Glossary of Contactless Payments - FAQ frequently asked questions

Here is the glossary of contactless payments or FAQ (frequently asked questions) about contactless.

The global payments market at a critical juncture. Payments represent an especially important business for banks and economies - given the likelihood that industry consolidation will continue and economic growth will remain weak.

For banks, payments generate recurrent revenue, though with higher Basel II capital consumption, so that returns on equity are reliable.

Moreover, payments services are vital for both consumer and corporate customers, so they can help win customers and drive loyalty if handled effectively.

From an economic perspective, investments in the efficiency and security of the payments systems help fuel growth by making funds flow more efficiently, and help protect against systemic risk.

Glossary of Contactless Payments

ACH - Automated Clearing House

AML - Anti-Money Laundering regulation

AOS - Additional Optional Services

B2B - Business-to-Business

B2C - Business-to-Consumer

BEPS - Bulk-Entry Payment System

BIC - Bank Identifier Code (ISO 9362 Norm)

Blue Book - Official ECB publication covering the main payment and securities settlement systems in EU Member States. Data once sourced to the Blue Book will in the future be sourced to the ECB's Statistical Data Warehouse (SDW).

BRIC - Refers collectively to the countries of Brazil, Russia, India, and China

CAGR - Compound Annual Growth Rate

Check 21 - The "US Check Clearing for the 21st Century Act"

Contactless Payment - Contactless payment devices, which use radio frequency identification (RFID) technology to let users make purchases by holding an RFIDenabled device such as a mobile phone in proximity to a reader

Critical Mass - In the SEPA context, the level of SEPA product adoption needed to ensure an irreversible move to SEPA instruments. The actual level has not been set in national migration plans.

CSM - Clearing and Settlement Mechanism

D - Date when payment of debtor is due to creditor

D/C - Documentary Collection

DG - Directorate General

e- Electronic

EBA - Euro Banking Association

EC - European Commission

ECB - European Central Bank

Efma - European Financial Management & Marketing Association

EMV chip - Europay MasterCard Visa chip

EPC - European Payments Council

EU - European Union

EU27 - The 27 members of the European Union

EU31 - The 27 existing members of the European Union plus Iceland, Liechtenstein, Norway, and Switzerland

Eurozone - The 27 member states of the EU that have adopted the euro as their national currency, including: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain and Slovenia

4-party card model - A cards business model or scheme involving cardholders, card issuers, merchants, and merchant acquirers all operating under the umbrella of a particular payment scheme. Cardholders are customers of card issuers, and merchants are clients of merchant acquirers.

GCC - The Gulf Cooperation Council; includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

GDP - Gross Domestic Product

IBAN - International Bank Account Number (ISO 13616 Norm)

IMF - International Monetary Fund

Interchange fee - The fee paid by the acquirer to the issuer mainly to reimburse for payment guarantees, fraud management, and issuer processing costs

ISO - International Organisation for Standardisation

ISO 20022 - Abbreviated term referring to the ISO UNIFI message scheme for SEPA instruments

Legacy payments - Term used to describe domestic payment instruments that pre-date SEPA

M-payments - Mobile payments

Mandate - In payments, the "mandate" is the authorisation required for a payment to be initiated

Micro-payments - Various techniques for exchanging small amounts

MSC - Merchant Service Charge, the fee paid by the merchant to the cardacquiring bank to cover the acquirer's processing costs and interchange

MTO - Money Transfer Operator

NFC - Near Field Communications, which use short-range wireless technology for contactless payments. When an NFC device (e.g., smartcard or mobile phone) passes close to a reader, data is transmitted between the two.

Negotiable Instrument - means an unconditional promise or order to pay a fixed amount of money.

NON-CASH - Cashless payments made with instruments other than notes and coins and include credit transfers, direct debit, credit and debit cards and cheques

P2P - Person-to-Person

PE-ACH - Pan-European ACH. A clearing house that processes domestic and cross-border SEPA payments alike, and has full reach across SEPA.

PIN - Personal Identification Number

Players - Major payments "players" (stakeholders) are banks, payment service providers, corporations, SMEs, and merchants

POS - Point-of-Sale

Promise - means a written undertaking to pay money signed by the party undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to the obligation.

PSD - Payment Services Directive

PSP - Payment Service Provider

Order - means a written instruction to pay money signed by the person giving the instruction. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.

RBA - Reserve Bank of Australia

Red Book - An official publication of the BIS

RTGS - Real-Time Gross Settlement is the continuous settlement of payments (versus one time daily) on an individual order basis without netting debits with credits across the books of a central bank

SCF - SEPA Cards Framework

SCT - SEPA Credit Transfer

SDD - SEPA Direct Debit

SEPA - The Single Euro Payments Area is a domain in which EU31 is standardising euro payments and collections so they can be treated as domestic transactions.

SEPA Instruments - Euro payments that are compliant with the SEPA Rulebooks

SMEs - Small and Medium-sized Enterprises

SMS - Short Message Service (more commonly known as text-messaging)

STEP2 SCT - The EBA's pan-European retail payment clearing house for SEPA Credit Transfers

STP - Straight-Through Processing

SWIFT - Society for Worldwide Interbank Financial Telecommunication

3-party card model - A cards business model or scheme involving cardholders, merchants, and specialist financial institutions that operate as combined card issuer, merchant acquirer, and also scheme owner. Both cardholders and merchants are customers of the specialist financial institution/ scheme owner.

UNIFI - Universal Financial Industry

WAP Browser - Function whereby a phone contains mini-browser software that will let you navigate various services through the Internet, shown on the phone's display

XML - Extensible Markup Language; facilitates the sharing of structured data across information systems

FAQ (frequently asked questions) about contactless

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