The Payment Processing Terminology Dictionary
Traders all over the world go online to sell their goods. After setting up the online shop, then comes the part about accepting payments. It can be easy to get dizzy when you first come into contact with the whole payment process. With a multitude of payment service providers, acquirers, gateways and banks, it can all become a little overwhelming if everything is not clear.
Traders all over the world go online to sell their goods. After setting up the online shop, then comes the part about accepting payments. It can be easy to get dizzy when you first come into contact with the whole payment process. With a multitude of payment service providers, acquirers, gateways and banks, it can all become a little overwhelming if everything is not clear.
Your online shop is ready, the stock is up to date and you are ready to start selling. The only thing missing is the acceptance of payments in your shop. Here is a list of payment terms that will help you navigate the payment term jungle.
Acquirer (acquiring bank)
This is a financial institution or bank that enables a company to accept payments. In simple terms, this is the company's bank. We work with a number of acquirers that you can integrate directly into your Wallee account.If you don't already have an acquirer contract, you can simply apply and sign up directly. To sign up, you will need to go through a KYC process to comply with current anti-money laundering regulations. You will then receive an acceptance agreement from us. During COVID, the acquiring team's workload is quite high, so please allow 3-5 business days to activate your contract. Depending on the acquirer you choose, this may take even longer.
For more information on the steps to set up your account, please see our Getting Started section.
Authorization - Authorization
When a card issuer, such as a bank or credit card company, verifies a buyer's request to purchase something, this is called authorisation. When the amount of the purchase is approved, the issuer reserves the authorised amount in the cardholder's account for the next step - capture. A capture is when funds are actually transferred. The authorisation can be kept open for about 5 days without incurring additional charges. After that, the schemes start charging additional fees. Please also note that the AUTH capture process is not available for every payment method.
Card networks (or card schemes)
The largest card networks are Visa, Mastercard, American Express, Discover and UnionPay, but a card network is not the same as a credit card company. The card networks set the technical infrastructure and rules for payment processing and charge a fee for the service.
Chargeback - chargeback
If a customer disagrees with a charge made to a card, they can first ask for a refund, but if the merchant refuses to refund the customer, the customer can ask their bank to make a chargeback. This is usually the start of a dispute process; who is liable for the transaction depends on the evidence both parties provide. Some reasons for chargebacks can be fraud, defective goods or undelivered goods.
Fraud (fraudulent payment) - Fraud (fraudulent payment)
A transaction that has either been attempted or completed by a malicious agent.Internet fraud is a big issue at the moment and there are various initiatives such as 3D Secure,which ensure that other factors besides the credit card must be present for authorisation. Also, most payment providers have additional fraud tools running in the background that analyse your transactions. In Wallee, it is also possible to set up specific fraud rules for transaction acceptance.
Interchange Fee - Interchange fee
This is a fee paid by the acquirer bank to the issuer bank. The fee is charged by the acquirer bank and the acquirer's bank for each card-based transaction. The amount of the fee may depend on the card type, the transaction value and the merchant category. Interchange fees vary between different card products and are often subject to specific regulations.
Issuer (or Issuing bank) - Issuer (or Issuing bank)
The issuing bank is the buyer's bank. It provides the buyer with card types such as debit and credit cards.
Local payment methods (or alternative payment methods)
Card payments are not a dominant payment method in all markets. Any payment method that is not part of a large card network is a local payment method. In some countries, payments are made through bank transfers, direct debits, digital wallets such as Apple Pay or Samsung Pay, or cash-based services such as TWINT in Switzerland.
Point of Sale (POS)
In a brick-and-mortar shop, a point-of-sale solution is the combination of hardware and software that allows customers to pay for their purchases in-store. POS is an important part of the payment ecosystem if you want to offer convenient contactless payment. See our devices here and contact our support for more details.
Payment Gateway - Payment Gateway
A payment gateway is a service that helps merchants initiate e-commerce transactions, in-app purchases and point-of-sale payments for a variety of payment methods. The gateway is not directly involved in the flow of money. A payment gateway often connects multiple acquiring banks and the respective payment methods under one system.
Payment Service Provider (PSP)
A PSP combines the functions of a payment gateway and a payment processor and can connect to multiple acquiring and payment networks. Read how you as a merchant can choose the right payment service provider in the payment landscape in Switzerland.
PCI Compliance
PCI DSS (Payment Card Industry Data Security Standard) was created by the major card networks to increase the security of cardholder data and reduce the risk of fraud. All organisations involved in payment card processing must be PCI compliant. Walle is PCI compliant.
Support / Questions
All questions answered and ready to start selling online? Register an account here.our support team will be happy to help you with any further questions.
