Glossary


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A

ABA (American Bankers Association)
National trade and professional association serving the entire banking community, from small community banks to large bank holding companies.
ABA Routing Number
A unique nine-digit number assigned to each banking institution, used to identify the bank and direct ACH debits and credits. The ABA routing number is usually found at the bottom of a personal or business check.
ACH
Automated Clearing House – group of processing institutions linked by a computer network to process electronic payment transactions between financial institutions.
Acquirer, Acquiring Bank
A financial institution that is a member of Visa and/or MasterCard and maintains the merchant credit card processing relationship. The acquirer receives all transactions from the merchant to be distributed to the issuing banks.
Acquittal
A jury verdict that a criminal defendant is not guilty, or the finding of a judge that the evidence is insufficient to support a conviction.
Active judge
A judge in the full-time service of the court. Compare to senior judge.
Address Verification Services (AVS)
When a card is not swiped, the address must be verified to combat possible fraud. This feature is used primarily by mail or telephone order merchants but can be used by retail merchants when a card cannot be swiped. A prompt appears on the terminal asking the merchant to enter at least the Zip Code of the Cardholder so that the address can be verified. Complete AVS is a service that verifies the Cardholder’s billing address.
Adjustment
A debit or credit to a Cardholder or Seller account to correct a transaction error.
Altered Card
A card on which the original embossed or encoded information has been altered for fraudulent purposes.
American Express
A company that specializes in the issuance of Travel and Entertainment (T&E) cards. American Express services the cards it issues, serving as its own transaction processor with its own processing network.
API
Advanced Programming Interface – APIs allow users to program to a pre-constructed interface, instead of individually programming a device or piece of software.
Approval Response
An affirmative reply following a transaction authorization request.
Arbitration
A procedure used by an acquirer on behalf of the merchant to resolve a chargeback-related dispute with a card issuer.
ASP
Application Service Provider – an organization that hosts software applications on its own servers within its own facilities. Customers access the application via private lines or the Internet. Also called a “commercial service provider.”
Associations
Any entity formed to administer and promote credit cards, including but not limited to MasterCard International®, VISA®, U.S.A., or VISA International®, that are licensing and regulatory agencies for credit card activities.
ATM
Automated Teller Machine – an unattended computer terminal that performs basic teller functions when a cardholder inserts a card into the ATM and enters the correct PIN. Typical functions include dispensing cash, accepting deposits and loan payments, and accepting account transfers and inquiries. Also used by credit cardholders for receiving cash advances.
ATM/Debit Card
The plastic card used in an ATM for deposits, cash withdrawals, account transfers and other related functions. A PIN must be entered to withdraw cash and access account functions. An ATM card may also be used to make a debit purchase if the merchant has a PIN pad to accept the key entry.
Authorization
The process by which a transaction is approved by the issuer, or by Visa/MasterCard on behalf of the issuer. Permission is given to (or denied) the merchant, via the acquirer, to accept a specific transaction from the cardholder account. An authorization indicates only that the card is valid and that sufficient funds are available on the cardholder’s credit limit at the time the request is made.
Authorization Approval Code
The numerical code designated by the issuer, assigned to a sales transaction as verification that the sale is authorized.
Authorization Code
The code sent by the issuing Bank in response to an authorization request to indicate that a credit card can be accepted as payment.
Authorization Fee
A fee charged by Credit Card Processor for every response a merchant receives through a terminal.
Authorization Only (Auth Only)
Used to reserve an amount against a credit card’s available credit limit for intended purchases. Authorization Only is most frequently used in the lodging (check-in), restaurant (tab) and car rental (pick-up) industries, where an approval is received for an estimated amount prior to the finalization of the charge amount.
Authorization Request
A merchant’s request for an authorization to accept a cardholder’s sales transaction. An authorization request can occur electronically via a credit card processing terminal or via telephone as a voice authorization.
Authorization response
The reply to a request for approval on a transaction.
Authorization response code
A code returned in the authorization response to indicate approval of a transaction. The code is recorded on the transition receipt as proof of Authorization.
Auto Representment
Automatically sending information to resolve a chargeback on a merchant’s behalf without the need for merchant intervention.
Average Monthly Volume
Total amount of sales for the year divided by 12 months.
Average Ticket
Total net merchant sales divided by the number of transactions.

