment
infrastructure solutions, established in June 1998
by 52 major European and international banks.
Currently, EBA CLEARING counts 53 shareholder
banks and has the mission to deliver market
infrastructure solutions for the pan-European
payments industry, to support its users’ needs in
line with user requirements.
e-Banking (online banking)
A banking methods in which the customer
conducts transactions electronically via the
Internet.
E-commerce
A way of doing real‐time business transactions via
telecommunications networks when the customer
and the merchant are in different geographical
places. Electronic commerce is a broad concept
that includes virtual browsing of goods for sale,
selection of goods to buy, and payment methods.
E-invoicing
Electronic invoicing is the exchange of the invoice
document between a supplier and a buyer in an
integrated electronic format. Traditionally,
invoicing, like any heavily paper-based process, is
manually intensive and is prone to human error
resulting in increased costs and processing
lifecycles for companies.
Electronic banking
A form of banking in which funds are transferred
through an exchange of electronic signals between
financial institutions rather than an exchange of
cash, cheques, or other negotiable instruments.
Electronic payments
Payments that are initiated, processed, and
received electronically.
Euro Banking Association (EBA)
Not to be confused with the European Banking
Authority, the Euro
Banking Association is an industry forum for the
European payments industry. Their role in PSD2 is
to promote the interests of their members and
help them to adapt to PSD2 in addition to
sponsoring the Open Forum on Open Banking.
e-IDAS
The European regulation for the electronic
identification and trust services for electronic
transactions. Since its announcement in July of
2018, the intent of the eIDAS Regulation has been
to facilitate secure and seamless electronic
transactions throughout the European Union (EU)
by providing a regulatory environment that would
promote their use.
Electronic money
A monetary value, represented by a claim on the
issuer, which is: 1) stored on an electronic device
(e.g. a card or computer); 2) issued upon receipt of
funds in an amount not less in value than the
monetary value received; and 3) accepted as a
means of payment by undertakings other than the
issuer.
Electronic money institution (EMI)
A term used in EU legislation to designate credit
institutions which are governed by a simplified
regulatory regime because their activity is limited
to the issuance of electronic money and the
provision of financial and nonfinancial services
closely related to the issuance of electronic money.
EMA (Electronic Money Association)
A European trade body representing electronic
money issuers and other payment service
providers. Members include electronic money
institutions (ELMIs), payment institutions (PIs),
banks, and payment schemes.
Encryption
The process of converting electronic information or
signals into a form, called a cipher text, which
cannot be easily understood by unauthorized
people.
European Banking Authority
A regulatory agency of the EU headquartered in the
UK. It concerns itself primarily with banking
regulation, but has a mandate to develop
technical standards for the security of Internet
payments.
European Central Bank (ECB)
The central bank for Europe’s single currency. The
ECB’s main task is to maintain the euro’s
purchasing power and price stability in the euro
area.
Faster Payments
A UK banking initiative to reduce payment times
between different banks’ customer accounts from
three working days using the long-established BACS
system, to typically a few hours. Many other
countries are now adopting a similar model.
Financial inclusion
The ability of an individual, household, or group to
access appropriate financial services or products.
Without this ability, people are often referred to as
financially excluded.
Four-party payment scheme
A card scheme where the stakeholders involved
are: 1) the issuer; 2) the acquirer; 3) the
cardholder; and 4) the card acceptor. (In the case
of automated teller machine (ATM) transactions, it
is usually the acquirer that offers its services via the
ATM.) By contrast, in a three-party card scheme,
the issuer and the acquirer are always the same
entity.
Fintech (Financial technology)
An economic industry in which companies use
technology to make financial systems more
efficient.
Identity theft
Happens when fraudsters access enough
information about some one’s identity (such as
name, date of birth, current or previous addresses)
to commit identity fraud. Identity theft can take
place whether the fraud victim is alive or deceased.
Issuer/Issuing Bank
Financial institution that issues payment cards
(credit, debit and prepaid cards) as a member bank
of the card organizations and receives transactions
from its cardholders from other member banks or
merchants.
In-app payments
Payments made from within mobile applications in
order to purchase dedicated content like digital
money, services, or even products.
Installment payments
The payments whereby the cardholder is able to
split a payment into smaller transactions spread
over an agreed period of time.
Instant payments
According to the European Retail Payments Board
(ERPB), instant payments are ‘electronic retail
payment solutions available 24/7/365 and resulting
in the immediate or close to immediate interbank
clearing of the transaction and crediting of the
payee’s account with confirmation to the payer
(within seconds of payment initiation). This is
irrespective of the underlying payment instrument
used (credit transfer, direct debit or payment card)
and of the underlying arrangements for clearing
(whether bilateral interbank clearing or clearing via
infrastructures) and settlement (e.g. with
guarantees or in real time) that make this possible.
Interbank
A transaction or exchange operated between
banks.
