Glossary

A

  • Acquirers are financial institutions or payment processors that partner with merchants to facilitate the acceptance of card payments. They are responsible for ensuring their merchants comply with payment industry regulations.

B

  • A business account is a bank account designed specifically for business transactions. It allows businesses to manage their finances, accept payments, and track expenses. This is not always the same as a merchant account, though they can overlap. A business account is broader, while a merchant account focuses on processing payments.

C

  • Card-not-present (CNP) transactions refer to payments where the cardholder is not physically present at the point of sale. This typically occurs in online, phone, or mail-order transactions where the card details are entered manually rather than swiped, inserted, or tapped. CNP transactions carry higher fraud risks because the merchant cannot physically verify the cardholder's identity or the card itself.

  • A chargeback occurs when a cardholder disputes a transaction, prompting the bank to reverse the payment. This can happen due to fraud, dissatisfaction, or error. Merchants may incur fees and penalties if chargeback rates exceed set thresholds.

  • Chargeback management refers to the process of tracking, responding to, and resolving chargebacks efficiently. It includes analyzing chargeback trends and improving merchant strategies to reduce chargeback rates.

  • Chargeback oversight refers to the monitoring and management of chargeback activities by acquirers and merchants to ensure compliance with fraud and chargeback thresholds.

  • Compliance reports are documents that merchants submit to payment processors or card networks, detailing their chargeback and fraud statistics. These reports are used to ensure adherence to regulatory requirements.

D

  • -

E

  • E-commerce transactions are payments made for goods or services through online platforms. These transactions are more vulnerable to fraud due to the lack of physical interaction between the buyer and seller.

  • An EMI (Electronic Money Institution) is a financial institution that issues electronic money (e-money) to customers, enabling them to store and transfer money electronically. EMIs are regulated under financial laws and typically provide services like prepaid cards or digital wallets.

  • Enumerated transactions are the transactions that have passed Visa’s security check. They are monitored and confirmed through sophisticated tools such as the Visa Account Attack Intelligence (VAAI) Score system. This method is highly effective at minimizing false positives and catch real fraud, making the system more secure and reliable for both merchants and customers.

  • MasterCard's Ethoca Alerts notify merchants of potential fraud or chargeback risks, enabling them to take corrective action before a dispute occurs. This system is used to minimize chargeback volumes and prevent fraud.

F

  • The FCA (Financial Conduct Authority) is a regulatory body in the UK that oversees financial markets and firms, ensuring they operate fairly and transparently. It supervises entities like banks, payment providers, and investment firms to protect consumers and maintain market integrity.

  • Fraud-related disputes involve chargebacks initiated by a cardholder due to unauthorized or fraudulent transactions. These disputes occur when a customer claims that their card was used without their permission or knowledge, such as in cases of identity theft or stolen card information. Fraud-related disputes typically result in a refund to the cardholder and require the merchant to provide evidence to dispute the chargeback.

  • Fraud prevention tools are systems that analyze transaction data to detect suspicious or fraudulent activities in real time. These tools use analytics and AI to block or flag transactions that may pose a security risk.

  • Friendly fraud occurs when a legitimate cardholder disputes a charge, claiming they did not authorize the transaction, even though they did. This often arises in scenarios like online purchases, where the customer later claims the charge was fraudulent, resulting in chargebacks.

G

  • -

H

  • -

I

  • An IBAN (International Bank Account Number) is a standardized format for identifying a specific bank account in international transactions. It facilitates cross-border payments by providing a unique identifier for the account, ensuring accurate and efficient routing of funds between banks.

  • An ISO (Independent Sales Organization) is a company or entity that partners with payment processors to sell and manage payment processing services on their behalf. They often work with merchants to set up payment solutions, including credit card processing and merchant accounts.

J

  • -

K

  • -

L

  • Load testing involves simulating high traffic on a system to assess its performance under stress. This process helps identify bottlenecks and ensures that payment systems can handle surges in transaction volumes during peak shopping periods.

