A tap of a card to make a payment might seem simple to some; however, there are a number of parties, technologies, and regulations involved in making sure that everyday payments work quickly and securely. The world of fintech and payments is ever-changing, so we have created a condensed go-to payments glossary of key terms, concepts, and acronyms to help demystify commonly used terminology.




Account Number (UK)

Every bank account held in the UK has an 8-digit account number. An account number, alongside a bank account’s six-digit sort code, can be used to set up direct debits payable from the account. These two details alone can never be used by a third-party to extract a payment.



A business providing Acquiring is licensed as a member of Mastercard, Union Pay, etc, and processes payments in-store and online. Whenever a credit, debit, or prepaid card is used for a purchase, the acquirer authorises or declines the transaction based on the data from the issuing (or issuing processor).


Agency Banking (Banking Light or Digital Banking)

An agency banking partner is a third-party which carries out certain banking services on behalf of a non-banking entity. They can provide Faster payments, BACs, and Direct Debits which their clients can provide to their end customers.


Anti-Money Laundering (AML)

“AML” refers to the laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income. AML is the worldwide term that refers to the laws put in place by governing bodies globally to tackle money laundering and terrorist financing. For banks, this means monitoring transactions and reporting any suspicious activity to the relevant regulators.


API – Application Programme Interface 

An API is a piece of software that allows entities to plug into each other. Its two main uses today facilitate data sharing and payment initiation. Under PSD2 regulation, APIs have allowed fintechs to gain access to banks’ customer data to offer third-party services.




BACS – Bankers’ Automated Clearing System

BACS facilitates two bank-to-bank payment methods – Direct Debit and Direct Credit. Bacs Payment Schemes Limited, part of the UK retail payments authority Pay.UK, oversees the schemes which clear and settle these two payment methods. Whilst a Direct Debit takes money out of a consumer’s banks account – such as a bill, a Direct Credit transfers money in – such as a salary. The payments take 3 working days to clear. You can use Starling’s sort code tracker to check if a UK bank accepts BACS payments.


Balance Transfer

A balance transfer describes the process of a consumer moving funds from one facility to another. It can also mean moving a credit card debt to another card. As MoneySuperMarket explains, “the balance of your old card is paid off by your new card, effectively swapping who you have to repay”. They’re often used to reduce interest payments or to combine multiple debts into one.


BIC – Bank Identifier Code

A BIC code is, in short, the same as a SWIFT code. The 8-11-digit number is used to identify a customer’s bank when they make an international transaction. As GoCardless explains: “It’s almost like a postcode for your bank.”


BIN – Bank Identification Number 

Every credit or debit card has a BIN, which consists of the first 4-6 digits in a long card number. In 2022, It’s also known as an Issuer Identification Number (IIN). They’re provisioned to issuers by the card networks (Mastercard, etc). 


BIN Range

A BIN’s digits or “range” allow issuers to separate a BIN for the country and currency allocation and can identify a company issuing a card or a specific product.


BIN Sponsorship

By partnering with a direct scheme member – or “sponsor”, firms issue payment products without having to spend time and money on a direct scheme membership. Companies can go to market faster because they don’t have to raise the collateral themselves to hold a direct scheme membership, perform settlement and reconciliation and hold the client funds in segregated accounts.


BIPS – Bank Internet Payment System 

An electronic system designed for facilitating payments. A BIPS can move money directly into a bank account using an internet connection.


BNPL – Buy Now, Pay Later

A payment method that gained serious traction back in 2019, BNPL gives customers and businesses the ability to pay for products or supplies on an installment basis – i.e. splitting their payment up over time. The number of installments, the time over which they are paid, and the interest rates applied, all vary between BNPL providers. In the UK, the payment method is growing at a yearly rate of 39%, according to Findr.





A payment card’s owner. Their name is printed on the front of the card.


CHAPS – Clearing House Automated Payment Systems

This bank-enabled payment method is guaranteed the same day as long as a consumer or business customer sets up the payment before 3.30 pm or online before 5 pm on a weekday – excluding bank holidays. The Bank of England describes CHAPS as “a sterling same-day system that is used to settle high-value wholesale payments as well as time-critical, lower-value payments like buying or paying a deposit on a property”.


Challenger Bank

Unlike traditional banks which founded before the 2000s and are based on a traditional branch model, challenger banks have, post-2000s, taken advantage of advances in technology to offer an alternative, digital-first approach. Virgin Money, which bought Church House Trust in 2010, and Metro Bank, which landed its banking licence the same year, are hailed as the UK’s first “challenger banks”. But it’s the 2015 wave of Revolut, Monzo and Starling, which truly uprooted the perceived need for banks to own branches. Metro Bank and Virgin Money still own branches today.



