Glossary of Financial Terms, Acronyms and Initialisms


Financial transactions, merchandising and banking are full of unique terms that are sometimes not easy to understand. Here is a glossary of credit card related terms that will help demystify a little.


Term, initialism or acronym Definition
Acquirer An acquirer, or an acquiring financial institution, is a financial institution that functions as an intermediary between the merchant and credit card issuer by facilitating a merchant’s daily debit and credit card transactions. The acquiring financial institution will either approve or decline the debit or credit card purchase, and, if approved, will settle the transaction by depositing the funds into the merchant’s account (after deducting the appropriate settlement and discount fees). The acquiring financial institution then settles the transactions with the debit/credit card issuer.
Administrative block-holder An administrative block-holder is an institution that is assigned a block of IINs that are then reassigned to card issuers within that institution’s industry or geographic area.
Annual percentage rate In relation to credit cards, the annual percentage rate (APR) is the percentage of interest charged to the cardholder. It is expressed as an annual rate that refers to the actual yearly cost of funds over the term of the loan.

The APR can be:

  • Fixed, meaning that does not change throughout a specified time period and does not change with market fluctuations; or
  • Variable, meaning that the rate can change over time—a variable APR is tied to another index, such as the prime rate. While the prime rate is determined differently in different countries, it is used to set the interest rates on other financial products, such as credit cards. When this index changes (for example, when the Federal Reserve changes the prime rate), a variable APR is also likely to change, thus affecting the amount of interest charged on an account.
Balance transfer A balance transfer occurs when a customer chooses to move the outstanding balance of their credit card(s) to another credit card account. Usually this occurs when customers are looking to transfer their debt to a credit card account with a lower interest rate. There may be conditions on how much can be transferred and there is generally a fee associated with a balance transfer.
Bank Identification Number (BIN) The bank identification number (BIN) is a digital code that appears on a credit card. The BIN is used to identify the card-issuing institution, such that the card being used for a purchase can be authorized as valid. Also called the Issuer Identification Number (IIN).
Beacon score A Beacon score is a type of credit score generated from information collected by Equivax, a consumer credit reporting agency. This credit score is generated by applying a mathematical formula to calculate a person’s credit risk level. The matrix uses a number of factors from a person’s Equifax report to assign a score between 0 and 850—a person who scores below 600 is a higher credit risk, and a person who scores above 680 is a lower credit risk. The following factors are considered in the calculation of the Beacon score: payment history (including late payments, collections, judgments and bankruptcies); current debts (how much owed and how many creditors are owed to); age of accounts (the length of time accounts have been open, extent of credit history); type of credit (bank loans, credit cards, revolving credit accounts, and repayments on these); and credit enquiries (number of inquiries posted on credit file in the past year).
Billing cycle A billing cycle for a credit card is the period of time between two consecutive billing statements. Although a billing cycle is usually one month in length, it may vary in length depending on the credit card type and issuer.
Block of IINs A block of IINs is a series of tow or more IINs that are reserved in the ISO Register of Card Issuer Identification Numbers for assignment by an administrative block-holder or card scheme block-holder.
Card acceptor The card acceptor refers to the merchant who accepts the credit/debit card for the purpose of presenting the transaction data to an acquirer.
Cardholder The cardholder is someone who owns, benefits from and is authorised to use a credit card issued by the financial institution. The cardholder enters into a binding agreement (a cardholder agreement) with the card issuer.
Card issuer The card issuer is a bank, company, credit union or any other financial institution that issues credit and/or debit cards.
Card scheme block-holder A card scheme blockholder is an institution that represents a group of card issuers and provides an environment to facilitate the issuing and acceptance of the cards of that group.
Card verification value (CVV) Also referred to as the card verification code (CVC), card security code (CSC), or card identification number (CIN). The card verification value (CVV) is the security code that verifies the legitimacy of a credit card by establishing the cardholder’s identity and minimizing the risk of fraud. This security code is a three- or four-digit number located either on the back or the front of the card.
