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Guide of terms and concepts of payment methods

Learn all the secrets of online card payments, learn how to differentiate a debit credit card, what type of Virtual POS is most used, what is the function of the means of payment in electronic commerce? and get free support for our payment gateway with just a few mouse clicks. If you want to know all the payment terms used on the Internet, we advise you to read our guide to questions about means of payment by card.

Credit and debit cards

AVS, INN, CVC and CVC2 codes of debit card

Debit and credit card verification numbers:

AVS (Address Verification System): It is an internal anti-fraud system used by issuing banks to identify the cardholder's address, country of residence, province and zip code. Each credit card has a holder, a natural or legal person, and an internally registered physical address. When a purchase is made online, the holder must enter the country and the postal code. If the card owner does not enter it correctly, the payment gateway notifies the issuing bank and the transaction will be rejected.

IIN (Issuer Identification number): The first four digits of the card identify the bank that provides the card. The same bank that has offices in two different countries issues the cards with the di

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What is an expiration date of a credit card?

The expiration dateof a card can be defined as the deadline for a credit or debit operation period. Once the card date has expired, the cardholder cannot withdraw money at an ATM, make reservations or online and offline purchases.

Cardholders have to be very aware of the expiration date of their credit cards in case of traveling. If the customer wants to travel on the dates the card expires, he will not be able to make any purchases and it will be impossible for his bank to restore the service again unless new card is issued and sent to the client. Therefore, we advise customers who have their card about to expire to go to their local bank office and request renovation of the card.

In the image below you can see the part of th

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Function of issuing bank in POS terminal processing

Issuing Bank or Bank Issuer is the bank that issues the debit, credit or prepaid card. The card issuing bank is required to be regulated by a central bank and must be a member of the card organization. It has an essential function in the entire payment process of a payment gateway, since it is the holder of the funds from where during the payment or refund money get transferred to merchant bank account.

The function of the issuing bank is to notify the acquiring bank if the card has enough credit or not to proceed with the purchase. Also it verifies if the card holder has foreign exchange restrictions or restrictions in operational countries. The card brands that card issuing banks usually work with are Visa, MasterCard, Cirrus, Maestro, Amex, Discover JCB, Union Pay and Diners Club.

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What is a bank identification number (BIN)?

Bank Identification Number or BIN number is the first 4 to 6 digits of a credit card. The first number identifies the brand of the card: Visa (number 4), MasterCard (number 5), Amex (number 3), the other 3 or 5 numbers identify the bank issuer that has issued the credit, debit or prepaid card.


BIN number

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What is EMV credit card chip?

EMV credit card chip was developed by Euro-pay, MasterCard and Visa, the 3 companies that decided to unite their knowledge and experience in order to fight credit card fraud. As a result of this collaboration they introduce a technology of EMV Chip that saves the cardholder's information and avoids using the magnetic stripe on the back of the card for cloning.

During these last years of technological revolution in the sector of payment methods, credit and debit cards have always been an easy target for fraudulent activities. Therefore, the magnetic line that was previously used to make a payment via PIN Pads and, as a result, many times ended up been cloned, was removed by an EMV Chip, a little device tucked inside a credit card, where the PIN verificat

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What does 3D security PIN mean?

3D security PIN is the best anti-fraud security system for all parties involved in the card purchase process: commerce, acquiring bank, card issuing bank and the customer (card holder). The system requires validation of the transaction that has been made using the credit card and identification of the client. Security PINs are usually provided by the bank when a new card is issued and are free of charge.

In the process of an online purchase where a payment gateway with 3D Secure protocol is used for processing, the client goes through one of the steps where he is asked to introduce a PIN number. In this case, in order to pass the identification control of 3D secure system the client is obliged to confirm his identity in one of the following ways:

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What is Dynamic Damping Control (DDC) system?

