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Finance

Online Payment Definitions You Should Know

For the outside observer, making payments seems to be very simple. It looks like a person just attaches a webpage to a paying agent and it is all done automatically. Money simply transferred exactly where it ought to go.

The actual process is far more complicated and as it goes on special terms and vocabulary has to be used. Very often the process may be too complicated and things like verification during setting the account for making certain payments will have to be done. The same happens with accepting payments, so there are lots of things that have to be known.

Below, the most common definitions are listed, which will be the most usable in the modern environment of accepting payments.

Here is the revision!

3-D Secure

This method of payment was initially created by Visa and was adopted by other companies. The way the payment is called refers to three domain models, which includes: interoperability, issuer and acquirer domains.

This is a very effective model in terms of security, safety and trustworthiness. It is also regarded to be very protective against frauds but slightly inconvenient. The actual transaction cannot be processed via use of mobile devices and an extra step with popping up windows makes the process a little longer.

Advantages and disadvantages have to be considered too before getting started.

Acquiring bank or acquirer

This is referred to the merchant bank. It simply connects the merchant to the bank of the cardholder or issuing bank. Acquirer provides the merchant account a line of credit, which means that it allows payments to be accepted by using customer’s cards. What acquiring means read more on wellcoinpay.com.

The business, which belongs to the merchant might be at certain risk. The risk may be lower or higher depended on circumstances. Acquirer shares the risks hence observes the transaction on the monitor. Transactions that are regarded as being questionable may lead to the application of extra fees.

Chargeback

This kind of payment can be defined as the return of paid money. During disputes and fraudulent events the transaction protects the customer.

It is initiated by the bank and initially requested by the holder of the card. The bank makes money return to the customer. Charges against merchants can be employed as the transaction is not friendly to them.

Credit Card

A credit is granted by the issuing bank. The card itself allows its owner to spend money set by the limit to be spent on goods and services.

CVV/CVC

The code that was initially created by the issuing bank, which substantially improves transactions’ safety.

Direct debit

The way payments work varies in different countries. In some places it is automatic and in the others, it works manually. Merchant is allowed to collect payments after the customer writes to his bank the authorization.

Fraud

This is a payment that is not authorized by the client. It is normally followed by chargeback for the merchant.

High risk merchant

The term is referred to the fact that some businesses carry more risk than the others. As a result, it may become the victim of fraudulent transactions and chargeback can be imposed.

Additional fees can be imposed too to any merchant whose activities have higher risk.

Issuing bank or issuer

This is the body, which issues the card. Any financial institution may issue a card that bears the logo Visa or anything else but the institution does not have to be a bank.

Merchant

A company that sells certain products online.

Merchant account

This is something that online businesses must have to sell the goods and accept payments. One merchant may have not one but several accounts. It is created by the acquiring bank and processes payments for goods.

Normally, it comes free of charge and reminds an ordinary bank account; however, funds cannot be withdrawn in the traditional way. Instead, accepted payments transferred to a business account.

MO/TO methods of payments

These are the payments, which are made over the phone or mail. The card does not have to be presented physically but details are provided hence payment is processed.

PCI DSS

The term is the abbreviation: Payment card industry and Security standards. A company, which is compliant to PCI, leads to the fact that it is much more trustworthy.

Recruiting payments

These era the payments for transactions, which are repeated. Often defined as recurring subscription of billing.

A good example is when payment is collected by PayPal in regular intervals. It could also be done via use of direct debit if the sums are variable.

Refund

Merchants prefer to make refunds rather than get chargeback. After getting a complaint from a client, a full amount of money is returned to the cardholder.

It also allows online business to grow in a positive way.

Retrieval request

Very often a merchant can be contacted by the issuer for the purpose of providing information about online transactions.

In order to avoid automatic chargeback, the merchant has to respond to such requests and provide the issuer with requested documents. If chargeback is imposed, there is no way of disputing it.

Rolling Reserve

There could be an increase in chargeback being imposed. For instance, high volume sales, tickets to spot events etc. Rolling reserve is often used when there are high risks. Acquiring a bank simply collects a higher percentage from each transaction over a certain period of time, which is agreed by both parties.

Settlement currency

This is the currency in which payments from the merchant account are made.

Transaction currency

This is the currency in which payments for products are accepted.

Descriptor of transactions

The descriptor allows the buyer to recognize the transaction more quickly. Your client might not recognize the transaction without descriptor and chargeback can be imposed. Dynamic descriptor is used for various products and services, whereas static descriptor is dedicated for all made payments.

Wire transfer

When payment has to be made, a buyer is directed to his own bank’s official website. Once connected, a transaction can be manually approved.