Making Sense of Payment Jargon

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Welcome to our article on deciphering the most common terms in the payment industry. Whether you’re a business owner, consumer, or simply interested in understanding the world of payments, this guide will provide you with valuable insights. It can be overwhelming to keep up with the constant changes and technical jargon used in this industry, but fear not! We’re here to break it down for you.

1. Acquirer

An acquirer, also known as a merchant bank or an acquiring bank, is a financial institution that partners with businesses to enable them to accept electronic payments. As a business owner, having an acquirer is essential for accepting credit and debit card transactions from your customers. Acquirers handle various payment processes, including authorizations, settlements, and chargebacks.

2. EMV

EMV, which stands for Europay, Mastercard, and Visa, is a global standard for secure payment transactions. It involves the use of an embedded microchip in payment cards, also known as chip cards or smart cards. Unlike traditional magnetic stripe cards, EMV cards provide enhanced security by generating a unique transaction code for every transaction, making it more difficult for fraudsters to counterfeit the card.

3. NFC

NFC, or Near Field Communication, is a set of communication protocols that enable two electronic devices (such as a smartphone and a point-of-sale terminal) to establish a wireless connection when in close proximity to each other (typically a few centimeters). NFC technology is commonly used for contactless payments, where customers can simply tap their mobile devices or contactless cards to make a payment, saving time and increasing convenience.


PCI DSS, short for Payment Card Industry Data Security Standard, is a set of security standards designed to ensure that businesses that process, store, or transmit credit card information maintain a secure environment. Compliance with PCI DSS is crucial for businesses to protect customer data and minimize the risk of data breaches or unauthorized access. It includes requirements such as maintaining a secure network, implementing strong access controls, regularly monitoring and testing systems, and more.

5. ACH

ACH, or Automated Clearing House, is an electronic payment network used for various types of transactions, including direct deposits, bill payments, and business-to-business payments. ACH transactions are typically more cost-effective than traditional paper checks and wire transfers, offering businesses a convenient way to transfer funds securely.

6. Interchange Fee

An interchange fee is a fee paid by the merchant’s acquirer to the card-issuing bank for each payment transaction. This fee is set by payment networks (such as Visa, Mastercard, or American Express) and is typically a percentage of the transaction amount. Interchange fees cover various costs, including network usage, fraud prevention, transaction processing, and customer support.

7. Tokenization

Tokenization is a data security technique that replaces sensitive payment card data with a unique identifier, known as a token. The token is used for payment processing and storage, reducing the risk of exposure to cardholder data in the event of a data breach. Tokenization helps enhance security and promotes trust in the payment ecosystem.

In conclusion, the payment industry can be complex and filled with confusing terms. However, by understanding the most common jargon, you can feel more confident in navigating the world of payments. Remember that acquirers are your partners, EMV provides enhanced security, NFC enables contactless payments, PCI DSS ensures data security, ACH offers electronic transactions, interchange fees support the payment infrastructure, and tokenization enhances data protection. Armed with this knowledge, you’ll be well-equipped to make informed decisions and stay ahead in the ever-evolving payment landscape.

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