Dynamic Currency Conversionis a process when the amount that has to be charged on the card of a client at the moment of paying at virtual or offline POS terminal is converted by a merchant or ATM machine to a currency of the card's issuing country. Every merchant has an option whether to activate or not the DDC control. When the DDC of a terminal is activated the customer will see the amount to be paid in its currency and the merchant will receive the money in the currency he has chosen for his merchant account. For example, imagine that a customer has a card issued by an American bank in US $ and wants to buy shoes at an online store in Europe for 100 euros. When the customer completes the check out process of the Virtual POS, introduces his information and confi

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Terms of payment by POS

What is an acquiring bank and its functions?

An acquiring bank is a regulated financial entity with the ability to open and provide merchant accounts in order for the commerce to collect credit or debit cards payments. The acquiring bank is responsible for receiving the funds from the card issuing bank, and then paying them by wire transfer to commerce.

The role of the acquiring bank in payment processing is to receive a payment. If the merchant has only integrated a payment gateway, without connecting it to a merchant number, it cannot accept card payments. In order for the acquiring bank to credit sales made by card to a merchant, the payment gateway must receive an authorization number from the acquiring bank, once received, the bank will credit the money from the sale.

Many people confuse t

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What is a merchant account and its purpose?

Merchant account number is a financial account with the unique ability to collect online payments made with cards (Visa, MasterCard, Amex, Discover, JCB, Union Pay or Diners Club). In order for a payment gateway to charge credit or debit cards online, the commerce needs to have a merchant account number.

Merchant accounts can only charge cards and cannot receive wire transfers, make wire transfers, accept direct receipts or pay interest for having a deposit.

The only banks allowed to open and provide the commerce with the merchant account are acquiring banks. Generally, acquirers and commercial banks are associated to facilitate the process of contracting the merchant accounts by customers.

As a general rule, when a commerce de

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What is a reversal transaction?

Reversal transaction or payment retrocession can be defined as the claim made by the cardholder to his issuing bank against a merchant number.

Reversal transaction is also known as chargeback and its objective is to recover the total or partial amount of money that the client has paid for a service or product. There are several types of reversal transactions according to their nature:

Legitimate transaction reversals: Take place when a cardholder files a claim to the issuing bank against the merchant number and argues that the product or service that he has purchased has not been delivered. This type of legitimate transaction reversal occurs when the merchant has forgotten to process your order or has had an oversight without intendi

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What is PCI DSS compliant?

PCI DSS (PCI Data Security Standard) arises from the collaboration of Visa, MasterCard, Amex, Discover and JCB card brands united to combat online scamming. The goal of PCI DSS is to create a fraud-free environment for the merchants and the cardholders who are willing to make their purchases online.

What are the security policies of PCI DSS?

PCI DSS regulations affect all merchants that process, transmit or store card data. Security policies affect the following credit card payment methods:

  • Face-to-face payments through PIN pads, mobile Pin pads and Smartphones.
  • Non-face-to-face payments made via virtual POS terminals integrated on websites, MOTO, recurring and mobile payments.

Security p

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What is a high risk business?

To carry out high risk businesses means additional controls and problems for its owner. When trying to open a corporate bank account or contract virtual POS, it is very often to hear that the financial entity doesn't offer its services to high risk businesses and therefore can not provide you with necessary tools to develop your commercial activity. In general, the level of risk is measured by the percentage of chargebacks and refunds, years of impecable banking history, possibility to use the company for money laundering and country of incorporation.

Having a high risk business doesn't mean carrying out illegal commercial activity, even though some people confuse these two definitions viewing them as the same concept. What it actually means is tha

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What is SEC or 3D Secure protocol?

SEC in card payment systems means that your merchant account works under “Safe Electronic Commerce” protocol. What does it mean? This means that when your customer makes a payment by credit or debit card, he will have to validate the operation using a PIN code that the card issuing bank will send to his phone number or the customer will introduce a security PIN that was provided by the bank together with a card.

