AAA

Authentication, Authorization, and Accounting

Protocol for authenticating a user based on their verifiable identity, authorizing a user based on their user rights, and accounting for a user’s consumption of network resources.

AML

Anti-Money Laundering

Anti-money laundering (AML) is a term mainly used in the legal and financial industries to describe a set of procedures, regulations, or legal controls designed to detect, prevent, and report the practice of generating a source of income through illegal actions (money laundering).

ACH

Automated Clearing House

An Automated Clearing House (ACH) is a network capable of handling and processing electronic payments in significant volume. Most countries have at least one ACH which provides a fully automated way of collecting and settling payments; effectively, the ACH provides a secure electronic network to allow banks and financial institutions exchange to information.

APM

Alternative Payment Method

Alternative Payment Methods (APM) relate to any electronic payment which is not made using a credit or debit card. This includes prepaid cards and e-vouchers, digital wallets, P2P solutions, mobile payments, and cryptocurrencies.

 

AVS

Address Verification System

This is a security system that requires merchants to provide the cardholder's address in “card not present” transactions (usually phone, mail or web transactions). The merchant’s system verifies the address with the records of the cardholder’s issuing bank. This is one of the older anti-fraud measures and assumes that if someone has a stolen credit card they didn’t also steal the wallet with the cardholder's address.

Many issuing banks are not actually set up to handle the AVS system or may only store the cardholder’s zip code. However, there really isn’t an industry standard for AVS and by even attempting to use it a merchant may qualify for a lower rate on those transactions where they do. The AVS does not necessarily ensure that a transaction is valid.

 

AOC

Attestation of Compliance

The AOC is a form for merchants and service providers to confirm the results of a PCI DSS assessment, as documented in the Self-Assessment Questionnaire or Report on Compliance.

 

AOV

Attestation of Validation

The AOV is a form for PA-QSAs confirming the results of a PA-DSS assessment, as documented in the PA-DSS Report on Validation.

 

ASV

Approved Scanning Vendor

Company approved by the PCI SSC to conduct external vulnerability scanning services.

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BIN

Bank Identification Number

The first six digits of the credit card account number are used to identify both the credit card association and the issuing bank or financial institution through which the account was opened. This is also known as the Issuer Identification Number.

 

BIC

Bank Identifier Code

BIC stands for Bank Identifier Code. This is often referred to as a SWIFT code or SWIFT address as SWIFT owns and administers the BIC system.

 

CHAPS

Clearing House Automated Payment System

CHAPS is typically used for making high-value transactions where same-day guaranteed payment is required. Payments are guaranteed to be processed same-day providing instructions are received by 2 pm on a working day. Banks may charge up to £35 for CHAPS transfers and are only used to make bank-to-bank fund transfers in GBP. 

 

CLS

Continuous Linked Settlement

Continuous Linked Settlement (CLS) is a settlement system run by CLS Bank International; a financial institution dedicated to settle foreign exchange trades. CLS operates a multi-currency settlement system that mitigates risk for FX transactions through the provision of its payment versus payment settlement service, which has direct links to the Real Time Gross Settlement (RTGS) systems of the 18 currencies it settles.

 

CNP

Card Not Present

A card not present transaction (CNP) is a remote purchase whereby the payment card and cardholder are not physically present for visual examination at the merchant’s point of sale, for example, purchases which are made over the internet, telephone, or by mail, fax, or mail-order. CNP transactions can be a major route for card fraud, as it is difficult for a merchant to verify whether or not the cardholder is actually authorizing a payment (compared to a card-present transaction, whereby the payment card and cardholder are both present so the PIN and/or customer signature can be verified).

 

CIS

Centre for Internet Security

A non-profit enterprise that helps organizations reduce the risk of business and e-commerce disruptions resulting from inadequate technical security controls.

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CVV

Cardholder Verification Value

The CVV is the three or four-digit numeric code usually printed on the back of the credit card to verify its authenticity. CVV2 refers to the numbers actually printed on the card while CVV1 is the same code encoded on the magnetic stripe. 

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DCN

Deposit Correction Notice

These are adjustments, either debits or credits, made for an “out of balance” situation in a merchant’s batch. The correction is made by the acquirer prior to the transactions being entered into interchange. 

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EFT

Electronic Funds Transfer

Electronic Funds Transfer (EFT) refers to any transfer of funds initiated electronically, including card payments, ATM withdrawals, point-of-sale (POS) and debit transfers without requiring the intervention of bank staff. These transactions can take place within the same organization, or across accounts spread between one or more financial institutions in the banking network.

 

EMD

E-Money Directive

Electronic money (e-money) is a currency that is digitized to be stored on, and used via, mobile phones, prepaid cards, or online accounts. The E-Money Directive is a set of regulations that exist to benefit businesses, customers, and the wider economy. The E-Money Directive aims to enable secure e-money services, provide market access to new organizations, and foster healthy competition between all participants.