Also referred to as a payments dispute, a chargeback is when a cardholder asks their card-issuing bank to reverse a transaction if a dispute can’t be resolved with the merchant. If a customer’s bank rules against the merchant, it sees those disputed funds returned to the cardholder. But if the bank rules in the merchant’s favour, disputed funds will land back in the seller’s pocket.


Clearing Data

Clearing is carried out by a clearing house or firm. It ensures the correct fund amount is transferred to the seller, and securities to the buyer, within a set time-frame. Clearing data submitted by parties on both sides of the transaction must match for the funds to clear. Without clearing houses, trades carry a settlement risk.


Closed-Loop Payment

In a closed-loop payment system, funds can only be used at a defined set of locations or merchants. Single-purpose payment cards – like a store credit card, gift card, or even wristband – are only used to pay at a single store or group of stores owned by a company. The customer may have the option to reload funds for continued use.


Commercial Card or Corporate Card

Issued via a third-party by businesses to their employees, commercial cards – which are usually credit – allow workers to make payments on behalf of their employer, as well as to cover work-related payments.


Contactless Payment

Contactless technology uses radio-frequency identification or Near Field Communication (NFC) to register a payment via a point of sale (PoS) terminal. The technology is compatible with cards, key fobs, mobile wallets, and wearables.


Country of Issuance

All cards have a country of issuance, irrespective of where they will be spent. This is the country that the card has been issued to the customer. For example, if your address is in the UK, the country of issuance will be the UK as that’s where the card is issued from.


Credit Card

Issued by banks and other financial services firms, credit cards allow cardholders to borrow funds up to a limit set by the card issuer, and pay back the borrowed money at a later date with an agreed interest rate. As well as issuing a standard credit line, these cards can also grant a separate cash line of credit (LOC) to cardholders. This allows customers to borrow money in the form of cash advances.


Customer Due Diligence (CDD)

Customer Due Diligence (CDD) is the process of assessing your customers’ backgrounds to determine their identity and the level of risk they possess. CDD is required when companies with AML processes enter a business relationship with a customer or a potential customer to assess their risk profile and verify their identity. Financial institutions must carry out Know Your Customer (KYC – see below) and CDD.


CVV – Card Verification Value

The 3-digit number on the bank of a credit or debit card, to the right of the signature box. Some debit cards display the CVV on the front of the card. In this case, it can be 4 rather than 3 digits.




Debit Card

A debit card deducts money directly from a customer’s current account, unlike a credit card. But there is another type of debit card that doesn’t need to draw on current accounts – a prepaid debit card. This type of debit card only spends what is on the card, and can’t tip a customer into their overdraft like a standard debit card.


Digital Banking

Typically digital banking refers to online banking services, such as a mobile banking app, or – more recently – the emergence of messaging app and keyboard-based banking. Moorwand’s Digital Banking solution provides a faster approach to creating financial propositions without having a payment platform in place, allowing users to get fast access to an account. Our Digital Banking solution is a seamless way to make Faster Payments in the UK and SEPA (instant payments) within the Eurozone.




European Economic Area (EEA)

As this definition explains, “The European Economic Area (EEA) brings EU member states and members of the European Free Trade Association (EFTA—Iceland, Liechtenstein and Norway) together in the same single market”.


Embedded Payment

Embedded Payments are payment options built into a product rather than bolting them on. An embedded payment can allow a buyer to proceed through a checkout process with just a few clicks, as opposed to manually entering card or bank details. 


EMI – Electronic Money Institution

Electronic Money Institutions are financial institutions that have been authorised to develop services relating to electronic money.  They are allowed to issue and redeem electronic money, under the EMI Directive (Directive 2009/110/EC).


E-Money Licence

An e-money licence is what EMIs operate on. It allows EMIs to issue and redeem electronic money, something typical Payment Institutions (PIs) can’t do without also holding this licence. You can think of electronic money as a digital equivalent to cash, which can be stored electronically – usually via a device.




Faster Payments

Introduced back in 2008, “Faster Payments” is an initiative designed to make payments between bank customers’ accounts almost immediately – though in some cases, it can take up to 2 hours. In 2019, Faster Payments processed 2.4 billion transactions. Some 32 UK banks participate in the initiative today.



“Fintech”, short for financial technology, describes any technology-based solution which solves or disrupts a traditional financial service. A B2C example would be stock trading apps like Robinhood or Freetrade. A B2B example would be digital payments providers like Telleroo.