The advantages of SEC protocol are the following:

  • The number of chargebacks or refunds decreases significantly.
  • The payment gateway can carry out better anti-fraud controls.
  • Having a POS terminal under SEC protocol creates favors trust relationships with clients, since it considers that
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What is MOTO payment system?

MOTO stands for Mail Order Telephone Order and it is one of the most used and most difficult to obtain non-contact payment methods on the market.

Charging your clients by MOTO virtual terminal has its advantages and disadvantages. First of all this payment system doesn't operate under SEC protocol and therefore does not request the security PIN code. The biggest disadvantage of using the MOTO terminal is that if the merchant uses this type of terminal for fraudulent purposes, it can make successive charges to any card in the world.

The MOTO terminal is one of the terminals with the highest rates of fraud and claims, therefore the acquiring banks do not usually grant the opening of these terminals to commerces. The operation of MOTO is very simp

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App and CMS modules support tpvvirtual.net

Where can I see my rolling reserve?

Among banks and payment processing companies, retention of the rolling reserve or also called security deposit is a common practice. The amount, which is saved by the payment processing service provider to cover the risks of refunds and chargebacks depends on the level of risk attributed to each e-commerce activity.

By clicking on "Billing" < "Rolling Reserve" section on left-side menu, the user can obtain all the information about his rolling reserve with the exact amount that has been withheld from his account and the date of its release.

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How can I recuperate my old invoice?

All old invoices generated by our payment gateway are stored in the "Billing" (left-side menu) <"Paid invoices" section. The user can always download it, review all the data and save on his device.

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Invoices for payment processing services

At the end of each billing period our payment gateway automatically generates an invoice taking into account all sales made by the merchant during this period, commissions, refunds and chargebacks. The customer can find all his invoices in the section "Billing" (left-side menu) <"Invoices".

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How can I see information about chargebacks?

The information about all chargebacks filed by your customerscan be found in the section "Transactions" (left-side menu) <"Chargebacks". For your convenience the page where all chargebacks are listed has a search engine where you can filter all chargebacks by amount, date, transaction ID, payment status, country, description or customer name and locate the necessary transaction in a few seconds.

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How can I see all refunds requested by clients?

Information about refunds requested by your customers is listed in "Transactions" (left-side menu) <"Refunds" section. For your convenience the page, where all the refunds are listed, has a search engine that can be used to filter all refunds by amount, date, transaction ID, payment status, country, description or customer name and locate the necessary transaction in seconds.

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How to locate a payment made by my client?

The information on all transactions made by your business and payments made by your clients is can be found in "Transactions" (left-side menu) <"All transactions" section. On this page you can find all the information related to your client, the sales your merchant made and the payment statuses.

For your convenience use the search engine where you can filter all transactions by amount, date, transaction ID, payment status, country, description or customer name and locate the necessary payment made by your client within few seconds.

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Where can I see the total of my sales?

On the main page of the payment gateway app users can find all the information related to their sales: net balance and gross balance. This information can be found for current period, las week, last quarter, last month or last year. In addition, the dashboard collects information about chargebacks and refunds, rolling reserves and commissions that the customer has to pay at the end of the billing circle. At the bottom of the main page of the payment gateway, the customer can locate all their sales on the map, a very useful information that can be used by the merchant when creating a marketing strategy for his online commercial activity.

Another option that the client has to find more information about the total sales of a specific period is entering the sectio

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Payment methods for E-commerce

What is a function of shopping cart in Virtual POS terminal?

The function of the shopping cart in a Virtual POS terminal is essential to complete a credit card payment. The shopping cart has the function of collecting all customer information in a CMS, such as order number, size, color, measurements of the item, name, surname, email, billing address, shipping address of the client and card information.

In the process of online purchase, the shopping cart is responsible for transmitting the related card information and description of the order to the payment gateway. That one in its turn, sends the information to the acquiring bank, through internal notifications with the card issuing bank that will authorize or not the purchase.

