ABC’s of Payments

We created this guide to help you better understand payment terminology and decipher abbreviations you might come across.If we missed the mark on a definition or you don’t understand one, please send us an email or tweet! Payments shouldn’t be hard. As Your Partner In Payments, Beanstream is here to help make it easier.

A

Acquirer or Acquiring Bank
A bank or financial institution that process credit or debit card payments on behalf of a merchant. The customer’s issuing bank will send the funds to the acquiring bank who deposits it into your business account.Ex) Desjardins, TD Canada Trust, First Data Canada, Bambora Euroline
Aggregator
A processing arrangement when a large business (called the aggregator) is processing transactions on behalf of smaller business belonging to its portfolio. Ex) Apple’s App Store processes the payments for all the individual apps and then sends payments to the App Owners.
API or Application Program Interface
Used by developers, APIs are a set of routines, protocols, and tools for building software applications. Think of it as a set of guidelines for developers to follow for integrating each other’s software.
Apple Pay
Apple Pay allows for payments two ways:
  • First is through the Wallet App which individuals can make contactless payments by tapping the iPhone to a NFC-capable payment terminal. Beanstream’s sproutPOS can process Apple payments in this manner.
  • Second is through in-app purchases for physical goods and services. You can use Beanstream’s iOS SDK to integrate Apple Pay into your app.
Authentication
How one identifies a merchant or customer. With merchants, Beanstream uses your Merchant Identification Number and password. Customers can use their pin, password, signature, or fingerprint to make a payment.
Authorization
Ensures that the money is available from a credit cardholder (customer) and places a hold on it until the transaction is captured by the merchant.
Automated Clearing House (ACH)
A secure payment transfer system that connects all U.S financial institutions. Think of it as the middle man between the customer’s bank and the merchant’s bank.

B

Batch Processing
Gives the ability to merchants to coordinate an unlimited number of payments at once. Used when companies have mail in orders or a call center.

Learn more about Batch Processing

Bank Identification Number (BIN)
The first four to six digits of a debit or credit card. Identifies the financial institution that issued the card.
Bitcoin
A type of digital crypto-currency created in 2009 that lets you exchange money differently than with typical banks. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. Often called the “cash” of the internet. After downloading a Bitcoin wallet users can exchange money or make mobile payments. Although it is not an official currency, bitcoin transactions are secured by military grade cryptography.

C

Capture
Once merchants want to process the payment they previously authorized they capture the amount owed to them. Merchants do not receive any funds until they capture the payment.
Card Not Present (CNP)
Payments that occur when there is no physical card present. Payments made online, over the phone or that are manually keyed in are all versions of card not present.
Card Present
Payments that occur when there is a physical card present. This can include mobile wallets and physical cards.
Card Skimming
A way to collect illegal data from the magnetic stripe of a card. A counterfeit reader is placed in an ATM or point of sales machine, where it reads the information off your card at the same time as the machine. EMV chip cards cannot be hacked by a card skimmer.
Cardholder
A person who has a credit card or debit card.
Chargeback
When a customer contacts their card issuer (Visa, MasterCard) about a transaction on their account that appears fraudulent the card issuer will investigate.
  • If a merchant cannot prove the transaction to be legitimate, the card issuer will take back the entire value of the transaction, along with an additional chargeback fee.
  • If the merchant can prove the transaction is legitimate, they will not get a reversal of funds, however, they may still be charged an additional chargeback fee for the investigation.
Credit Card Associations
A network of issuing banks and acquiring banks that process payment cards for specific brands.Ex) Visa, MasterCard, American Express are all card association brands who pair with banks. Royal Bank of Canada (RBC) banks are co-branded with Visa making it a Credit Card Association.
Credit Card Fraud
A general term for theft and fraud committed using or involving a credit card. It can include obtaining goods without paying or obtaining unauthorized funds from an account.
Card Verification Value (CVV)
A 3-4 digit code on your credit and debit cards used to combat online fraud. Often found on the back of your card at the signature line (except with AMEX, which is found on the front). Also known as Card Security Code (CSC).
Cryptocurrency
A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfers of funds. Operating independently of a central bank.EX) Bitcoin.