B

B2B
Business to Business – refers to one business communicating with or selling to another.
Back-End Network
The settlement provider responsible for finalizing transactions, routing payment to a merchant’s account and generating statements.
Back-end Processor
A data processing company that contracts with Acquirers to provide communication and processing systems that connect with the interchange systems for clearing and settlement services on behalf of those Acquirers. (In some cases the Acquirer may act as its own back-end processor.)
BAI (Bank Administration Institute)
Professional institute devoted to improving the competitive position of financial services companies through education and research.
Bail
The release, prior to trial, of a person accused of a crime, under specified conditions designed to assure that person’s appearance in court when required. Also can refer to the amount of bond money posted as a financial condition of pretrial release.
Balance Sheet
A financial statement that lists assets, liabilities and net worth as of a specific date.
Bankcard
A card issued by a banking institution with a MasterCard or Visa brand.
Bankruptcy
A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).
Batch
A group of approved credit card transactions, usually accumulated during one business day.
Batch Deposit
The electronic depositing of a batch file transmitted to the transaction processor for settlement.
Batch Processing
The authorization of transactions offline when immediate approval is not required. Transactions are collected in a batch and sent as one transmission for authorization and/or settlement. Batch processing is generally used with mail/telephone order transactions.
Baud Rate
The speed at which a PC or terminal modem transmits data through the telephone line.
BIN (Bank Identification Number)
The 6-digit range of numbers assigned by the Federal Bureau of Standards and used by card companies to identify their financial transactions. The Discover® range begins with ‘6’ (6xxxxx), the MasterCard® range begins with ‘5’ (5xxxxx), and the VISA® range begins with ‘4’ (4xxxxx).
Bisynchronous Communication
A communication method that transmits continuously with no start and stop between the information bytes.
Browser
A software application used to locate and display web pages.
Business Card
A payment card typically issued to and used by owners of small businesses.

