Payment Systems
















 Glossary:

Access Code Includes pin, password or code, which provides a means of access to a Consumer’s Account for the purpose of initiating an Electronic Fund Transfer.
Acquirer /Acquiring Bank Is the entity that holds deposit accounts for card acceptors/ merchants and to which the card acceptors/ merchants transmit the data relating to the transaction. The acquirer is responsible for the collection of transaction information and settlement with the acceptor/ issuer.
ATM Only Card Proprietary Card that can only be used at ATM for cash withdrawal and other transaction.
Card-Not-Present (CNP) Transaction made when a consumer is not face-to face with the retailer or service provider – for example shopping online, by mail, or by phone.
Cash Card Card that is used for cash withdrawal only at ATM or Cash Dispenser.
Cheque A Negotiable instrument written, dated and signed instrument that contains an unconditional order from the drawer that directs a Bank/ MFB to pay a definite sum of money to a payee. A check is a bill of exchange where the drawee is a Bank/ MFB.
Clearing Clearing is the process of transmitting, reconciling and, in some cases, confirming transfer orders prior to settlement, potentially including the netting of orders and the establishment of final positions for settlement.

Clearing House Means corporation, company, association, partnership, agency or other entity that provides clearing or settlement services for a Payment System.
Closed loop Prepaid Card Means a prepaid cards that: I. Are not issued by the Bank. II. Are issued by a merchant (such as fuel cards), card program sponsor or a service provider and are generally distributed by the merchant’s retail outlets. III. Are acceptable at the issuing merchant/service provider’s sites only. IV. Do not necessarily collect the identity (CNIC) of the purchaser or recipient.

Consumer Means any person who or which avails the facility of Electronic Fund Transfer.

Convenience Amount The amount in figures field on a cheque that shows the amount payable. (i.e. the convenience amount rectangle.

Counterfeit / Skimming Illegally altering a valid card where the information is copied or skimmed directly from card’s magnetic stripe.

Credit Cards Card indicating that the holder has been granted a line of credit. It enables the holder to make purchases and/or withdraw cash up to a prearranged ceiling; the credit granted can be settled in full by the end of a specified period or can be settled in part, with the balance taken as extended credit. Interest is charged on the amount of any extended credit and the holder is sometimes charged an annual fee.

Debit Cards Card enabling the holder to have his purchase directly charged to funds on his account at a deposit-taking institution (may sometimes be combined with another function e.g. that of a cash card or cheque guarantee card).

Debit Instrument Means a Card, Access Code, or other device other than a cheque, draft or similar paper instrument, by the use of which a person may initiate an Electronic Fund Transfer.

Demand Draft A remotely created instrument used to make payment transfer from one Bank/ MFB account to another account or from one Bank/ MFB to another Bank/ MFB. These are the instruments issued by Bank/ MFB after receipt of payment either in cash or from account of customer.

Designated Areas of Interest (AOI) An imaginary rectangular clear area 0.64 cm (0.25") around each of the Data Elements specified on the face of the Cheque, required to optimize image character recognition.
Designated Payment Instrument Means a Payment Instrument designated by the State Bank as Payment Instrument under section 12 of Payment Systems & Electronic Fund Transfer Act 2007.

Designated Payment System Means a Payment System designated by the State Bank under section 4 of Payment Systems & Electronic Fund Transfer Act 2007.

Dividend warrant Payment of company dividend either using dividend voucher. Bank/ MFB report transfer through Account.

E-commerce Buying and selling of goods and services over internet.

Electronic Fund Transfer Means any transfer of funds, other than a transaction originated by cheque, draft or similar paper instrument, which is initiated through an Electronic Terminal, telephonic instrument, point-of -sale Terminal, stored value card Terminal, debit card, ATM, computer magnetic tape or any other electronic device so as to order, instruct, or authorize a Financial Institution to debit or credit an Account.

Electronic Money Institution Means an undertaking that issues means of payment in the form of Electronic Money and is duly authorized to do so.

Electronic Terminal Means an electronic device, operated by a consumer, through which a consumer may initiate an Electronic Fund Transfer.

Encryption Is a process of encoding information or data into a form called cipher text, so that only authorized parties can read it.

Financial Market Infrastructure Is a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions.

Interbank Fund Transfer (IBFT) Transfer of funds from one Bank/ MFB to another Bank/ MFB. The transactions can be executed through ATMs/Internet/Call center/Mobile Phone Banking. 

International Bank Account Number (IBAN) Is an international standard for identifying bank accounts across national borders with a minimal of risk of propagating transcription errors.

Intra Bank Fund Transfers (Within Bank/ MFB Fund Transfer) Transfer from one account to another account within the same Bank/ MFB; branches may be different.

Intrusion Detection System (IDS) Means network security applications\appliances which monitor events occurring in a computer system or network in order to identify violations, malicious activity and suspicious patterns that may indicate a network or system attack from someone attempting to break into or compromise a system.

Intrusion Prevention System (IPS) Is an extension of IDS, which in addition to performing intrusion detection also attempts to stop possible incidents.

Issuer Is the bank which issues payment cards (debit/ credit/ prepaid cards etc) to accountholders/ customers.

Least Privilege Principle The principle that security architecture should be designed in a way that each entity is granted the minimum system resources and authorizations needed by the entity to perform its functions.

MICR Magnetic Ink Character Recognition (MICR) Line also called as MICR line must consist of Payment Order/Demand Draft number, bank and currency code. The MICR line should be according to E-13 B font format across left bottom side.

