WigWag's Guide to Payments Jargon: Navigating the Buzzwords and Acronyms

Hey there, fellow fintech enthusiasts and curious minds! Let's kick things off with some eye-popping facts: McKinsey anticipates that between 2020 and 2025, the e-payments market in Africa will grow by around 150 percent to reach almost $40 billion in revenues from domestic payments alone. That's a whole lot of online action!

Recently, the WigWag team had the absolute pleasure of attending a buzzing Startup Club ZA event in Cape Town. Not only did our very own founder, Kiaan Pillay, light up the panel, but he also shared the stage with the legendary payments and e-commerce guru, Jonathan Smit, the brains behind Payfast.

The event was a fantastic opportunity to mingle with local founders and tech enthusiasts, but one conversation stood out. Jonathan and Kiaan reflected on how much the payments landscape has evolved—from the early days of Payfast to the present era of Stitch and WigWag. Pioneers like them have driven incredible progress, but as the host, aptly pointed out, there's still a lot of work to be done. "Until I can pay who I want, how I want, the payment piece is still largely unsolved in South Africa."

This got us thinking. The payments space can feel like a massive, daunting puzzle with no clear picture or manual. For entrepreneurs diving into the space, investors researching it, or anyone just plain curious, the jargon can be overwhelming. So, we've put together the WigWag Payments Dictionary—a fun, handy guide to help you navigate the maze of payments terminology and maybe even sound super smart at your next social gathering.

Card Payment and Online Payment Terms:

Merchant
The business owner that is accepting card payments for their goods or services.

Acquire
The bank or payment service provider that processes credit or debit card payments on behalf of a merchant. Think of them as the middlemen who make sure your payment goes through smoothly.

Issuer
The bank or financial institution that provides credit or debit cards to consumers. In other words, they are the ones who give you the card and manage your account.

Card schemes
This is Visa and Mastercard, they leverage their network of integrated banks and systems to communicate transactions across the world and make sure that banks move the right money to the right place for all card transactions.

Authorization
This is the process of verifying that a card has enough funds available to make a purchase. It’s like getting the green light before the actual money is moved.

Chargeback
This is a formal dispute initiated by a customer through their bank or card issuer. It's a serious matter where the customer claims they didn't authorise a transaction, didn't receive the goods or services they paid for, or encountered some other issue with the transaction. Chargebacks can result in financial losses, additional fees, and damage to a business's reputation, so they're taken seriously by merchants and payment processors alike, and merchants generally would need to prove the legitimacy of the transaction.

Card verification code/security code (CVC/CVV/CSC/CVD/CID):
That little three-digit code on the back of your card. It’s an extra security layer to make sure you’re the real cardholder. Good to note that CVC/CVV/CSC/CVD/CID and security code can be used interchangeably.

EFT (Electronic Funds Transfer)
Moving money from one bank account to another electronically. But this is known to take a bit longer and generally involves needing to send a Proof of Payment (POP) to prove that the transaction happened

POP (Proof of Payment)
It is a document or digital confirmation that shows a payment has been made. This can include receipts, transaction confirmations, bank statements, or any other form of verification that the funds have been transferred from the payer to the payee. Proof of Payment is often used to provide evidence of transaction completion for accounting, auditing, and customer service purposes.

Clearing
The transfer of transaction information between banks and the card schemes. This is the step of a transaction where the acquiring bank asks the issuing bank to debit the cardholder's account for the amount paid and the issuing bank agrees to do so. So the information has flowed and been accepted but the money hasn't moved yet. The money movement happens in the settlement step.

Settlement
The actual movement of funds from one financial institution to another that completes a transaction.

Tokenization
A way to save cards without a merchant actually storing the details. So your card information stays secure but you can agree for them to charge your card without having to re-input the details every time you want to pay. This is used for subscriptions as well as when you save your card on your favourite e-commerce stores and apps.

3D Secure
An additional way to make sure that the person making the transaction is the cardholder rather than just someone with the card details. This usually means approving the transaction through an app or using a one-time PIN. (OTP)

Recurring Payment
Automatic payments that happen at regular intervals. Perfect for subscriptions or services you pay for regularly without lifting a finger.

Interchange Fee
A small fee is paid by acquirers to card-issuing banks for processing card payments. Think of it as the cost of doing (card) business.

Card present
This is an in-person payment where the cardholder is physically present and can either input their card, tap the card, or use their device to pay on a card machine.

Card not present (CNP)
Card payment transactions where the physical card is not present at the point of transaction, such as online purchases. Because the person isn’t in the same place as the merchant or their card machine, they can’t input/tap their card or device so they have to input their card details with a CVV number and then sometimes carry out 3DS to prove that they haven’t stolen those card details.

PCI Compliant
PCI Compliance is like a security badge for businesses that handle card information. It stands for Payment Card Industry Compliance, and it means that a business follows strict security standards to protect card data from theft and fraud. It's all about keeping your payment info safe and sound!

Payment Service Provider (PSP)
That’s us! PSPs handle all the nitty-gritty of payment processing, making sure your money moves smoothly from customers to businesses. PSPs like PayPal, Stripe, or WigWag simplify the complex world of online transactions, dealing with everything from technology, licenses, and security to moving money, so you don't have to.

Cut-Off Time‍

Banks often only process transactions up until a certain time during weekdays and they also don’t always process transactions on weekends or public holidays. Cut-off times are the times up until which they will process your transaction. If your transaction falls after this cut-off time, it will be processed when the bank starts processing again. This is usually the next business day.

We hope that  this dictionary helps you navigate the payments landscape with ease and confidence. Whether you’re a founder, an investor, or just someone curious about how all this magic works, WigWag is here to demystify the jargon and make the world of payments a bit more fun and a lot less confusing.

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