C

Call Center
An authorization request response displayed on the credit card terminal screen, generated by the issuer or through stand-in processing. The merchant must then call for a voice authorization. If an approval is given, the user must enter the approval code manually into the POS device as a “force” or “post-authorization.”
Capital offense
A crime punishable by death.
Capture
Receiving and storing transaction data at the processor’s host computer, to be submitted later for processing and payment.
Card Association
Any entity whose members issue credit or debit cards or acquire card payment transactions on behalf of their customers.
Card not present transactions
Transactions in which the cardholder and the card are present.
Card Present
A type of transaction in which the card is present and is swiped through an electronic device that reads the contents of the magnetic stripe on the back of the card.
Card Reader
Input device on a card terminal that translates the information stored on the magnetic stripe on the back of a card.
Card-Not-Present
A type of card transaction in which the card is not present at the point of sale for the magnetic stripe to be read. These are considered higher risk transactions.
Cardholder
The person to whom a payment card is issued, or an additional person authorized by the original cardholder to use the card.
Cardholder Account Number
A sequence of numbers assigned specifically to a cardholder account that also identifies the issuer and type of payment card. The cardholder account number is the embossed number imprinted on the payment card.
Cardholder-Initiated Chargeback
A chargeback that results when a cardholder contacts the card issuer and refuses to accept a charge appearing on a monthly billing statement. A cardholder has 90 days to initiate a chargeback.
Caseload
The number of cases handled by a judge or a court.
Cash Advance
A transaction in which a cardholder obtains cash in person at the branch of a member financial institution or ATM. This is the only method of receiving cash from a credit card that is approved by the bankcard associations.
CCD
A credit or debit entry, initiated by a merchant, to consolidate funds of that organization, from its branches, franchises or agents, or from other organizations; or to fund the accounts of its branches, franchises or agents, or of another organization.
CDPD
Cellular Digital Packet Data – a method of sending data through cellular networks. CDPD is used with wireless credit card terminals to transmit transactions and deposits in mobile environments.
CHAPS (Clearing House Automated Payment System)
A U.K.-based payment system for high-value, same-day settlement of transactions
Chargeback
When a credit card transaction is disputed (either at the request of the Cardholder or by a card Issuer), the dispute is handled through a chargeback. A chargeback will cause the amount of the original sale and a chargeback fee to be deducted from the checking or savings account you provided.
Chargeback Fee
The amount assessed by the acquirer for processing chargebacks.
Chargeback Reason Code
A numerical code which identifies the specific reason for a chargeback. MasterCard and Visa each have their own chargeback codes.
Check Card
A bankcard that can be used with a PIN at an ATM or without a PIN at the point of sale, also known as an offline debit card. When used at the point of sale, the transaction is processed through interchange as a credit card transaction with the funds debited from the cardholder’s checking account.
Check Conversion
The conversion of a check to an electronic debit or image of the check. This check image serves as the official record.
Check Digit Verification (MOD-10 check)
A check digit is the last position of a card account number, generated from an algorithm performed on a primary card account number. Verification of this number is referred to as a MOD-10 check and is used to validate a credit card number.
Check Guarantee
A service that guarantees check payment to a merchant up to a specified amount. However, merchants are required to perform correct authorization procedures.
Check Reader
A device that reads the numbers encrypted on the bottom of most checks.
Check Verification
A service that provides merchants with some security against bad checks. The person writing the check is matched against a national negative file database to flag outstanding or bad checks on record from other members of this service.
CHIPS
An independent message switching system that permits international financial transactions to be settled among New York banks. CHIPS is operated by the New York Clearing House Association.
CID
Card Identification Number/Card Identifier – An American Express and Discover verification process that utilizes a non-embossed three- or four-digit number printed when authorizing credit card transactions where the physical card is not present.
Ciphertext
The encrypted text of a message, which may be decrypted only by someone who has the correct key.
Clearing
The transfer of data between Issuers and Acquirers
Close
Sending a merchant’s completed transactions to the host for processing. (See also “Settlement”)
Closing
The sending through the interchange of the credit card transactions accumulated by the merchant in the terminal or Host so the merchant can be paid for them.
Code 10 Authorization
If the POS device reads “Lost or Stolen Card,” or “Pick Up Card” or a similar message, the merchant should call the authorization center for a Code 10 Authorization. The operator will ask questions to determine if the transaction is valid.
Commercial Cards
Formal name for the following three types of cards:
Corporate Card; usually issued to the employees of a large corporation where the corporation assumes all liability for the card’s usage.
Purchasing Card; issued to corporations. It allows the corporation numerous parameters to control daily and monthly spending limits, total credit limits and where the card may be used. Many employees may be issued the same card number.
Business Card; similar to the Corporate Card, but issued to a business with fewer employees. Each employee is responsible for his or her purchases.
Commercial Paper (CP)
Short-term, unsecured promissory notes issued to finance short-term capital needs with a maturity of 270 days or less
Compliance
Compliance to the Visa and MasterCard regulatory bylaws.
Also, a method of resolving a dispute between members if no chargeback reason code applies. The challenging member must prove financial loss due to a violation of MasterCard or Visa rules by the other member.
Control Number
Number that uniquely identifies a retrieval request or chargeback.
Counterfeit Card
A plastic card which has been fraudulently printed, embossed or encoded to appear to be a genuine bankcard, but which has not been issued by a Visa or MasterCard member. It could also be a card which was originally issued by a member, but was subsequently altered without the issuer’s knowledge or consent.
Credit
A refund or price adjustment given for a previous purchase.
Credit Card
A plastic card with a credit limit used to purchase goods and services and to obtain cash advances on credit. The cardholder is then billed by the issuer for repayment of the credit extended.
Credit Rating
A current opinion delivered from a rating agency of the creditworthiness of an obligor with respect to a specific financial obligation.
Credit Slip
A form stating a refund or price adjustment will be credited to a cardholder account. Also referred to as a credit voucher or credit draft.
Credit/Pending Settlement
Transactions of this status have been entered as credits, but have not yet been submitted for settlement. These transactions will remain in this unsettled state until they are submitted for settlement. Once a credit has been settled, its status changes to Credited.
Cryptography
The process of protecting information by transforming it into an unreadable format. The information is encrypted using a “key” that makes the data unreadable. It is later decrypted, making the information readable again.
CSP
Commerce Service Provider – an organization that hosts commerce software applications on its own servers within its own facilities.
CVC2
Card Validation Code – MasterCard term for the three-digit code printed next to the card number in the signature panel and used as part of the authorization process. For a list of CVC2 response codes, click here.
CVV2
Card Verification Value – Visa term for the three-digit code printed next to the card number in the signature panel and used as part of the authorization process. For a list of CVV2 response codes, click here.
CVV2/CVC2
CVV2/CVC2 is the three-digit value printed on the signature panel on the bank of cards immediately following the card account number. The 3-digit value helps validate that the cardholder has a card in his/her possession, and the card account is legitimate. A paper or electronic representation of credit that is issued to a Cardholder on a prior credit card sale.

