Resources
The world of payments has a lot of moving parts...
Here are a few components and terms used in the world of processing payments.
Common Acronyms, Terms & Definitions
Term | Definition |
Account | Where the Consumer’s PII information is stored & who is being entitled. |
Acquiring Bank | Processes debit and credit card payments as well as maintains the Merchant’s account. |
ARPU/ARPC | Average Revenue Per User (Customer). |
Authorization | The process of verifying that a credit card has sufficient funds available to cover the transaction. |
AVS / CVV | Address Verification System (AVS) and Card Verification Value (CVV) to confirm the authenticity of the purchase. |
Billing Plan | The compensation for the goods or services used during a discrete period of time. |
BIN | First 4-6 numbers on a payment card that identifies the card issuer. |
CAC | Customer Acquisition Cost. |
CCR | Customer Churn Rate. |
Chargeback | A transaction that is under dispute, initiated by the card issuing bank to settle a financial claim between the Issuer and Acquirer. |
Churn | The turnover or loss of customers. Could be Passive or Active. |
CLV/LTV | (Customer) Life Time Value. |
CNP | Card Not Present. |
CSC | Card Security Code, Debit Cards. |
Customer Attrition | Also known as customer churn and customer turnover |
Entitlement | Access to digital service or goods provided to the account. |
Interchange | Standardized electronic exchange of Visa and MasterCard transaction data between acquirers and issuers. |
Invoicing | A one-time billing event requesting a payment. |
Involuntary / Passive Churn | Occurs due to failed authorization from the issuer's bank regarding a transaction (opposite of Active Churn). |
Issuing Bank | Issues the debit and credit cards and pays acquiring bank on behalf of the cardholder. |
MCC | Merchant Category Code. Four-digit numbers that describe a merchant's primary type of business activities used by credit card issuers. |
Merchant of Record (MOR) | The entity whose name appears on the credit card charge, to whom the card company shall reimburse for the credit charge. |
Metering/Usage | Billing model that usually involves a fixed monthly fee plus an overage fee for additional usage beyond the included amounts. |
NSF | No Sufficient Funds. |
PAN / CID - Primary Account # | A unique 14 to 19 number embossed on a credit / debit card made of the BIN and Cardholder account. |
Payment Orchestrator / Gateway | An entity logically located between an agency’s internet payment application and their financial services provider which supports the encryption of data transmitted over the internet. |
PCI | Payment Card Industry Standard as defined by VISA / MasterCard. |
Processor | A member, MC and/or VISA, or an MC/VISA approved non-member acting as the agent of a member, that provides authorization, clearing, or settlement services for merchants and members. A business entity that receives a Monetary Destination file for clearing purposes. This entity can also receive an Auth log, and/or non-monetary files. |
PSP | Payment Service Provider. |
Renewal | Subscribe again after the initial subscription. |
Reason Response Code | Given when a transaction occurs with a credit card, gives the status of that card. |
Subscription Billing | A fee that does not change and is collected on a monthly or annual basis. |
Voluntary / Active Churn | Occurs due to a decision made by the customer to switch to another service provider. |