M

  • MIDs (Merchant Identification Numbers) are unique identifiers assigned to merchants by payment processors or acquiring banks. They are used to track and manage a merchant's transactions within the payment system. Each merchant that accepts card payments, whether online or in-person, is assigned an individual MID to ensure that their transactions are processed correctly and attributed to the right account. MIDs help distinguish different merchants within the payment network, allowing for efficient transaction processing, reporting, and monitoring.

  • Mobile wallets are digital applications that store payment information, allowing users to make secure transactions using their smartphones. Popular examples include Apple Pay, Google Pay, and Samsung Pay, which enable quick and contactless payments.

  • A merchant account is a type of business account that allows a business to accept and process electronic payments, such as credit card or debit card transactions. While similar to a business account, a merchant account is specifically set up to handle payment processing, making it essential for businesses that want to accept payments from customers. It acts as an intermediary to move funds from the customer’s payment (e.g., credit card) into your system. It is primarily focused on payment transactions and does not typically have the broader financial functionality of a business account.

N

  • Non-fraud disputes refer to chargebacks initiated by a cardholder that are not related to fraudulent activity. These disputes typically arise due to issues such as non-receipt of goods or services, dissatisfaction with the product or service, incorrect billing, or failure to process a promised refund. Unlike fraud-related disputes, non-fraud disputes are based on customer dissatisfaction or transactional errors.

O

  • -

P

  • PCI DSS (Payment Card Industry Data Security Standard) is a set of security standards designed to protect cardholder data during payment transactions. Compliance with PCI DSS is mandatory for businesses that handle credit card information, ensuring the safety of customer data.

  • A Payment Institution (Payment Institution) is a financial entity authorized to provide payment services like processing credit transfers, direct debits, or money transfers. They are regulated under financial services laws and can operate across different countries within the EU.

  • Pre-dispute alerts notify merchants of potential issues with transactions before they escalate into chargebacks. These alerts, often sent via systems like Visa RDR or MasterCard Ethoca, enable merchants to resolve disputes proactively.

  • Prevent alerts are notifications issued by payment processors or card networks to merchants when certain potentially risky activities or behaviors are detected in their transaction patterns. These alerts are part of fraud prevention systems designed to flag issues before they escalate into chargebacks or fraud-related disputes. Prevent alerts can be triggered by factors such as unusual transaction volumes, suspicious patterns, or high-risk transactions. They serve as early warnings to merchants, allowing them to take corrective action or investigate further to mitigate risks.

  • A PSP (Payment Service Provider) is a company that facilitates online payments for merchants, allowing them to accept payments via credit cards, digital wallets, or bank transfers. They provide the infrastructure, technology, and security to process electronic transactions.

Q

  • -

R

  • -

S

  • An SPI (Specialized Payment Institution) is a type of payment institution regulated to offer certain payment services, but with a more limited scope compared to full-service payment institutions. It is often focused on specific types of payment services or markets.

T

  • Thresholds are predefined limits set by Visa or MasterCard for acceptable levels of chargebacks and fraud. Exceeding these thresholds can lead to penalties or additional scrutiny under specific (eg) compliance, risk, and chargeback programs.

  • Tokenization is the process of replacing sensitive payment information, such as credit card numbers, with a unique identifier or "token." This reduces the risk of data breaches, as the token is meaningless without the corresponding encryption key.

U

  • -

V

  • VAMP (Visa Acquirer Monitoring Program) is a regulatory framework by Visa that monitors fraud and chargeback activity for acquirers. It sets thresholds for chargeback and fraud rates, holding acquirers accountable for their merchants' performance. Compliance with VAMP is essential for maintaining operational efficiency and avoiding penalties.

  • Visa's Rapid Dispute Resolution (RDR) system provides early alerts for disputes, allowing merchants to address issues before they develop into chargebacks. This tool helps improve merchant compliance with fraud prevention standards.

W

  • -

X

  • -

Y

  • -

Z

  • -