D

Data Capture
The collection, formatting, and storage of information in computer memory.
Data Encryption
The scrambling of data so only the intended users can read and understand the encrypted information.
DBA
Doing Business As – the name a business uses to operate.
DDA
Demand Deposit Account – a checking account.
Debit Card
A bankcard used to purchase goods and services and to obtain cash, which debits the cardholder’s personal checking account. During online debit transactions, the cardholder must enter a PIN. Learn more…
Debit Switch
A portal that transmits debit data between gateway banks and debit card issuers – also referred to as “Debit Network.” Only financial institutions may be members of debit switches.
Decline
A response from the card issuer denying the use of the card for the attempted transaction. If a request for approval is declined, the merchant must ask the cardholder for another form of payment.
Demand Deposit Account (DDA)
The bank checking account to which the merchant’s deposits are made or funds debited
Dial-Up Terminal
An authorization terminal that uses a telephone line to communicate with the authorization center.
Digital Certificate
An encrypted attachment to an electronic message, used for security purposes. The most common use of a digital certificate is to verify that a user sending a message is who he or she claims to be. The receiver is also provided with a way to encode a reply.
DIP Switches
Dual In-Line Package Switches – a series of connected switches that determine the proper configuration for a payment card terminal printer.
Direct Response
Term used to describe a merchant processing primarily non-face-to-face or card-not-present transactions.
Discount Rate
A discount rate is a fee associated with collecting, assessing, approving, processing, and settling credit card transactions. This fees is often a percentage of the transaction value.
Display
The backlit panel on a payment card device that shows characters on the screen.
Duality
The membership of a financial institution in both MasterCard and Visa associations.
DUKPT
Derived Unique Key Per Transaction – a method of PIN pad encryption.

E

E-Commerce
Electronic Commerce – the sale and purchase of goods or services over the Internet.
EBT
Electronic Benefits Transfer – the automation of government benefits through electronic authorization, data capture and settlement processes. Plastic cards with magnetic stripes are used, eliminating paper benefits and coupon distribution. Learn more… (PDF, 384KB)
ECA/ECP
Electronic Check Acceptance/ Electronic Check Processing – process that converts a paper check into an electronic check at the point of sale. The check is electronically processed through the ACH network. Learn more…
ECR
Electronic Cash Register – a cash register that also emulates a point-of-sale terminal for processing credit card transactions.
EDC
Electronic Draft Capture – the use of a point-of-sale device to authorize and settle credit card transactions.
EFT
Electronic Funds Transfer – an electronic system that automatically moves funds, e.g., an ATM withdrawal or pay-by-phone transaction.
EFT (Electronic Funds Transfer)
The movement of funds by non-paper means (i.e. electronically), usually through a payment system such as the ACH network or Fedwire.
Electronic Draft Capture (EDC)
Sending the information about each credit card transaction to the issuing Bank electronically through the point of sale terminal.
Encryption
Method of scrambling data to protect a cardholder’s personal information.
Entitlement
License or permission to accept a particular type of payment card or other payment vehicle.
EPROM
Erasable Programmable Read Only Memory – industry-initiated standards used to identify terminal types and components.
Exceeded Timeliness
A transaction that is deposited too late to qualify for the best interchange rate.
Expiration Date
The embossed date on a bankcard. After that date, the card becomes invalid and should no longer be accepted.

