Glossary
Acquirer (Acquiring Bank)
An acquirer is a bank or financial institution that processes payments from customers to the merchant. For accepting card transactions, an acquirer must be accredited by the respective card networks and either collaborate with a payment processor or function as one.
Application Programming Interface (API)
API stands for Application Programming Interface—a general term for a set of tools and protocols that software developers use to integrate with specific services or applications. Depending on the type of software, this can include web APIs, remote APIs, SDKs, libraries, frameworks, and more.
In the payments industry, APIs are commonly offered by entities involved in the transaction process (such as payment gateways, processors, or service providers) to support and streamline the flow of funds. PostFinance Checkout provides a secure and robust API, enabling merchants to integrate seamlessly with its services through modern solutions like Hosted Payment Pages and other advanced integration methods.
Authentication
The process of confirming that the individual initiating a transaction is the rightful owner of the account. Common methods include 3D Secure, PIN codes, and biometric verification such as fingerprint or facial recognition. Authentication is different from authorization.
Authorization
Authorization refers to the process where the card issuer (such as Visa or Mastercard) verifies the payment information and places a hold on the funds so they can be captured later.
In e-commerce, in-app, and point-of-sale transactions, authorization typically occurs via an API call to the payment gateway. The gateway, together with the payment processor, carries out necessary validations and risk checks before requesting the card network to approve the payment from the issuer to the acquirer.
If a payment has been authorized but not yet captured, the merchant also has the option to cancel it—for example, if there's a suspicion of fraud.
Card schemes (or Card Networks)
Card schemes/networks establish the guidelines and infrastructure needed to issue cards and handle transactions made with them. For a transaction to go through, both the card issuer and the payment processor (acquirer) must belong to the same network. Common examples of card networks include Visa, Mastercard, American Express, and China UnionPay.
These card networks charge fees for processing transactions and also control the interchange fee, whose amount varies based on several factors related to each individual payment.
Card not Present
A payment transaction made with a card, where the shopper cannot physically present the card to the merchant at the time of the transaction. Examples of CNP transactions include online payments, in-app payments, and MOTO transactions.
CNP transactions are a common target for card fraud, because it is difficult for the merchant to verify that it is the actual cardholder making the purchase. To reduce the risk of card fraud arising from CNP, use 3D Secure and AVS features.
Card on File
Card details may be securely stored to simplify checkout for returning customers. This enables features like one-click payments, pay-per-use services, or recurring payments that occur on an irregular schedule.
Chargeback
A chargeback is when a shopper asks their card issuer to reverse a payment made to a merchant, usually after the merchant has declined to issue a refund.
Once a chargeback is initiated, the merchant may have the opportunity to challenge it. If so, they must submit supporting documentation to either the acquiring bank or the payment processor.
Contactless or Near Field Communication (NFC)
Contactless payments let customers pay without swiping or inserting their card. At the point of sale (POS), this is made possible through Near Field Communication (NFC) technology. Payment methods like Apple Pay, Google Pay, and Samsung Pay use the standard NFC protocol and are widely accepted. These methods are considered highly secure, making them suitable for processing large-volume transactions.
Dynamic Currency Conversion (DCC)
Dynamic Currency Conversion (DCC) gives shoppers the option to convert a transaction amount into their card’s home currency when making a payment in a foreign country.
When the payment is in a different currency than the one set on the card, and the terminal supports DCC, the shopper is offered the choice to convert the amount. The terminal displays the exchange rate details to help the shopper make an informed decision, while the same information is also sent to the POS system for the merchant's records.
The shopper can either accept or decline the DCC offer, and the payment proceeds in the selected currency. If DCC is accepted, the receipt will include all relevant conversion details.
In-app payments
In-app payments are electronic transactions made by shoppers through mobile apps. These payments typically use cards or local payment methods and are processed via native mobile APIs or mobile-optimized web pages (often referred to as mobile web).
Other forms of digital payments include e-commerce and point-of-sale (POS) transactions, which rely on similar infrastructure and generally require a payment service provider to manage and automate them. PostFinance Checkout enables merchants to accept omnichannel payments, including online, in-app, and in-store transactions.
Interchange fee
An interchange fee is charged to the acquirer by the issuer for each card transaction processed through a card network. The amount of this fee is set by the relevant card network, along with the scheme fee.
The acquirer then deducts this and any additional fees from the total transaction amount before settling the remainder into the merchant's account.
Issuer (or Issuing Bank)
An issuer is a bank that provides a shopper with a card used for cashless payments—whether online, in a mobile app, or at a physical store. To issue cards, the bank must be part of one or more card networks or participate in a card service program.
Even when no physical card is involved, a shopper’s bank is often still called the issuer. This helps differentiate it from the merchant’s bank (the acquirer), as the issuer is responsible for sending the funds, while the acquirer receives them on behalf of the merchant.