Cash advance A cash advance is a service that allows cardholders to withdraw cash or transfer money from their credit card account up to a certain limit. A cash advance fee is charged for these transactions, and the interest rate on a cash advance is much higher than the standard credit card interest rate.
Check digit The check digit of the credit card is the last digit of the credit card number. It is used to confirm the initial digits of the card number; this prevents credit card numbers from being casually invented or prevents mistakes when credit card numbers are manually entered.
Convenience checks Convenience checks are checks that are linked to a credit card account similar to checks linked to a checking account. Convenience checks can be used for purchases or cash advances, as long as the credit limit of the credit card is not exceeded. Like a cash advance, there is no grace period and interest is charged immediately (at a higher rate than charged for purchases).
Credit card A credit card is a plastic payment card issued by a financial institution (card issuer) that allow the card holder to purchase goods or services on credit. A credit card effectively allows the card holder to borrow funds at the point of sale. Card holders must pay for purchases within a certain time period in order to avoid paying interest on these purchases.
Credit limit With reference to credit cards, the credit limit is the maximum amount of credit that the card issuer will allow the cardholder to access.
Debit card A debit card is a plastic payment card issued by a financial institution (card issuer) that allows the card holder to transfer money electronically from their bank account at the point of sale. While a debit card resembles a credit card in appearance, it withdraws money directly from a bank account rather than creating a loan.
Expiration date All credit and debit cards will have an expiration date embossed, encoded or printed on them that indicates when the card is no longer useable. The expiration date is one more piece of information that can be used in fraud prevention to cross-check and verify the identity of the card holder.
FICO FICO is a type of credit score developed by the company of the same name. It is a three digit number in the range from 300 to 850 that describes a person’s credit risk. The higher the number, the lower the credit risk. FICO scores are calculated using complex formulas that incorporate income, outstanding credit, debt to income ratio, mix of credit types, and past payment behaviour.
Finance charge A finance charge is a fee charged for the use of credit or extending existing credit. Percentage-based finance charges are the most common, but they can also be charged as a flat fee. Finance charges can include transaction fees, account maintenance fees, late fees, and interest rates.
Grace period The grace period is the time period during which repayments can be made towards a credit card debt without being charged interest on the amount payable. If the grace period is exceeded, a penalty in the form of interest is charged. There is no grace period for cash advances or balance transfers as interest in charged immediately automatically.
Identification card Identification cards have specific physical characteristics and properties according to an international standard. Credit and debt cards are a type of identification card. Identification cards may be used to prove a person’s identity. Other types of identification cards can be used to establish the 100 points of identification that is, for instance, required to set up a bank account.
Individual account number (or individual account identifier) The individual account number form part of the Primary Account Number (PAN), and is the unique number assigned by each card issuer to each of their cardholders. It starts from the 7th digit of the PAN (digits 1 to 6 and 1 to 8 being the Issuer Identification Number (IIN)), and is a maximum of 12 digits (depending on the total length of the PAN). From 2017, when the IINs will be expended to an eight-digit number, the individual account number will start from the 9th digit of the PAN.
Interchange The interchange fee, also called the discount rate or swipe fee, is the fee paid by the merchant’s financial institution (the acquirer) to the customer’s financial institution (the issuer).
Interest Interest is the cost that the card issuer charges the cardholder for loaning money used to pay for purchases. Interest is charged for the time that the money remains borrowed. Interest is calculated as a percentage of the money borrowed, and is expressed as an annual percentage rate (APR).
Introductory rate The introductory rate, or introductory annual percentage rate (APR) is a low interest rate that the card issuer will offer as an incentive to apply for the credit card. Consumers should be careful to check the standard APR, as the lower introductory rate will only apply for a limited period of time (e.g. six months).
