ETerms: A Comprehensive Glossary for Payment Processing and Accounting Abbreviations

ETerms: A comprehensive glossary for payment processing and accounting abbreviations

This glossary defines essential terms used in payment processing and accounting. Whether you’re new to the field or well-versed in these subjects, ETerms is your key to understanding the abbreviations and the term. Let’s dive in and decode the language together.

A security protocol for online card transactions that adds an extra layer of authentication, reducing the risk of unauthorized use and fraud.

A service provided by payment processors that automatically updates cardholder account information, such as expiration dates or card numbers, to ensure uninterrupted recurring payments for merchants.

The process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization.

The outstanding bills or invoices that a business owes to its suppliers or vendors for goods and services purchased on credit.

The outstanding payments owed to a business by its customers for goods or services provided on credit.

An accounting method where revenue and expenses are recognized when they are earned or incurred, regardless of when the cash is exchanged.

An expense that a business has incurred but has not yet paid. It is recorded in the accounting books as a liability until it is settled.

Revenue that a business has earned but has not yet received. It is recognized in the accounting books as an asset until it is collected.

The financial transaction made by the acquiring bank to the merchant for the value of goods or services sold to customers.

A payment processor that provides services to acquiring banks, facilitating the processing of payment transactions.

The financial institution that partners with merchants to enable them to accept electronic payments from customers.

A security measure used by payment processors to compare the billing address provided during a transaction with the address on file with the card-issuing bank, helping to reduce fraud.

A report that categorizes accounts receivable based on the length of time they have been outstanding, helping businesses monitor and manage unpaid invoices.

The process of spreading out the cost of an intangible asset (such as goodwill) or a long-term liability (such as a loan) over a specific period.

A financial ratio that measures a company’s efficiency in using its assets to generate revenue.

A unique code provided by the card-issuing bank to indicate that a payment transaction has been authorized.

A network that facilitates electronic funds transfers and automated payment processing between banks, businesses, and individuals.

In accounting, bad debt refers to the portion of accounts receivable that is unlikely to be collected from customers. It is treated as an expense on the income statement and reduces the accounts receivable on the balance sheet.

A financial statement that provides a snapshot of a company’s assets, liabilities, and shareholders’ equity at a specific point in time. It showcases the financial position of a company.

The process of comparing and matching the balance of a company’s cash account in its accounting records to the balance shown on the bank statement. The goal is to identify and rectify any discrepancies between the two records.

A monthly record provided by a bank to an account holder, summarizing all transactions and balances for the given period.

A method of processing multiple transactions together as a group, typically used in end-of-day settlement procedures.

The process of settling multiple payment transactions as a batch, where the funds are transferred from the payment processor to the merchant’s bank account.

Capital refers to the financial resources, such as money and assets, that a company uses to fund its operations and investments.

A card association is an organization that sets the rules and standards for credit card transactions. Examples include Visa, Mastercard, and American Express.

The first six digits of a credit or debit card number that identify the card’s issuing bank or financial institution.

A fee charged for adding funds to a prepaid card or digital wallet.

A card transaction where the physical card is not presented during the purchase, such as online or over-the-phone transactions.

A payment transaction where the cardholder’s physical card is not used for authentication, such as online or phone transactions.

The network that processes and facilitates payment transactions between merchants, card issuers, and cardholders. Examples include Visa and Mastercard networks.

A payment transaction where the physical card is presented at the point of sale for authentication.

A three or four-digit code on credit cards (CVV or CVV2) used as an additional security measure for card-not-present transactions.

The method used to verify the authenticity of a cardholder during a payment transaction, such as signature or PIN.

A three or four-digit code on credit cards (also known as CSC) used for additional security during card-not-present transactions.

The method used to authenticate the cardholder during a payment transaction.

A security standard developed by Visa to protect cardholder data and enhance security in payment card transactions.

The method used to verify the identity of a cardholder, such as signature or PIN.

An accounting method where revenue and expenses are recorded only when cash is received or paid, regardless of when the actual transaction occurred.

A payment made by a company to settle liabilities or expenses.

The movement of money in and out of a business or organization during a specific period.

The process of predicting future cash flows based on historical data and anticipated future transactions.

A financial statement that provides an overview of a company’s cash inflows and outflows during a specific period.

A payment method where the customer pays for goods upon delivery.

The money received by a company from various sources, such as sales, loans, or investments.

A professional accountant who has met specific educational and experience requirements and has passed the CPA examination.

Strategies and measures taken by merchants to reduce the occurrence of chargebacks in their business.

Services offered to merchants to help prevent and manage chargebacks.

A numeric or alphanumeric code that indicates the reason for a chargeback, used by card associations to categorize disputes.

The process of recovering funds from a chargeback dispute, usually by providing evidence to the card association.

The process of challenging a chargeback by providing evidence to the card association that the transaction was valid.

A structured list of all the accounts used in a company’s accounting system, showing the account names and numbers.

A service that verifies the validity of a check before accepting it as payment.

A senior executive responsible for managing a company’s financial operations and strategy.

A senior executive responsible for overseeing a company’s day-to-day operations.

The journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

The process of distributing or assigning costs to specific cost centers or products.

The direct costs associated with producing or manufacturing a product, including materials, labor, and overhead.

The expenses directly related to the production or purchase of goods sold by a company.

An entry on the right side of an accounting ledger that increases liabilities or equity or decreases assets.

The fee paid by the merchant’s bank to the cardholder’s bank for processing credit card transactions.

A monthly statement provided by the credit card company to the cardholder, summarizing all transactions and outstanding balances.

A document issued by a seller to a buyer, indicating that the buyer’s account has been credited with a specified amount, often due to a refund or adjustment.

A payment transaction that involves a card issued in one country being used to make a purchase in another country.

Assets that are expected to be converted into cash or used up within one year or the normal operating cycle of a business.

Liabilities that are due to be settled within one year or the normal operating cycle of a business.

A financial ratio that measures a company’s ability to pay its short-term obligations.

A feature provided by some payment gateways that securely stores customer payment information for easy and secure future transactions.

A security incident in which sensitive, confidential, or protected data is accessed, viewed, stolen, or used by unauthorized individuals or entities.

An entry on the left side of an accounting ledger that increases assets or decreases liabilities or equity.

A document issued by a buyer to a seller, indicating that the buyer’s account has been debited with a specified amount, often due to a return of goods or an adjustment.

The systematic allocation of the cost of a tangible asset over its useful life to reflect its declining value or wear and tear.

A technology-based platform that enables electronic payment transactions, offering various methods such as credit cards, mobile payments, and online wallets.

A virtual wallet or application that securely stores payment information, allowing users to make electronic transactions, such as mobile payments or online purchases.

A cost that can be directly attributed to the production or provision of specific goods or services.

The process of handling and resolving disputes or chargebacks arising from payment transactions between merchants, cardholders, and card issuers.

Payments made by a corporation to its shareholders, usually from its profits as a distribution of earnings.

An accounting system that records each financial transaction in at least two accounts to ensure accuracy and maintain the accounting equation (Assets = Liabilities + Equity).

A service provided at the point of sale that allows international travelers to choose to pay in their home currency instead of the local currency, with the exchange rate applied at the time of the transaction.

A payment processing feature that dynamically routes transactions to the most cost-effective or efficient payment network based on various factors, such as card type, transaction amount, or location.

A payment processing method that converts a paper check into an electronic transaction, allowing funds to be electronically debited from the payer’s account.