Netting Means the conversion into one net claim or one net obligation of claims and obligations resulting from transfer orders which a participant either issues to, or receives from, one or more other participants with the result that only a net claim can be demanded or a net obligation be owed.

Off Site ATM ATM installed on places other than Branches i.e. Installed at Business/Public places.

Off Us Transaction between Payer and Payee of different Bank/ MFB via different payment channels.

On Us Transaction between Payer and Payee of same Bank/ MFB via different payment channels.

Open Loop Prepaid Card Means a prepaid card that: I. Is issued by a Bank on a prepaid basis in electronic or physical form to a customer in a specified amount, may be reloadable in exchange for payment; and II. Can be redeemed at multiple, unaffiliated merchants, or usable at different Alternate Delivery Channels like ATMs, Internet etc.

PA DSS Is the global security standard created by the Payment Card Industry Security Standards Council (PCI SSC).

Participant Means a party to an arrangement that establishes a Payment System.

Pay order A negotiable instrument which instructs a payer bank to pay a certain sum to a third party.

Payee Person to whom money is being paid or is due, especially the person to whom a cheque or money order is payable.

Payer Person named as responsible for the payment of a check, money order, or other financial paper when it is redeemed.

Payment Card Any card including an ATM card, debit card, credit card, prepaid card or stored value card, used by a Consumer to affect an electronic transaction.

Payment Instrument means any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services or to otherwise make payment; but excludes Payment Instruments prescribed in Negotiable Instrument Act, 1881(XXVI of 1881).

Payment Scheme Are a set of interbank rules, practices and standards necessary for the functioning of payment services and may include card schemes comprising technical and commercial arrangements, setups to serve one or more brands of card which provides the organizational, legal and operational framework necessary for the functioning of the services marketed by those brands or internet based E-Commerce schemes.

Payment System Inter-alia means a system relating to payment instruments, or transfer, clearing, payment settlement, supervision, regulation or infrastructure thereof and includes clearing, settlement or transfer of Book Entry Government Securities.

Payment System Operator and Payment Service Provider (PSO and PSP) Means such Authorized Party that is a company registered under Companies Ordinance 1984 and is engaged in operating and/or providing Payment Systems related services like electronic payment gateway, payment scheme, clearing house, ATM Switch, POS Gateway, E-Commerce Gateway etc. acting as an intermediary for multilateral routing, switching and processing of payment transactions.

Payroll Card Is a prepaid card issued by a Bank on behalf of an employer for electronic transfer of an employee’s salary, wage or other compensations on a recurring basis.

PCI DSS Is a global data security standard adopted by Payment Card brands that process, store or transmit cardholder data and/or sensitive authentication data. Payment Systems Department Regulations for Payment Card Security State Bank of Pakistan.

Point of Sales(POS) POS Machines -where retails transactions are carried by swiping the Plastic Cards such as at a service desk of sales points at restaurants, lodging, entertainment, and museums etc.

POS Terminal Is a device which enables payments at a POS location.

Preauthorized Electronic Fund Transfer Means an Electronic Fund Transfer Authorized in advance.

Prepaid Card A card on which value is stored, and for which the holder has paid the issuer in advance.

Real Time Gross Settlement System Means a Payment System which can effect final settlement of funds, payment obligations and Book Entry Government Securities and instruments on a continuous basis during such operating hours of a processing day as the State Bank may determine on a transaction-by-transaction basis.

Security Breach Is any incident that results in unauthorized access of systems, applications, data, services, networks and/or devices by bypassing their underlying security mechanisms.

Security Controls Are formal arrangements made to avoid, counteract and minimize security risks identified by the bank in its Security Risk Assessment exercise. These include preventive, detective and corrective arrangements to mitigate security risks to protect bank’s assets.

Security Framework: Means documentation of management’s decision that describes the detailed arrangements made for the protection of bank’s customers, IT and communication resources. Security framework contains operational, administrative, technical and physical safeguards to meet the security objectives outlined by the bank.

Security Objectives Series of statements that describe bank’s intent to safeguard itself from internal or external threats.

Security Risk Assessment  Is the process of identifying, estimating and prioritizing internet security risks to which bank’s assets (customers, IT and communication resources) are exposed.

Social Transfer Card Is a prepaid card issued by a Bank under a formal agreement with an authorised government entity for a specific purpose of disbursing funds to assist the underserved segment of the country.

Standing Instructions It is an instruction an account holder given to the Bank/ MFB to pay a fixed amount at regular intervals to another account, utility bill company or any other such purpose.

Supplementary Cards Cards issued with the consent of Basic Cardholder to close family members.

Systemic Risk means the risk that relates to the inability of a participant to meet its obligations in the Payment System as they become due or a disruption to the Payment System that could, for whatever reason, cause other participants in the Payment System to be unable to meet their obligations as they become due.

Teller An employee in a bank or savings institution who receives and pays out money.

Third  Party -ATM ATM installed by a 3rd Party Service Provider that provides service to the Bank/ MFB.

Threats Are circumstances/events with the potential to adversely impact the operations of the bank and its assets.

Traceability Means the ability to discover information related to an event happened in a system by chronologically recording all related events in an unbroken manner to uniquely identify parties involved in a verifiable way.

Two dimensional  (2D) Bar Code Is a graphical image that stores information both horizontally and vertically. 2D Bar code can store information up to 7,089 characters.

Two Factor Authentication  A combination of two different factors of authentication among three known factors; something the user knows, something the user has and something the user is.

Vulnerabilities Are the weaknesses in a system, or control gaps, if exploited, could result in the unauthorized disclosure, misuse, alteration, or destruction of information or information systems.


       
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