 

EMV

Europay, MasterCard, and Visa

Europay, MasterCard, and Visa (EMV) is a worldwide technical standard for payment cards that provides global telecommunications between all cards and acceptance networks (payment terminals). The EMV standard also applies to mobile payment solutions including mobile EMV with NFC (Near-Field-Communication).

 

EURO1

The EURO1 is a large-value payment system for same-day euro transactions at a pan-European level, which processes transactions of high priority and urgency, and primarily of large amounts at a domestic and cross-border level on a multilateral net basis.

EURO1 processes in excess of 250,000 payments per day, with an overall value of approximately €210 billion. EURO1 is based on a messaging and IT infrastructure provided by SWIFT.

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FANF

Fixes Acquirer Network Fee

The FANF is a Visa fee that is assessed based on a merchant owner/taxpayer basis and includes all merchant accounts owned by a single taxpayer ID for Visa payment card transaction processing. The fee is actually charged to the acquirer but is passed onto the merchant, possibly with a mark-up. The FANF is charged to anyone who accepts a Visa payment card regardless of whom the processor is. As with most fees in the industry, this one is fairly complicated. The fee is based on a Merchant Category Code, the number of locations the merchant has and whether they process only “card present” transactions or process both “card present” and “card not present” transactions or only “card not present” transactions.

FX / Forex

Foreign Exchange

Foreign Exchange (FX) is the exchange, or conversion, of one currency into another currency. Foreign Exchange also refers to the global trading market whereby currencies are virtually exchanged around the clock, with the largest centers being based in London, New York, Tokyo, and Singapore. The term Foreign Exchange is frequently abbreviated to ‘forex’ as well as ‘FX’.

 

HCE

Host Card Emulation

Host Card Emulation (HCE) is a specialist software that permits a mobile device to act as a card in order to perform a transaction on a Near Field Communication (NFC) enabled device without the need of a secure element.

 

IBAN

International Bank Account Number

An International Bank Account Number (IBAN) is an account number written in a standardized internationally recognized format that is used to identify an individual account, making it faster easier to process cross-border transactions across Europe. An IBAN is made up of a code that identifies the country the account belongs to, the bank the account belongs to, followed by the account number.

 

KBA

Knowledge-Based Authentication

Knowledge-Based Authentication (KBA) is a security measure that seeks to prove the identity of a user who is attempting to access an online service, by asking them to answer at least one “secret” question. KBA is generally used as a component in multifactor authentication (MFA) and for self-served password retrieval.

 

KYC

Know Your Customer

Know Your Customer (KYC) is a mandatory banking regulation designed to protect the integrity of the banking system by reducing the likelihood of financial institutions becoming vehicles for money laundering, terrorist financing, and other unlawful activities. To mitigate risk, financial institutions perform KYC checks by obtaining sufficient information that can be used to develop a comprehensive profile of the customer, such as proof of address and photographic identification.

 

LVPS

Large-Value Payment System

A Large-Value Payment System refers to Real Time Gross Settlement systems (RTGS), such as CHAPS, TARGET2, and country-specific equivalents. Payments via this method are sent securely, in real-time, with complete certainty that the payment will settle.

 

MiFIR / MiFID II Directive

Markets in Financial Instruments Directive

The Markets in Financial Instruments Directive (MiFID) is the EU legislation that regulates providers of services that are linked to ‘financial instruments', such as shares, bonds, investment schemes and derivatives, and the venues where these instruments are traded. In April 2014, the European Parliament approved an updated version of the law, MiFID II, which is set to expand the scope of the rules to cover more companies and products.

 

MCC

Merchant Category Code

Four-digit number that is assigned by the credit card associations to a merchant before a merchant starts accepting credit cards as payment. The merchant is assigned an MCC which classifies the merchant by what types of goods or services it offers. There are approximately 800 Merchant Category Codes.

When an issuer offers its cardholders, rewards based on what type of business they use their credit cards at, the merchant's MCC is what determines whether or not a purchase qualifies for the reward. The MCC is also used to determine which transactions must be reported to the IRS.

 

NFC

Near-Field Communication

Near Field Communication (NFC) is a short-range method of wireless data transfer that enables two electronic devices to establish communication without an internet connection when they are in close proximity of one another. NFC chips are stored inside payment cards to enable contactless payments, and more recently, inside smartphones, stickers, and wearable devices.

 

PAN

Primary Account Number

Also referred to as “Account Number.” Unique payment card number (typically for credit or debit cards) that identifies the issuer and the particular cardholder account.

 

PCI

Payment Card Industry

The Payment Card Industry (PCI) consists of all the organizations which store, process and transmit cardholder data, including automated teller machines (ATMs), point of sale (POS) terminals and credit, debit, prepaid, and electronic money cards. PCI is governed by the Payment Card Industry Security Standards Council.