Interchange fee
When a consumer pays for a purchase using a credit
or debit card, the organization that serves the
merchant (known as the acquirer) pays a fee to the
organization that issued the payment card to the
shopper (known as the issuer). This “interchange
fee” is then charged to the merchant and absorbed
into the merchant commission rate or card
acceptance fee.
Interchange Network
An electronic network maintained by the card
companies that exchanges data related to the value
of card sales and credits among issuers and
acquirers.
International Bank Account Number (IBAN)
An International Organization for Standardization
(ISO) technical code that is an expanded version of
the basic bank account number (BBAN). Intended for
use internationally, the IBAN uniquely identifies an
individual account at a specific financial institution in
a particular country. The IBAN also includes the bank
identifier of the financial institution servicing that
account.
operate only in their own respective systems.
Know your customer (KYC)
The term refers to due diligence activities that
financial institutions and other regulated companies
must perform to ascertain relevant information from
their clients for the purpose of doing business with
them.
Loyalty card
A brand‐specific or retailer‐labelled card that has
cardholder bene fits tied to purchase amounts,
usage, membership, or number of visits. Benefits
typically include coupons or discounts for future
services.
Machine learning
An artificial intelligence (AI) discipline geared toward
the technological development of human knowledge.
Machine learning allows computers to handle new
situations via analysis, self-training,
observation, and experience.
Merchant
Term used for people and companies who have
entered into an under taking in a contract with the
acquirer to accept credit cards (VISA, MasterCard).
Merchant Acquirer
A member that has entered into an agreement with
a merchant to accept deposits generated by
bankcard transactions; also called the acquirer or
acquiring bank.
Mobile payments
Also referred to as mobile money, mobile money
transfer and mobile
wallet, mobile payments generally refer to
payment ser vices operated under financial
regulation and performed from or via a mobile
device. Mobile payment is an alternative payment
method. Instead of paying with cash, cheque, or
credit cards, a consumer can use a mobile phone to
pay for a wide range of services and digital or hard
goods.
Mobile point of sale (m-POS)
A smartphone, tablet, or dedicated wireless device
that performs the functions of a cash register or
electronic point of sale.
MCS (merchantservice charge)
A fee paid by the acceptor/merchant to the
acquirer.
Monetization
The conversion of an asset into or establish
something as money or legal tender. The term
‘monetise’ has different meanings depending on
the context. It can refer to methods utilized to
generate profit, while it can also literally mean the
conversion of an asset into money. For example,
the US Federal Reserve can monetise the nation’s
debt; this involves the process of purchasing debt
(treasuries), which in turn increases the money
supply. This essentially turns the debt into money
(monetization).
National Automated Clearing House
Association (NACHA) A US national organization that
establishes the standards, rules, and procedures for
electronic payments.
National Retail Federation (NRF)
The world’s largest retail trade association, with
membership that encompasses all retail formats and
distribution channels, including department,
specialty, discount, catalogue, Internet, and
independent stores as well as the industry’s key
trading partners of retail goods and services.
Nonbank financial institution
A financial institution that is generally nondepository
(e.g. it does not accept deposits).
OAuth (Open Authorization)
An open standard for token-based authentication
and authorization on the Internet. It allows an end
user’s account information to be used by third-party
services, such as Facebook, without exposing the
user’s password. OAuth acts as an intermediary on
behalf of the end user, providing the service with an
access token that authorizes specific account
information to be shared.
OBeP (Online Banking e-Payments)
The Online Banking e-Payments (OBeP) scheme is a
type of payments network designed to facilitate
online bank transfers. In an OBeP scheme, the
consumer is authenticated in real-time by the
consumer’s financial institution. The availability of
funds is validated in real-time and the consumer’s
financial institution provides the guarantee of the
payment to the merchant in case the payment is
made as a credit transfer (push payment): i.e. the
consumer/buyer initiates the payment. The
merchant receives a real-time guarantee so he can
continue with the fulfilment process. The actual
funds arrive later (D+1), according to the SEPA Credit
Transfer Scheme.
Payment flow
The clockwise transfer of money in payment for
the counter clock wise physical flow of goods and
services. The payment flow is the monetary
payment for goods and services received by the
household sector from the business sector
through product markets and the monetary
payment for resource services obtained by the
business sector from the household sector
through factor markets.
Payment gateway A system that provides Ecommerce services to merchants for the
authorization and clearing of transactions.
Payment Initiation
An electronic service facilitating payment by a
third party from a customer’s payment account
via APIs or Open Banking.
Payment Initiation Service Provider (PISP)
A regulated entity that allows customers to
initiate payments without the customer needing
to directly access their bank account or use a
debit or credit card. PSD2 allows PISPs authorized
access to bank accounts through an API. Payment
Initiation Services can be provided by existing
retail banks, payment service providers or by
third parties.
Payment method
A generic way in which a payment is carried out,
for instance by PIN card, credit card, internet
banking, COD, premium SMS. When a payment
method is not generic but specific, it is called a
payment product.
