Payments 101: A glossary
ACH: Automated clearing house (ACH) is an electronic network to process transactions in the U.S. Transactions are usually low value payments between financial institutions and can be direct debit or credit. The system is designed for numerous transactions and charges low fees to entice use.
Alternative payments/local payments: Payment types that are used as an alternative to credit card transactions and eliminate card associations, such as debit cards, prepaid or stored-value cards, direct debit, bank transfers, and mobile payments.
Bacs payments: Bacs stands for Bankers Automated Clearing Services and is the most common bank-to-bank transfer in the UK. It refers to an electronic payment system that allows payments from one bank account to another. The two two main types of payments are direct debit and direct credit.
B2B payments: A form of transaction between two or more businesses. These payments could include payments made by a manufacturer to a wholesaler or a retail business to a rental company.
Contactless payments: A secure method of transaction that supports mobile devices and payment terminals that are equipped with radio frequency identification (RFID) or near-field communication technologies (NFC).
eCheck: Is a form of online payment designed to fulfill the same function as a paper check. The money is electronically withdrawn from the payer’s account, transferred over the ACH network, and deposited into the recipient’s account.
Electronic bill payment (ePay): An alternative method of paper checks to pay bills, where the consumer or business can use computers, telephones, smartphones or ATMs to send electronic instructions to a bank or bill-payment provider to withdraw funds from their accounts and pay merchants.
EFT: Electronic funds transfer (EFT) can vary by country. For Canadians, it is used on an everyday basis, as it is the backbone of the Canadian payment industry. EFT verifies that funds are in the bank account before withdrawing them electronically. EFTs include direct-debit transactions, direct deposits, and online bill pay services. In the U.S. EFT is a broad term that includes several types of payments such as wire transfers and ACH.
Mass payments: A method of paying multiple recipients online simultaneously.
Mobile payments: The purchase of goods and services through the use of a mobile device.
In-App payments: The purchase of goods and services though a mobile application.
Online payments: The purchase of goods or services through the use of internet, computer networks and digital stored value systems.
P2P payments: A payment method that allows consumers to transfer funds from their credit card or bank account directly to another individual’s account using a mobile device or the internet.
QR (Quick Response) code mobile payments: A two-dimensional bar code that is found on a customer’s mobile device that can be scanned by the merchant’s optical scanner that reads the code and facilitates payments.
Wire transfer: A method of electronic funds being transferred from one person or entity to another. Most often used to transfer funds from one institution to another through a secure system. Domestic transfers in the U.S. typically happen through Fedwire, while wire payments in Canada use LVTS (Large Value Transfer System). International wire transfers use the SWIFT messaging system, while money moves through the correspondent banking network.