Glossary of Terms
The commercial bank or other financial institution in which the beneficiary of a credit card or debit card payment maintains the account into which the funds are deposited.
The appeals process through which neutral professional arbitrators employed by the credit card networks can review a bank’s decision to approve or deny a chargeback.
An authorized transaction is one agreed to by the person whose name appears on a credit card or debit card and the merchant prior to or at the time of payment.
A broker is an individual holding a valid license issued by an appropriate government financial oversight agency who purchases and sells securities on behalf of clients. A broker operates out of a brokerage, which likewise must hold a valid license issued by an appropriate government financial oversight agency.
A card-not-present (CNP) transaction occurs when neither the cardholder nor the credit card is physically present at the business location at the time of the transaction.
Chargebacks are forced transaction reversals initiated by the cardholder’s bank. They are meant as a consumer protection mechanism.
Commodities are natural resources (e.g., crude oil, natural gas and precious metals), crops (e.g., corn, soybeans and wheat), or animals and their by-products (e.g., cattle, chicken eggs and pork bellies) purchased and sold by contract at a predetermined price on a future date. For that reason such contracts are commonly known as “futures.” In almost all instances, trading in futures must be executed on the floor of a licensed commodity exchange.
A credit card is a payment instrument that enables the cardholder to pay merchants for goods and services while reimbursing the issuer on a set day every month. The reimbursement commonly includes interest charges for late payments.
Cryptocurrencies are virtual currencies that employ cryptology to validate and secure transactions, enabling their true ownership to be masked. They are digitally recorded on a distributed ledger, popularly known as a blockchain. Cryptocurrencies are bought and sold independent of central bank control. Synonyms include altcoins, digital currency and virtual currency. Bitcoin was the first cryptocurrency.
A dealer is an individual holding a valid license issued by the appropriate government financial oversight agency who buys and sells securities for his or her own account.
A debit card is a payment card that enables the cardholder to pay merchants for goods and services, after which the sums spent are deducted directly by the issuing bank from the cardholder’s account.
The foreign exchange market (or “forex,” often abbreviated as FX) is the system through which banks, businesses and investors trade currencies. It is the largest, most liquid market in the world in terms of the total amount of cash traded. The average daily sums measure in the trillions of dollars. It includes every currency in the world.
In the lexicon used by banks, fraud is understood to mean an unauthorized transaction. Legally, it is an intentionally deceitful attempt to deprive any individual, individuals or entity of their rights, income or tangible or intangible assets.
General Data Protection Regulation (GDPR)
GDPR is an enactment of the European Union (EU) that “regulates the processing by an individual, a company or an organisation of personal data relating to individuals in the EU.” The legislation also guarantees consumers a right of access to stored data as well as a right “to be forgotten,” requiring the deletion of personal data upon demand. Companies that are adjudicated to operate in violation of the GDPR are subject to a fine of 4% of their gross annual revenue or €20 million, whichever is greater.
The commercial bank or other financial institution that provides a credit card or debit card to the cardholder.
Know Your Customer (KYC)
KYC is a financial industry standard designed to ensure that a financial services provider has done its due diligence by verifying the identity of a client before the opening of an account. While KYC was originally implemented as a deterrent to money laundering, it has become an valuable tool in investigating a broad range of financial crimes.
A specialized financial services firm hired by a merchant to route consumer credit card and debit card payments to the beneficiary’s bank account.
Phishing is an illegal attempt by an individual or group to obtain personal information from unsuspecting victims using deceptive internet-based tools. The most widespread phishing mechanism is email. Phishing emails are designed to look like they were sent by a legitimate bank, government agency or organization, such as a charity. These emails will typically notify recipients that due to a security breach they must verify their personal details, such as a credit card number, bank account number, username, and/or password, usually by clicking on an embedded link to a spoofed but legitimate-looking website. The compromised data is then used by the scammer to rob victims of their funds and/or commit identity theft. Many of these spoofed websites also implant malware into victims’ computers, enabling the scammers to continue to impersonate them indefinitely.
A Ponzi scheme is any type of get-rich-quick scam that follows the business model developed by Charles Ponzi, in which dividends are paid to existing investors out of funds raised from new investors. Ponzi schemes eventually collapse of their own weight once the availability of new investors decreases and the inflow of money can no longer sustain the outflow. For that reason the business model resembles the architecture of a pyramid. Ponzi schemes are also known, therefore, as pyramid schemes, since new blocks (in this case of ever decreasing numbers of investors) are set on top of existing ones.
A regulator is a government agency established by law that is charged with the licensing and supervision of financial institutions and providers of financial services.
A representment is the rebuttal of a cardholder’s request for a chargeback submitted by a merchant to the acquiring bank, or a rebuttal of the merchant’s objections submitted by the cardholder in response.
A scam is a deceptive and disingenuous offer of goods or services. Its objective is to profit by taking money from a consumer without providing the goods or services that were contracted in advance, or by knowingly substituting those goods or services with others of inferior quality.
Securities is a broad term that includes a variety of assets, including debt (e.g., banknotes, bonds or debentures), equity (e.g., common stocks and mutual funds) or derivatives (e.g., forwards, futures, options, or swaps).
Traders are individuals who buy and sell securities for themselves.
Treating Clients Fairly (TCF)
TCF is an outcomes-based evaluative process designed to ensure that regulated financial institutions meet specific benchmark standards of fairness in their interactions with their customers.
An unauthorized transaction is one for which the person whose name appears on a credit card or debit card did not assent to prior to or at the time of payment. In the lexicon used by banks, an unauthorized transaction is synonymous with fraud.
Also known as a bank transfer, credit transfer or electronic transfer, a wire transfer is a payment sent by an individual or entity from one bank account into another or by payment in cash to a financial services provider, which then transmits the funds to their intended recipient.