Broadly speaking, “funding” refers to money a company or organisation has raised, either via a third-party institution or through a crowdfunding campaign. Plenty of start-ups operate based on funding to begin with. But some will remain “bootstrapped”, i.e. without external funding, until they make a profit. Funding is often raised in the interests of geographic expansion, or growth – be that in products, headcount, or customer base.


Funds Flow

A company’s “funds flow” represents the net sum of all the cash flowing in and out of it.


Foreign Exchange (Forex or FX)

“Forex” or “FX” is the conversion of one currency into another at the foreign exchange rate, which is constantly fluctuating. The FX market is the largest financial market in the world. In 2019, it transacted a daily volume of around $6.6 trillion.




Gift Cards

Gift cards are prepaid stored-value cards, usually issued by a retailer. Often bought as gifts, they are designed to encourage consumers to spend more with a particular retailer. The UK Gift Card and Voucher Association found in 2020 that two-thirds of people it surveyed spent more than the card value when they used it. Typically an extra £18.55 is spent on top.




Host Card Emulation (HCE)

HCE is the technology that allows credit or debit cardholders to make a payment at a PoS terminal using their mobile phone. The technology allows card credentials to be stored in a shared repository – be that the issuer’s data center or a private cloud – as opposed to being stored on the mobile phone itself.




IBANs – International Bank Account Number

IBANs are used to make or receive international payments. Rather than replacing a person’s sort code or account number, an IBAN works alongside these details to provide extra information when overseas banks identify a customer’s account for payment.


In-App Payments

As Real Simple clearly explains: “An in-app purchase is any fee beyond the initial cost of downloading the app (if there is one) that an app may ask for.” This can include game add-ons, or paid subscriptions. In-app payments are often incorporated into free apps as a way to monetise once customers have made the initial download.



Interchange itself denotes the domestic and international systems operated by Mastercard® and Visa®. These systems authorise, settle, and pass-through payments, in addition to other monetary and non-monetary information related to bank card activities.


Interchange Fee

The interchange fee is the price card network operators like Mastercard® and Visa® put on using their interchange system. The fee is a percentage of each transaction. It covers things like the cost of fraud, risk of loss, and the instance of accounts paying off monthly balances. Depending on the card type, merchant type, and market data requirements, there can be multiple interchange fees.



An issuer is a financial institution that issues cards directly to consumers on behalf of credit and debit card networks. Issuers are responsible for the billing and collection of funds related to purchases on any cards they issue. The card issuer – usually a bank, digital banking service, or payments firm – then pays the acquiring bank.


Issuer Processor

To connect card networks and card-issuing banks, you need an issuer processor. They will provide the system of record, manage card issuance, green light transactions and inform the settlement entities. They are PCI certified and certified with the schemes (e.g Mastercard, Visa, etc.)



When firms issue a card directly to a consumer, they sign an “issuing” contract with the payment service provider who originally issued it to them. Issuing essentially refers to the handover of a card from one entity to another, be that B2B or B2B2C.


Issuing Bank

The financial institution that issues credit and debit cards to consumers on behalf of the card networks like Mastercard® and Visa®. You can think of the issuing bank as the “middle-man” between the consumer and the card network. They sign contracts with the cardholders to ensure the repayment of transactions, which then match up with their issuing contracts drawn up by the card networks.





Formerly Japan Credit Bureau, JCB is a credit card provider based out of Tokyo. Its cards function worldwide, which means for online merchants focused on the Japanese e-commerce market, it’s a ‘must-have’ payment option. Around 30 million retailers worldwide accept JCB cards or payments.




KYB (see CDD which is more commonly used)

“Know Your Business” is an extension of “Know Your Customer” laws. It requires companies to verify business customers before providing them with financial services. KYB looks at both their corporate information and the personal information of their highest management.


KYC (see CDD which is more commonly used)

Unlike, KYB, KYC focuses on verifying consumers before, similarly, providing them with financial services. By carrying out KYC checks, companies comply with regulatory requirements put in place to bring down the levels of fraud and money laundering.




Merchant Category Codes – MCCs

These are four-digit codes assigned by schemes to merchants to identify the types of goods and services they provide. This, in turn, means the code can be used for tracking purposes.


MLRO – Money Laundering Report Officer

As of 2007, under the UK’s Money Laundering Regulations, every regulated firm in the financial services sector has to appoint an MLRO, or a ‘nominated officer’. The MLRO ensures the firm’s AML and CTF policies and procedures are maintained and meet regulatory requirements. They ensure business risk assessment and appetite is defined and the business can manage the risks. They ensure all staff are aware of their obligations and they report to external law enforcement agencies. As Comply Advantage explains, “a firm’s MLRO may face steep fines and, in worst cases, prison sentences of up to 2 years”, if AML operations are found to be insufficient.