Issuer Identification Number (IIN) The Issuer Identification Number (IIN) is the first six digits of the credit card number, including the Major Industry Identifier (MII) digit. It is determined by a standardised global numbering scheme, and identifies the location of the card issuer and the institution that issued it. During 2017, the IIN will be expanded to an eight-digit number (from the current six-digits). The IIN was formerly known as the Bank Identification Number (BIN). By identifying the issuer and location, the IIN assists with the authorisation process by directing the request for authorisation to the correct institution, thus increasing the speed and safety of card validation.
Late fee A late fee is charged when a cardholder misses paying at least their minimum payment by the payment deadline. Late fees can be avoided by ensuring that at least the minimum amount is paid by the due date. Late payments may negatively affect a cardholder’s credit history, even if the outstanding balance is paid in full later.
Magnetic stripe  Some credit cards will have a magnetic stripe on the back of them that is read by swiping the card through a device that can read the data stored in the stripe. The magnetic stripe is encoded with data such as: the primary account number; full name; expiration date; and the country code. Smart cards that contain a chip do not need a magnetic stripe (as the data is contained in the chip).
Major Industry Identifier The major industry identifier (MII) is the first digit of the credit card number that represents the category of the institution or company type that issued the credit card.
Minimum finance charges If a balance remains following the payment deadline, the cardholder will be charged the greater of the calculated interest on the balance, or a minimum finance charge set by the financial institution.
Minimum payment The minimum payment is lowest amount that must be paid on a credit card statement each month to avoid penalties (such as late fees). Minimum payments are calculated as a percentage of the balance. Even if the minimum payment is made, interest is still payable on any remaining balance (after the grace period).
Overlimit Overlimit refers to a cardholder account that has exceeded its credit limit as the result of a transaction. The card issuer may decline the transaction that puts the account over the credit limit, or may charge overlimit fees.
Penalty pricing Penalty pricing is an interest rate increase that applies when payment of a credit card balance is late or other breaches of the credit card agreement have occurred.
Personal Identification Number (PIN) A personal identification number (PIN) is a type of password that is a series of digits used to verify the identity of a cardholder.
Phishing Phishing is a criminal activity where fraudulent emails are used to steal personal financial information. Criminals send out fake emails that resemble those of financial institutions inviting recipients to click on website links that direct them to fake sites (that may strongly resemble the financial institution’s real site). Any data that is entered on this site (e.g. user name, password, account details, credit card number, etc) will be transmitted to third parties who then have access to that person’s financial details and consequently can illegally access their finances. Financial institutions do not usually request financial information via email, and it is, therefore, important to verify the origins of any suspicious emails.
Post date The post date is the date when the cardholders’ purchases appear on the card issuer’s records; it may be different to the actual transaction date.
Primary Account Number The primary account number is the up to 19-digit number embossed and/or encoded on the debit/credit card. The primary account number is embossed on the front of the card, and is also encrypted in the magnetic stripe of the card.

The numbers represent the following:

  • The first 6 or 8 digits identify the card issuer (see Issuer Identification Number—IIN); this includes the Major Industry Identifier (MII), the first digit that represents the category of the institution or company type that issued the credit card.
  • The last digit is the check digit that confirms the initial digits of the card number and help to protect fraudulent use of the card.
  • The remaining digits, a maximum of 12, is the individual account number allocated to each individual cardholder.
Registration management group The Registration Management Group (RMG) governs the development and maintenance (including updates) of the ISO 20022 standard.
Routing number A routing number is a 9-digit number used in the United States that identifies the financial institution where the account is held in transactions such as direct deposits, automatic loan payments or recurring bill payments. A routing number is only needed when funds are being directly transferred to or from a bank account—it does not relate to debit or credit card transactions.
Smart card Smart cards contain a chip that is read by waving the card over a device that can read the data stored in the chip (such as the primary account number; full name; expiration date; and the country code). Smart cards that contain a chip do not need a magnetic stripe (as the data is contained in the chip).
Sponsoring authority The sponsoring authority is the body authorised to receive, process and approve application for Issuer Identification Numbers (IINs) submitted according to the requirements of the regulatory system (ISO/IEC 7812-1).