F

Factoring
When a legitimate merchant processes another merchant’s transactions in return for payment. This practice is forbidden by the associations.
Fedwire
The same-day value electronic funds transfer system operated in the U.S. by the Fed.
Fees
Fees for screening and processing online payments may include, but are not limited to, costs for the following:
Financial Institution
Any organization in the business of moving, investing or lending money, dealing in financial instruments, or providing financial services. This includes commercial banks, thrifts, federal and state savings banks, saving and loan associations, and credit unions.
Fixed Rate
An interest rate on a security that does not change for the remaining life of the security.
Fleet Card
Payment card designed mainly for fueling, maintenance and repairs of corporate motor vehicles. Fleet cards are normally used to provide specialized reporting.
Floating Rate
An interest rate, sometimes referred to as a “variable rate,” on a security that changes at intervals according to market conditions or a predetermined index or formula.
Folio
A number assigned by a lodging merchant for tracking a guest’s charges.
Force
The process by which a voice-authorized transaction is key-entered to be settled electronically with a batch of transactions. Also known as a post-auth.
Frame Relay
A TCP/IP link for data that has high transmission speeds, low network delay,high connectivity and efficient bandwidth use. Learn more…
Fraud Investigation
The process of identifying suspicious merchant or cardholder activity.
Front-End Network
Network provider responsible for authorizing and capturing transactions and forwarding the information to the back-end network.
FTP
File Transfer Protocol – a protocol used to transfer files over a TCP/IP network (Internet, UNIX, etc.).
FX (Foreign Exchange Rate)
The equivalent number of units of one currency per unit of a different currency.

G

Gateway
Manages the electronic connection between consumers and their financial institutions and transmits data.
Gift Card
A reusable, stored-value card that enables merchants to have an electronic alternative to paper gift certificates.
Good Faith
An attempt by a card association member to resolve a dispute with another member in writing. A good-faith attempt at resolution must be made before filing a compliance case.

H

Hard Decline
A declined authorization attempt resulting from a lost or stolen card, pick-up card, etc. A Code 10 call should be made by the merchant to the authorization center.
HCS
Host Capture System – a transaction is transmitted with an authorization request to the host computer at the front end, the information is captured at the host, then sent back to the POS device. Since the information is already stored at the host, it can be settled without the merchant performing a settlement function.
Hologram
A laser-created photograph that uses a three-dimensional image that is difficult to duplicate. Used as an anti-counterfeiting measure on many payment cards.

I

Idle Prompt
The standard display on a payment card terminal waiting to process the next transaction.
Imprint
When a credit card cannot swiped through a terminal, it is necessary to obtain an emboss of the card by using a manual imprinter.
Imprinter
A device used to imprint embossed card information onto a sales draft for payment card transactions. An imprinter is used if the card is present and the POS device cannot read the contents of the magnetic stripe.
Interac
National debit card network in Canada.
Interchange
The exchange of transaction data between acquiring and issuing institutions
Interchange Fees
Fees generally collected from Acquirers on the value of their card sales and paid to Issuers.
Interchange Network
An electronic network maintained by Discover®, MasterCard®, American Express, or VISA® that exchanges data relating to the value of card sales and credits among Issuers and Acquirers.
Interest Rate SWAP Contract
A contract entered into by an issuer with a swap provider to exchange periodic interest payments. For example, one party agrees to make payments to the other based upon a fixed rate of interest in exchange for payments based upon a floating rate. Interest rate swap contracts are used as hedges against interest rate risk or to provide fixed debt service payments to an issuer or dependent on a specified revenue stream for payment of such debt. Certain regulatory requirements mandate these contracts to be marked-to-market.
ISDN
Integrated Services Digital Network – a digital phone service link capable of supporting up to three types of communication devices simultaneously.
ISP
Internet Service Provider – an organization that provides access to the Internet.
Issuer
Any Discover®, MasterCard® American Express or VISA® member, or a commercial organization that establishes and maintains customer credit lines that are accessed through the use of a card. (Public and private companies and financial institutions that offer card-accessed lines of credit to consumers and businesses.)