Mobile Banking

As an extension of digital banking, mobile banking refers to the ability to bank on a mobile device, without the need for a desktop. It can either refer to in-app mobile banking, or browser-based banking via a mobile.


Mobile Payment

Using a mobile phone to pay for a service, be that digital and hardware. Mobile payments can be made using direct operator billing (or WAP billing), allowing the charges to be added to the user’s mobile bill. Mobile payments can also be made using a credit card or mobile wallet.


Multi-Currency Processing

If a business can either accept payments in more than one currency or charge for service in more than one currency, then it’s doing multi-currency processing. Businesses do this to avoid the FX risk which comes with pricing products in different currencies and then only charging in your currency, as there’s a chance you may not be able to maintain your profit margin during currency volatility. This whitepaper by Merchant Accounts goes into more detail.





Unlike the banks established in pre-digital era, “neobanks”, often interchangeable with “challenger banks”, have taken advantage of advances in technology post-2000 to offer an alternative, digital-first approach. The 2015 wave of Revolut, Monzo and Starling in the UK are often referred to as “neobanks”. Monzo and Starling both hold UK banking licences, whilst Revolut holds a Lithuanian banking licence.



In a payment system, a “non-bank” is a financial institution or company which provides some banking services but does not offer the full array of retail banking services that firms with banking licences can. Namely, in the UK, Revolut still acts as a payment institution, or “non-bank”, because it offers some services – like debit and credit cards – but it can’t yet lend on its UK deposits because they are held with a partner bank.




Onboarding CDD

Onboarding refers to the process of bringing a customer onto your platform. It can refer to a direct retail customer or a business customer which is implementing one of your services for its own customers. In financial services, onboarding new customers requires certain checks – see the KYC and KYB entries for more details.


Open Banking

The term “open banking” refers to regulation passed called PSD2 – or the Second Payment Services Directive – in the UK back in 2018 which legislates the country’s “CM9″ (or biggest) banks, HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske, Lloyds and Nationwide, to give third-parties (namely fintechs) access to their customers’ banking data. The open flow of banking data was designed to welcome more competition into the banking industry. “People are paying too much for their overdrafts; money is sat in current accounts not earning interest; there’s not enough switching,” Imran Gulamhuseinwala, the UK’s open banking head, told Wired back in 2018. Since the UK pioneered open banking legislation, more countries across the world have followed suit.




Primary Account Number (PAN)

This number is embossed or encoded on a plastic card. It identifies the issuer and the particular cardholder account. It is the 16 – 19 digit unique number allocated the payment instrument.  The PAN is generated by the issuing processor.


Payment Initiation (PI)

Whilst data sharing was the initial reason for PSD2, or open banking, another use case for the legislation is payments. Payment initiation, or “PI”, allows customers to authorise a payment directly from their bank accounts. “Simply put,” says Tink, “the big benefit of payment initiation is that it provides a hassle-free experience. There’s no need to scramble to reach credit cards and type in numbers. No need to open their banking app to transfer money between accounts, or fill in recipient accounts.”


Payment Processor (see Issuer Processor)

A company that handles transactions made by customers to a business is a payment processor. “That means the payment processing company communicates and relays information from your customer’s credit, or debit or prepaid card to both your bank and your customer’s bank,” American Express-acquired Kabbage explains. The processor is also responsible for the security of each transaction, ensuring there are no fraudulent payments, as well as sorting out accidental transactions as and when they occur.


Payments Value Chain

To complete a non-cash payment – be that at point of sale or online – you need a full payment value chain in place. The exact form this chain takes can vary. Typically, it includes the consumer, the merchant, an acquirer, a card network (like Mastercard® or Visa®), an issuer, and a processor. You’ll also likely have a myriad of third-party servicing entities supporting these different links too. Fintech Factory have put together a helpful infographic on this.


PCI DSS Compliance

Short for “Payment Card Industry Data Security Standard”, PCI DSS – often referred to as PCI compliance – is an information security standard for major card schemes. Launched back in 2006 in the UK, it requires firms to process, store, or transmit credit card information in a secure environment. There are 12 key requirements, laid out here by Digital Guardian.


PIN Number

A personal identification number, or “PIN” number, is the 4-digit code used to access the money you hold on your account- be that through an ATM, or at a card terminal at the point of purchase or online.


Point of Sale, or Mobile Point of Sale (PoS/MPoS)

Point of sale, or “PoS” – interchangeable with point of purchase (PoP) – refers to the place where a customer pays for an item or service. This can be a physical PoS, like a card terminal in a shop, a digital PoS, like a website checkout, or a MPos, such as an in-app checkout.