Peer-to-peer payments(P2P)
An online technology that allows customers to
transfer funds from their bank account or credit
card to another individual’s account via the
Internet or a mobile phone.
Phishing
A method of social engineering that allows criminals
to gain access to sensitive information (like
usernames or passwords). Very often, phishing is
done by email. This email appears to come from a
bank or other service provider. It usually says that
because of some change in the system, the users
need to reenter their usernames/ passwords to
confirm them. The emails usually have a link to a
page, which is similar to the one of the real bank.
Point of sale (POS)
Or checkout, is the location where a transaction
occurs. A checkout refers to a POS terminal or, more
generally, to the hardware and software used for
checkouts; it is the equivalent of an electronic cash
register.
Processor
A platform that acquires financial transactions from
ATMs, POS terminals etc. The processor then sends
these via a Switch/ Scheme to the issuer processor
for authorization and settles the authorized
transactions.
PSD (Payment Services Directive)
The Directive on payment services (PSD) provides
the legal foundation for the creation of an EU-wide
single market for payments. The PSD aims at
establishing a modern and comprehensive set of
rules applicable to all payment services in the EU.
The target is to make cross border payments as easy,
efficient, and secure as ‘national’ payments within a
member state.
PSD2
On 24th July 2017, the European Commission
adopted a proposal for a revised Directive
2007/64/EC on Payment Services (the PSD2). The
main high-level objectives of the revision are to
promote better integration, more innovation and
more competition in the market for payment
services within the EU.
Quick response code (QR code)
A type of 2D bar code that is used to provide easy
access to information through a smartphone. There
are static and dynamic codes.
Reconciliation
A procedure to verify that two sets of records issued
by two different entities match.
Regulatory Technical Standard (RTS)
Provides the rules by which PSD2 will be
implemented. The European Banking Authority is
responsible for the development of the RTS to meet
the objectives of PSD2 as defined by the European
Commission.
Returns
Funds sent back by the payee to the payer following
settlement of the original payment instruction. The
term “return” is used in connection with both direct
debits and credit transfers.
Risk management
The process concerned with the identification,
measurement, control, and minimisation of security
risks in information systems and payment systems to
a level commensurate with the value of the assets
protected. Good risk management in the merchant
program requires meeting the challenges of
reducing the exposure to risk and responding quickly
when risk arises. Monitoring merchant activity with
pre-set parameters allows the transactions to be
rejected for examination before potentially incurring
a loss.
SCT Scheme
The SCT scheme is an interbank payment scheme
defining a common set of rules and standard
procedures for credit transfers in euro.
Settlement
The completion of a transaction or of processing
with the aim of discharging participants’ obligations
through the transfer of funds and/or securities. A
settlement may be final or provisional.
Screen scraping
A programmatic means of processing web content to
extract data. In the context of PSD2, this was the precursor to API access to accounts (XS2A) and relied on
third parties holding some security credentials for
their customers.
Single Euro Payments Area (SEPA)
The vision, directive, and goal of the European
Commission, which means that citizens and
companies within the EU are able to pay with a single
set of payment instruments. This set is the
combination of a bank account and instruments like
money transfer, direct debit, and cards. SEPA
signifies the end of international payments within
Europe.
Settlement bank
A bank, including correspondent or intermediary
banks, that is authorized to execute settlement of
interchange on behalf of the member or the
member’s bank.
Spear phishing
An email that appears to be from an individual or
business that the user knows. In fact, the respective
email is from the same criminal hackers who want
the user’s credit card and bank account numbers,
passwords, and the financial information on their PC.
Strong Customer Authentication (SCA)
A methodology by which PSD2 looks to secure
payments. It aims to reduce payment fraud and is
based on authenticating payment initiation using
multiple factors that include inherence, possession,
and knowledge.
Surcharge
In debit card usage, additional fees assessed to
cardholders by merchants and ATM providers.
Merchants are sometimes charged additional fees for
nonqualified interchange transactions.
Tokenization
The process of substituting a sensitive data with an
easily reversible benign substitute. In the payment
card industry, tokenization is one means of
protecting sensitive cardholder PII in order to comply
with industry standards and government regulations.
TPP
Provide services which are based on access to
payment accounts provided by a PSP who is not the
‘account servicing’ PSP (ASPSP), in the form of
payment initiation services and/or account
information services. AISPs and PISPs are examples of
TPPs for PSD2.
Virtual card
Virtual credit cards are online cards that are not
physically issued by the credit card provider. It is
usually a free service provided by the original card
issuer to their customers who want to perform an
online payment with the help of their credit cards.
Virtual terminal
Internet-assisted user interface for payment
acceptance (including via MOTO), which is used, for
example, in call centers. It allows direct payment
acceptance without signature by the paying party.
White label
A product or service that is purchased by a reseller
who rebrands the product or service to give the
impression that the new owner created it. White
label products are often produced via mass
production.