The Payments Industry Terms You Need to Know

The ABCs of retail and payments can get a little tricky at times. With so many technologies and processes in play, it’s easy to mix up the definition of omnichannel or the difference between a data breach and fraud. Whether you’re new to payments or just need a refresher, we’ve got your back. Here are eight terms that should be in every payment pro’s vocabulary: 

Data Breach: You’ve probably heard a lot about data breaches in the news, but not everyone knows just what it takes to label a hacker’s actions this way. In short, data breaches are the payments equivalent of breaking and entering. Any event where a hacker gets access to sensitive information by breaking through security is considered a data breach. No actual theft needs to occur. 
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Encryption: An important step to keeping sensitive information away from the eyes of hackers while it’s being transmitted, encryption involves the scrambling of information as it’s making its way from the point of sale to the place where it’s ultimately processed and back again, only making it readable when it reaches its final destination and the transaction is complete. All of this is done through an ever-changing numerical “key.” 
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Fraud: Often confused with a data breach, fraud takes the idea of breaking and entering one step further. This happens when payment information isn’t just accessed, but actually used without the permission of the person or company that data belongs to. Hackers commit fraud by accessing large amounts of cardholder information and using it to make unauthorized purchases, disguised as someone else. 
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NFC: An acronym standing for Near Field Communication, if you’ve ever used Apple Pay or the just-rolled-out Android Pay, you’ve experienced the capabilities of this technology. Smartphones capable of NFC transactions contain a microchip that communicates wirelessly with an NFC-enabled payment terminal when placed nearby. It also has added security features, like the need for shoppers to authorize the payment using a passcode or fingerprint scan—making these mobile payments safer than magnetic-stripe credit card transactions. If you’ve ever gotten a push notification on your phone while walking through the mall, that’s also NFC at work. 
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Omnichannel: This is a retail concept that involves moving away from a single-channel view of the customer (in-store- or online-only). Omnichannel is all about creating a holistic customer experience that seamlessly connects all of their interactions with a brand, from the digital world to the physical one. Brands from Sephora to Nordstrom have been getting on board in some pretty creative ways. 
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P2P Payments: If you’ve ever paid a friend using Venmo, PayPal or even Facebook Messenger, you’ve made or accepted a P2P (peer-to-peer) payment. While it’s yet to be determined what the future holds for this modern money transfer format, we’re seeing some early signs of P2P going beyond our personal devices: Macy’s just partnered with PayPal to offer the service—traditionally known as a P2P payment option—at the register via an in-app QR code accessible from the apps of both Macy’s and PayPal. 
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PCI DSS: Standing for Payment Card Industry Data Security Standard and applying to all purchases made with debit or credit cards, this required set of rules are meant to create security consistency amongst merchants, banks, financial institutions and any other place that deals with sensitive cardholder information. Put simply, businesses can’t accept payment cards without PCI compliance. Once upon a time, these standards weren’t in place, MasterCard, Discover, Visa and American Express all operated under their own standards, which wasn’t exactly a recipe for safe payments. 
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Tokenization: This is the driving force behind mobile payments options like Android Pay and Apple Pay. Unlike encryption, tokenization doesn’t use a key, but it does scramble customer information. The real version of the sensitive data is kept safe locally or under the watch of a third-party service, while anything hackers access elsewhere is a fake version of the information they’re after, foiling any plans to use it.  
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