PSP – Payment Service Provider 

PSPs are third-party companies that work with merchants to help them accept customer payments. As FIS explains, PSPs “connect merchants to the broader financial system”, and though “invisible to most” they’re “essential to all”. “Payment service providers make modern commerce possible.”


Prepaid Card

Unlike a debit or credit card, a prepaid card isn’t linked to a bank account. This means the cardholder can only spend up to the amount that has been pre-deposited onto the card. Prepaid cards are often reloadable. You can read our deep dive into the payment method here.


Principal Member

A financial institution that directly participates as an issuing or acquiring member of a card network like Mastercard®.


Programme Manager

The programme manager is typically responsible for establishing relationships with processors, banks, payments networks, and distributors. They also tend to oversee the establishment of pooled account(s) at banks. For businesses that manage a card programme on behalf of an issuing bank, the programme manager defines the logistics of the scheme, operates it, markets it to consumers and merchants, and manages its profitability.


PSD2 (Second Payment Services Directive)

PSD2, or the Second Payment Services Directive, passed into law in the UK in January 2018. It legislates that the country’s “CM9” (or biggest) banks, HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske, Lloyds, and Nationwide, have to give third-parties (namely fintechs) access to their customers’ banking data. PSD2 is often hailed as a cornerstone regulation for fintech.


Peer-to-Peer (P2P) Payments

As NerdWallet explains, P2P, or peer-to-peer, payments “allow users to send one another money from their mobile devices through a linked bank account or card”.





An accounting process that compares two sets of records to ensure the figures are in agreement and are accurate. Reconciliation determines whether the incoming or outgoing funds in an account match the amount spent, or returned. it also makes sure the two values are balanced at the end of a given recording period.





The process by which a merchants’ (acquirer) and a cardholders’ (issuer) banks exchange financial data and funds.


SEPA (Single Euro Payments Area)

SEPA, or the Single Euro Payments Area, is the format cross-border euro-based bank transfers take. The European Union (EU) initiative, fully introduced by November 2009, is designed to harmonise payments across the Eurozone. It aims to make cross-border euro-based transfers within the Eurozone equivalent to a domestic transfer within a European country. Here’s a full list of all the countries in the “SEPA Zone”.




TPP – Third Party Provider

An authorised service provider which offers an extension of a company’s services. In an open banking context, for example, RBS explains TPPs – or in this case, fintechs – as existing outside of a customer’s relationship with their bank, but which may be involved in the online transactions a customer carries out. For example, a TPP might automate investments from that account via its app, or send you daily balance updates.



The process of translating a credit card number into a random sequence of numbers as a method of encryption, so as to improve credit card security during a transaction.


Transaction Fee

Every time a business processes an electronic transaction, they will pay a fee into the payment ecosystem which is split between the various processing parties. This is why some merchants ask customers to pay by cash, so they can avoid the fees incurred with electronic payments.


Transaction Monitoring

To comply with anti-money laundering legislations, financial firms have to monitor all their transactions. Any transactions which seem suspicious, such as large cash deposits or wire transfers, have to be reported. That way, firms can spot financial crimes before they happen and pre-empt their playing out. This process can also include sanctions screening and customer profiling, as KYC-Chain points out.




UBO – Ultimate Beneficial Owner 

The person or entity which is the ultimate beneficiary when an institution initiates a transaction. Legislated under the Fifth Anti-Money Laundering Directive (5AMLD) which came into force in January 2020, it gives banks and corporates clarity on who they’re doing business with. 


UnionPay International

Also known as China UnionPay or “UPI”, UnionPay is the world’s largest card network, with more than 7 billion cards issued via bank issuers. The large majority of these cards are used in China, but the card network is beginning to challenge Europe.



A company that has a valuation north of $1 billion.




Virtual Card

A virtual card holds all the fundamental attributes of a physical card – except it’s stored virtually via a mobile wallet. Mobile wallets can be used at card terminals that accept contactless payments, just like physical cards. And online, users can link their virtual card to a PayPal wallet, for example, or type in the numbers attached to their virtual card manually.




White Labelling

This is when a company provides its services to another company. Instead of using the provider’s own branding, the company which has bought – or pays via a subscription for – this provider’s services can put its own brand on the service when offering it directly to its own customers.




3D Secure

The name for a group of protocols designed as an additional security layer for online credit and debit card transactions. Each of the major credit cards has its own version of the 3D Secure protocols.


Relevant Resources


What’s included on the front and back of your payment card

Discover more resources from Moorwand   To find out more about Moorwand’s Issuing (Bin Sponsorship) and Digital Banking  – head to our solutions page or get in touch.

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