L

Leased Line
A dedicated telecom connection with either point-to-point or multi-point configuration.
Level I Data
Level I purchasing card data includes the same information captured during a traditional credit card purchase transaction. This includes: total purchase amount, date, merchant category code and supplier/retailer name.
Level II Data
Level II purchasing card data includes the same information captured at Level I, plus the following: sales tax amount, customer’s accounting code, merchant’s tax ID number, applicable minority- and women-owned business status, and sales outlet zip code.
Level III Data
Level III purchasing card data includes the same information captured at Levels I and II, plus the following: quantities, product codes, product descriptions, ship to zip, freight amount, duty amount, order/ticket number, unit of measure, extended item amount, discount indicator, discount amount, net/gross indicator, tax rate applied, tax type applied, debit or credit indicator, and alternate tax identifier.
LIBOR
The benchmark used by banks, securities houses and investors to gauge the cost of unsecured borrowing in the money markets. It is calculated each day by asking a panel of major banks what it would cost them to borrow funds for various periods of time and in various currencies, and then creating an average of the individual bank’s figures.
Line of Credit
The amount of credit a lender will extend to a borrower over a specified period of time.
LOC (Letter of Credit)
A document issued by a bank guaranteeing the payment of a customer’s draft up to a stated amount for a specific period, provided that specified terms and conditions are met.
Lockbox
A collection system in which a bank or a third party receives, processes and deposits a company’s mail receipts. Also known as a lockbox processor.

M

Magnetic Stripe
A panel located on the back of a payment card containing magnetically encoded cardholder account information.
Magnetic Stripe Reader
A point-of-sale device that reads the encoded information from the magnetic stripe when the card is passed through the reader. Readers may read Track Two, which contains the cardholder account number and expiration date, or both Track Two and Track One, which contains the cardholder name.
Magnetic stripe reading
When the credit card is swiped through the terminal to record the card information. Obtaining a magnetic strip reading proves the card’s presence at the time of a transaction.
Mark-To-Market
A process whereby the carrying value of a security is adjusted to reflect its current market value. Certain regulatory requirements mandate that issuers of these securities carry positions at prices that reflect current market values.
MasterCard International Incorporated
A member-owned international bankcard association, governed by a board of directors, which licenses members to issue cards or accept merchant drafts under the MasterCard Program. MasterCard owns and operates its own international processing network.
MasterCard®
A registered mark for MasterCard International, Inc.
MATCH
A shared database maintained by the Card Associations that lists all Sellers terminated for cause by Acquirers.
MCC or MCC Codes
Special numbers assigned by the Card Associations to Seller types for identification and tracking purposes. MasterCard® uses MCC (Seller Category Code), while VISA® uses SIC (Standard Industry Codes).
Media
The documentation of monetary transactions (i.e., sales drafts, credit slips, computer printouts, etc.).
Media Retrieval Requests
Media retrieval is the process of obtaining paper documents from a centralized location. There are two types of media retrieval requests: 1) requests for sales records from cardholders, and 2) requests for documentation in defense of a chargeback from card issuers.
Member
A financial institution that is a member of Visa and/or MasterCard. A member is licensed to issue cards to cardholders (issuer) and/or accepts merchant drafts (acquirer).
Merchant
Store owner or seller of products.
Merchant Agreement
The written contract between the merchant and acquirer that details their respective rights, responsibilities and warranties.
Merchant Bank
See Acquirer.
Merchant Discount
The fee an acquiring member charges the merchant to cover the costs of providing deposit credit and handling credit card sales transactions. See Discount Rate.
Merchant File
A file used by the Acquirer to list pertinent information on its merchants.
Merchant Identification (MID) Number
Each merchant is assigned a unique identification number that is used in all Processing systems to locate information concerning the merchants and their accounts.
Merchant Processing Agreement (MPA)
A signed contract between the merchant and the credit card processor that outlines the responsibilities of the processor and the merchant in the credit card transaction process.
Merchant Qualification Standards
The minimum standards established by MasterCard and VISA for merchant acceptance that requires the merchant to be financially responsible and of good repute.
MICR Number
Magnetic Ink Character Recognition – the bank routing and transit, checking account number and check number encoded at the bottom of a check that can be used to authorize the check.
MID
Merchant IDentification Number – The identification number assigned to a merchant by the acquirer.
Minimum Discount Fee
The minimum discount fee a merchant agrees to pay each month based on his or her expected sales volume. The Credit Card Processor will charge the merchant the actual amount of fees generated or the minimum discount fee, whichever is greater.
MMD
A high-grade municipal bond index. The index serves as a benchmark for fixed rate tax-exempt bonds.
MO/TO
Mail Order/ Telephone Order
MOP
Method Of Payment – the way a merchant chooses to accept payment for products or services. Examples include: MasterCard, Visa, American Express, Discover, Carte Blanche, Diners Club, JCB, Electronic Check and private label cards.

