This blog gives you your payment processing dictionary with various payment gateway terms and definitions.
Accepting online payments is a need of today’s time but due to the lack of knowledge, it is hard for many people to start with them. Even if you have some knowledge, you might not be aware of many things.
This is the first part of two articles which helps you a lot with an understanding of payment gateway usage, security, functioning, and technical aspects.
Payment Gateway Terms in Alphabetical Order
1. 3D Secure / 2 factor authentication
3D Secure authentication refers to the extra layer of security added in an online transaction. When paying online, an SMS with the OTP is received as a security measure. This is also known as Two-factor authentication.
It is called two-factor authentication because the security measures include two steps. In the first step, the customer enters the card details, like cardholder name, card number, CVV, username, password, and then in the second step the OTP is received on the registered mobile number.
2. Acquiring Bank
This is the merchant bank in which the online payments are first received. The settlements are processed from the acquiring bank to the merchant’s account.
The acquiring bank holds the account on behalf of the merchant to accept the payments made by the customers.
3. API
API Full form is Application Programming Interface. It enables the communication terms between the two applications. It is in the form of a connecting link between them.
Read more: What is Payment Gateway API?
4. Authentication
To authenticate the identity of the person who has initiated the online payment, an authentication process is carried out. The details as mentioned in Term 1 are required to be entered by the payer.
5. Authorization
The authorization request is sent via the payment gateway to the customer’s bank when an online payment is initiated.
If the customer’s bank authorizes the transaction then the transaction is successful otherwise it will get failed. The failure may be due to the lack of balance or security reasons.
6. Bank Identification Number
This number is vital for various reasons in online payment. BIN is the initial 6 to 8 digits in the card number. It is useful for the identification of the transaction, its origin, also in authorization, processing, and clearing.
7. Business Days
A business day is also known as the Working day. The working days would not include the bank/public holidays, 2nd and 4th Saturdays of the month, and all Sundays.
Mostly this term is used with regard to settlements. However, it is also applicable when the functioning of any payment gateway-related activity is done on a working day.
8. Capture
The authorized amount from the customer’s bank is transferred to the acquiring bank. The merchant needs to capture these finds which is a type of acknowledgment for receiving the amount. Capture can be manual or automatic.
9. Chargeback
When a customer raises a dispute with his bank against the card transaction it is known as Chargeback.
10. Chargeback Minimization
Measures taken by the merchant and payment gateway can be helpful in the Chargeback Minimization of both types – fraudulent as well as genuine.
Read More: Chargeback Meaning, Process and Merchant Protection against it
11. Chargeback Reason Code
This type of code helps payment and financial institutions to identify the chargeback reason.
12. Customer
The person who is purchasing the product or the service and who is initiating the online transaction with the available payment methods to make the payment is called a customer or user.
13. Electronic Funds Transfer
The facility to transfer the funds using the online payment methods is known as Electronic Funds Transfer. For example NEFT, RTGS, IMPS, UPI, etc.
14. Fraud Prevention
The measures or systems to prevent fraud from the merchant or the customers are known as the Fraud Prevention Measures. This would include KYC, transaction monitoring, risk analysis, etc.
15. High-Risk Business
The businesses that include a high amount of chargebacks, high-risk business activities, etc are considered high risk.
16. ICO
Initial Coin Offering refers to the raising of funds for offering a new cryptocurrency. It is similar to the IPO (Initial Public Offering). IPO is raising the funds at the time of a new company going public.
17. Integration
Integration means in layman’s language, adding the payment gateway to a website or mobile application.
The Payment Service Providers have ready Plugins and SDKs for various platforms which would make it very easy for the merchants as it would require no complex coding.
18. International Bank Account Number
IBAN is the term used in international settlements.
19. Issuing bank
It is the customer’s bank that holds the account from which the payment is authorized and deducted. It provides the net banking facility and also issues various types of cards such as credit cards or debit cards. It provides various other facilities, statements, etc.
20. KYC
Know Your Customer is a verification process of any applicant through required details and documents. The financial institutions, payment gateway/aggregators, etc carry out this process to verify the merchant or the customer.
Conclusion
To know more about any of the given payment gateway terms reach out to us. Start collecting online payments with PayKun.
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