When configuring a number of steps in place an order process, it is very important

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Number of steps in checkout process

The number of steps in checkout processaffects greatly the volume of sales in your online store. Statistics say that if there are more than 5 steps, one of three customer decide to abandon the cart. In our opinion, the optimal number of steps is 3, provided that the Virtual POS terminal works in insecure mode, without 3D secure protocol. If the Virtual POS is set for SEC protocol, the total number of steps in checkout process increases to 4. This does not mean that the customer will always leave the cart, but the chances of abandonment will be higher.

As we have previously said, the optimal number of steps in checkout process is 3. Always keeping in mind that this number can decrease with further purchases, once the online stores have stored the clients

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Difference between face-to-face and on-site commerce

Face-to-face commerce

Face-to-face commerce is a traditional way of paying for goods and services in local restaurants or physical stores. The usage of PIN Pad has been a revolution in payment methods for very long time. We all know how to insert the card or just swipe it up next to this little black machine in order for the system to charge us for goods or services we are purchasing. Face-to-face commerce is the most secure one, when speaking about client verification. Some trades still ask their clients for a signature or ID in order confirm the card ownership.

Card present, face-to-face operations get validated instantly and the percentage of funds and chargebacks filed for this type of purchases is quite low. The main reason of it is that

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Virtual POS Terminal for CMS. Types of CMS in Internet

Launching a new online business, the first question that our clients usually face is how to charge their clients online and accept credit card payments. Choosing a payment method for online store, a decision that can affect the way the new business will grow, involves analyzing the level of its security, speed and fees you will have to pay for each sale.

Virtual POS Terminal is a perfect solution for almost all online stores, since it allows its owners to accept and process credit card payments within seconds using any CMS.

The most used CMSs on Internet that allow a full integration of payment gateway are the following:

  • PrestaShop
  • Wordpress (WooCommerce)
  • Magento
  • WHMCS
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What is an e-commerce payment?

E-commerce payment is a payment method used by a company or self-employed individual to pay their debts contracted with another “person/s” in a virtual environment, such as the Internet.

E-commerce payment system includes several types of payment methods:

  • Cash on delivery
  • Cryptocurrencies (Bitcoin, Ethereum, Riple etc.)
  • Wire transfer
  • Online Virtual POS payment
  • Checks

Before contracting E-commerce payment system make sure it fulfills the following requirements:

  • Ability to process payments quickly, within seconds.
  • Low fees.
  • Anti-fraud protocols.
  • Safe.
    E-commerce payment method
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What is one-click payment?

One-click payment was an invention developed by Amazon programmers with the aim of selling more and summing up all the process of online purchase in 1 click.

In our opinion, this purchase process has misleading advertising since i order to make a purchase in just one click the user has to present previously all banking information. Which means that if a customer decides to buy an item for the first time on the Amazon platform, he cannot place the order and pay in a single click, since he has to register and go through all the following steps:

  • Confirm e-mail
  • Enter his billing, shipping and phone number information
  • Enter credit or debit card information
  • Enable multi-factor authentication
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What is U-Commerce?

In order to understand the concept of U-Commerce, it is essential to get familiar with the main variants of electronic commerce. The most important are:

  • E-commerce: Electronic commerce focused on websites and shopping carts.
  • Social Commerce: Electronic commerce oriented to social networks, type Facebook, Twitter, Linkedin.
  • Chat Commerce: E-commerce oriented for messaging applications like WhatsApp, Line, Live Chat etc.
  • Mobile Commerce: It is the electronic commerce focused on mobile telephony.
  • U-commerce: Is a type of commerce that emerged from the desire to satisfy all the needs that a modern customer can have. U-commerce is focused on customer experience and making it easy for him to rea
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PAYMENT METHODS

Payment gateway website

MOTO payment

Recurring payment

Bank accounts