 

PCI DSS

Payment Card Industry Data Security Standard

The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that handle payment cards. This standard is governed by the Payment Card Industry Security Standards Council and exists to increase controls around cardholder data and to reduce credit card fraud. Compliance is validated on an annual basis, either by a qualified security assessor or by a self-assessment questionnaire, depending on the volume of transactions made by each organization.

 

PSD

Directive on Payment Services (AKA Payment Service Directive)

Established in 2007, the Directive on Payment Services (PSD) is EU legislation that provides the legal foundation for the creation of a single market for payments across the Eurozone, and the

necessary legal platform for the Single Euro Payments Area (SEPA). The introduction of PSD made cross-border payments easier and faster with SEPA payments being used to make transfers across the majority of Europe.

Another key goal for the PSD is to improve competition by opening up payment markets to new entrants, providing greater efficiency and cost-reduction to end-users.

 

PSD2

Revised Directive on Payment Services (AKA Payment Service Directive II)

The Revised Directive on Payment Services (PSD2) builds on the existing PSD and has been developed to make certain provisions in PSD clearer, as well as putting emphasis on further opening up the payments industry for third party businesses and non-banks, to increase competition.

 

POS / mPOS

Point of Sale / Mobile Point of Sale

A Point of Sale (POS) is a cashier counter, or checkout, usually located within a retail shop, or an environment whereby transactions and purchases may occur. The term may also apply to the actual hardware and software including electronic cash registers, barcode scanners, touch screen displays receipt printers, and pole displays. In simpler terms, if something can be exchanged for monetary value, then this will happen at a Point of Sale.

A Mobile Point of Sale (MPOS) is a tablet, smartphone, or wireless device that performs the functions of a regular POS terminal. Any device can be transformed into an MPOS with the use of a dedicated app.

 

PSP

Payment Service Provider

A Payment Service Provider (PSP) is a third party that facilitates payments on the behalf of merchants, typically by partnering with an acquirer (such as a bank). The PSP takes on the responsibility of ensuring that electronic payments are processed in a secure and reliable way. Some PSPs are able to provide merchants with a connection to multiple payment methods and networks, including cross-border payments, digital wallets, P2P (peer-to-peer) transfers, and other alternative payment methods.

 

RTGS

Real-Time Gross Settlement Systems

Real-Time Gross Settlement Systems (RTGS) are fund transfer systems designed to move high-value and wholesale payments between banks instantly. RTGS are usually controlled by the central bank of a country.

Payments made via a RTGS are settled as soon as they are processed, and once processed, payments are final and irrevocable. As these payments are high value, they do not need to be netted or bundled, meaning the transaction is settled on a one-to-one basis in real-time.

 

SEPA

Single Euro Payments Area

The Single Euro Payments Area (SEPA) is a European payment initiative that was introduced in order to establish a single payment market; making it simple and less costly for consumers and businesses to make and receive payments across Europe.

SEPA payments are available in 35 countries, and provide cross-border bank transfer capabilities for businesses, merchants, and consumers in a way that is equivalent to making a domestic payment.

 

STEP1 and STEP2

STEP1 is a payment service offered by EBA Clearing for small and medium-sized banks for single euro payments of high priority and urgency, processing approximately 20,000 transactions on a daily basis.

STEP2 processes mass retail payments in euros which provides banks across Europe with one channel through which they can send and receive their SEPA Credit Transfers and SEPA Direct Debits.

 

SWIFT

Society for Worldwide Interbank Financial Telecommunication

Founded in 1973, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative utility that was initially made up of 239 banks from 15 countries. Their goal was to develop standardized messaging and processing of transaction services for financial institutions globally, making global cross-border transfers possible.

SWIFT is often considered to be the backbone of the international finance industry and now serves more than 200 countries and territories. SWIFT payments are a type of international transfer sent via the SWIFT network; however, SWIFT does not facilitate the transfer of funds. Instead, it sends payment orders via its secure and reliable network, which must be then settled by the correspondent accounts that institutions have with each other. When sending or receiving international payments, a SWIFT code is used to identify a specific bank.

 

TARGET2

Trans-European Automated Real-Time Gross Settlement Express Transfer System

The Trans-European Automated Real-Time Gross Settlement Express Transfer System (TARGET2) is a real-time gross settlement system owned and operated by the Eurosystem.

TARGET2 handles mostly large-value central bank transactions across twenty-euro area central banks (including the ECB), as well as five central banks from non-euro area countries which include Bulgaria, Croatia, Denmark, Poland and Romania, which are made instantly and with immediate finality.

 

TINO

Tokenization in Name Only

TINO refers to products that offer ill-thought-out, mathematically-derived primary account number (PAN) encryptions that offer incomplete solutions. These products use the name “tokenization” but are not providing users with the levels of data protection or simplification of PCI compliance offered by a true solution.​​​​​