Know Your Customer (KYC)
Know Your Customer (KYC) refers to the process of confirming and validating the identity of customers. It is a regulatory requirement in the payments industry and must be completed before individuals or businesses can receive payouts.
Mail Order/Telephone Order
A card-not-present (CNP) transaction where the shopper provides payment information to the merchant via mail (physical mail, not email), fax, or phone.
MOTO (Mail Order/Telephone Order) transactions are usually conducted offline; rather than submitting payment details through an online form, shoppers either call a call center or send a coupon or voucher containing their credit card information.
Manual Keyed Entry
Manual key entry is the process of manually inputting a customer’s card information into the POS system or payment terminal.
Merchant Category Code (MCC)
Although the International Organization for Standardization (ISO) manages Merchant Category Codes (MCCs), card schemes have the authority to make changes to them. For detailed descriptions of various MCCs, refer to:\
Offline transaction
Offline transactions occur when there is no active network connection. Debit card transactions are usually declined in these cases, whereas most credit cards are set up to approve a limited amount without an online connection.
Payment Facilitator
A payment facilitator (payfac) is an entity authorized to onboard merchants onto an acquirer's platform and handle settlement funds on their behalf. Payfacs function as aggregator merchants and can:
- Onboard merchants for the acquirer, with these merchants referred to as "sub-merchants."
- Process transactions for sub-merchants through card schemes.
- Receive settlement funds from the acquirer and distribute payments to sub-merchants.
While a payfac streamlines the onboarding process, it also takes on primary responsibility for transaction liability and regulatory compliance related to its sub-merchants. For more information, see: Payment Facilitators. Wallee is such a Payment Facilitator.
Payment Gateway
A payment gateway is a service that enables merchants to initiate payments online, in-app, and in-person. It doesn’t directly handle the flow of money but typically acts as a web server connecting the merchant’s website or POS system to payment processing.
Payment gateways can be offered by banks or operate as independent services linking to one or more payment processors. PostFinance Checkout combines the roles of a payment gateway and payment processor, along with risk management and acquiring functions, making it a comprehensive full-stack payment service provider
Payment Terminal (or POS Terminal)
A payment terminal is a device at the point of sale that interacts with a shopper’s card—typically by tapping, inserting (dipping), or swiping it. The terminal then asks the shopper to enter a PIN or provide a signature, depending on factors like region, card type, and transaction amount. It’s also known as a PIN Entry Device (PED).
PostFinance Checkout calls this device "the terminal." It receives API requests to initiate transactions, displays the charge amount to the shopper, and can print receipts. If applicable, it also offers Dynamic Currency Conversion (DCC). After obtaining authorization, the terminal sends the transaction data to PostFinance Checkout’s payment platform for processing. The receipt data is included and can be accessed in the Portal.
PostFinance Checkout supports various terminal models designed to seamlessly integrate with its payment platform.
Payout
This term has several meanings within the payments industry but generally refers to a substantial sum of money paid in a single transaction to an individual or business.
PCI compliance
Being PCI DSS-compliant means continuously meeting all the requirements set forth by the current Payment Card Industry Data Security Standard (PCI DSS). This standard was established by major card networks to enhance the security of cardholder data and minimize fraud risks. Any organization involved in payment card processing must adhere to these stringent rules to protect sensitive information.
Merchants who find it challenging or costly to fully comply with PCI DSS may choose to use encrypted solutions or delegate card processing to a PCI-compliant payment service provider such as wallee. This approach can significantly reduce their PCI DSS compliance burden.
Refund
A refund occurs when a shopper cancels a purchase after payment has been made. The merchant returns the funds, which are transferred from the acquirer back to the issuer. If the payment was authorized but not yet captured, the merchant can cancel it; otherwise, a refund can be processed.
If the merchant declines to issue a refund, the shopper may request a chargeback through their issuer. In certain situations, the merchant has the option to dispute the chargeback.
Scheme Fee
This fee is paid by the acquirer to the card scheme for every transaction processed through that card network. The amount of the fee is set by the card scheme and is charged in addition to the interchange fee.
Tokenization
Tokenization is the technique of substituting sensitive information with a non-sensitive equivalent called a token. This token can later be used to retrieve the original data. In the payments industry, tokenization helps protect card numbers and other payment details by replacing them with a unique numeric code. This code can then be used for functions like recurring payments.
Two-Factor authentication (2FA)
An authentication method that uses two separate factors to confirm a user’s identity. A two-factor authentication (2FA) is a common second factor based on possession—typically a temporary code sent via SMS or generated by an app. It is used in combination with a primary factor, such as a password, to fulfill Strong Customer Authentication (SCA) requirements.
Webhooks
Webhooks are HTTP callbacks sent to a designated endpoint on your server, notifying you of events such as authorized, captured, or updated payments. They are essential for a successful integration with PostFinance Checkout.