D

Data Accessibility
Refers to the merchant’s ability to access or retrieve data stored on a payment solution database. With Beanstream if you decide to switch payment providers, you are able to take your data with you.
Decline
When a transaction is denied. Declines happen for a variety of reasons such as insufficient funds, expired card or incorrect pin.
Discount Rate
The percentage of each transaction that the acquirer charges the merchant for facilitating the payment.

E

E-Check
A form of payment made via the internet that is designed to perform the same function as a conventional check. Since it is in an electronic format, it can be processed in fewer steps and has more security features than a regular check.
E-Commerce
Transactions conducted on the Internet using a gateway such as the Beanstream gateway.

G

Gateway
Facilitates the transfers of information between a payment portal (such as a website or an embedded form) and the acquiring bank.

Learn more about Gateway’s

I

Interchange
A fee paid between banks for the acceptance of card-based transactions. Also known as a Processing Rate.
Issuer
A bank or credit union who offers credit cards and is responsible for sending payments to merchants for purchases made with credit cards from that bank.

K

Keyed Transactions
Credit card transactions where the merchant doesn’t have the physical card (or the point of sale won’t read the card) and has to manually key in the card information.

M

MCC
Four digit industrial codes that define what line of business merchants are in and are assigned to businesses when they first open a processing account. The MCC is used to classify the business by the type of good or services it provides.Ex) 0742 is the industry code for Veterinary Services.
Merchant
A person who buys and sells goods or services.
Merchant Account
Not your average bank account. A merchant account is where settlement takes place. Once the funds have cleared in the gateway, they are then settled into your merchant account. These funds are then passed through to your business account.

Learn more about Merchant Accounts

Merchant Identification Number (MID)
A number that represents the merchant and account they have.
Mobile Payment
Payments made from or with a mobile internet-connected device.
Mobile Point of Sale (mPOS)
A point of sale that is mobile. sproutPOS is a mobile point of sale that enables you to take payments anywhere you have an Internet connection (through your data plan or through Wi-Fi).

N

Near Field Communication (NFC)
A set of protocols that enable electronic devices to establish communication with each other by touching the devices together or hovering over. Seen with mobile wallets and cards that enable contactless payments or “tapping”.

P

Payment Aggregation
A processing arrangement when a large business (called the aggregator) is processing transactions on behalf of smaller business belonging to its portfolio. EX) Apple’s App Store processes the payments for all the individual apps and then sends payments to the App Owners.
Payment Facilitator
A business that takes the legal responsibility for funds in the process of directing them from buyers to sellers. Beanstream offers payment facilitator solutions to our merchants.
Payment Processor
A company appointed by a merchant to handle transactions from various channels such as credit cards and debit cards by providing a connection to an acquiring bank.
PCI Compliance
The Payment Card Industry (PCI) is made up of a coalition of credit card companies. In 2006, they developed a set of Payment Card Industry Data Security Standards (PCI DSS) to ensure all companies that process, store or transmit credit card information maintain a secure environment. This includes all merchants, vendors, or software providers who handle credit card information. There are four levels based on transaction volume. Beanstream is certified at the highest level at PCI-Level 1.

Learn more about PCI-Compliance

 Point of Sale (POS)
A device or application that can be used to take payments, track and manage payments and merchant inventory.
Processing Rate
A fee paid between banks for the acceptance of card-based transactions. Also known as Interchange.

R

Recurring Payment
Payments that occur at a set interval. EX) You would pay the same amount for your lease every month.

Learn more about Recurring Billing

Refund
A return of payment.

S

Secure Socket Layer (SSL)
Secure Socket Layer is a standard technology for establishing an encrypted link between a server (Beanstream) and a client (a merchant). With SSL both the link and the payment data being transmitted are encrypted.
Subscription Billing
Billing that occur at a set interval.EX) A gym would do subscription billing payments every month.

T

Terminal Identification (TID)
The acquirer terminal number associated with your processing account.
Tokenization
A way to securely manage confidential customer information. Beanstream’s tokenization service encrypts every piece of confidential data your customer supplies and stores it on our PCI-Level 1 certified servers. Tokens are great because they remove systems from PCI scope otherwise associated with storing credit cards. Further, if there is a data breach tokens can be invalidated without exposing any cardholder data.

Learn more about Tokenization

Transaction Fee
The amount charged to merchants for a transaction. Most common fees are processing fees, a chargeback fees or a refund fees.