N

NACHA
NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits services (EBS). Additional Information: http://www.nacha.org/
Network
An entire system of communication hardware and software used to transfer electronic information during the authorization and settlement process.
No-Show
A charge to a cardholder account by a lodging merchant if the person either fails to arrive or fails to cancel the guaranteed reservation.
Non Face-to-Face Transaction
Any transaction in which the card is not presented, such as a phone, mail or Internet purchase. See Card-Not-Present.
Non-Qualified Rate
The discount rate level, at which the transaction qualifies when it did not meet any of the qualifications for the other lower rates. All paper merchants will qualify at this level, as will all business cards
NSF (Not Sufficient Funds)
A bank check having insufficient funds to back it.

O

Off-Line Debit Card
A debit card that does not deduct funds from the checking account immediately. Transactions are processed like a regular credit card and funds are not deducted for 24-72 hours. No Personal Identification Number (PIN) is needed to process the transaction.
Off-Line Sale
Allows the merchant to enter a transaction if unable to process under the regular sales key. Also called a Force of Post Auth.
Official Statement
A document prepared by or on behalf of the issuer of municipal securities in connection with a primary bond offering that discloses material information on the offering of such securities.
Offline Debit
Debit transaction that occurs when a Visa/MasterCard check card is authorized through the credit card system and the amount is debited from the cardholder’s checking (DDA) account.
Offline Transaction
A transaction that is authorized through a voice authorization and later keyed into a POS terminal prior to settlement.
OK Number
A validation number from the host computer confirming a successful batch deposit.
Online Transaction
A transaction that is authorized electronically from the front-end network.

P

Partially Qualified Rate
The discount rate level at which the transaction qualifies when it did not meet all requirements for the best (lowest) rate but met more requirement than needed to qualify for the Standard (highest) rate.
Payment Gateway
An Internet-based service that transports credit card information from a computer terminal or Web site to a credit card processor, where it can be verified.
PBX Access Code
An access number that is dialed to reach an outside line.
Per-Transaction Fee
A fee that can be charged to a merchant for each transaction that is processed.
Personal Identification Number (PIN)
A number that must be entered by the customer before an ATM will allow access to the customer’s bank accounts. Also used at a retail establishment when a customer pays for a purchase with an ATM or on-line debit card.
Pick Up Card
An issuer’s electronic response to an authorization request, asking that the card be retained by the merchant and returned to the issuer.
PIN
Personal Identification Number – a numeric code used as verification to complete a transaction via a payment card. The number is entered into a keypad and is encrypted to travel along with the authorization.
POP
Point of Purchase Conversion. A one-time ACH debit from a consumer’s bank account for in-person purchases made at the point-of-sale; upon receipt of a check and signed authorization.
POS
Point Of Sale – the location at which a payment card transaction occurs, usually by way of a device such as a credit card terminal or cash register.
POS Terminal
A terminal at the point of sale, connected via telecommunication lines to a central computer. Authorization, recording and transmission of electronic transactions are performed through the terminal.
Positive Pay
Positive pay is the leading method of check fraud deterrence. The process entails a daily reconcilement of a company’s issued checks to checks presented for payment to your bank to identify potentially fraudulent checks.
Posting
The process of recording debits and credits to an account.
PPD
A credit or debit entry, initiated by a merchant, pursuant to a standing, or one time authorization from a consumer, to effect an electronic funds transfer, to or from a consumer’s bank account
Prenote
In the electronic check-processing environment, a non-dollar transaction sent through the ACH network for the purpose of verifying the accuracy of the cardholder’s account data.
Presentment Currency
The currency in which a purchase is authorized through Visa, MasterCard or American Express.
Private Label Card
A card issued by a merchant that can only be used in the issuing merchant’s business. An example would be a department store credit card.
Processing
The procedure by which the merchant sends the information about each credit card transaction to the issuing Bank so that the Issuing Bank can pay the merchant for the transactions.
Processing Fees
The fees associated with the processing of credit card transactions.
Processor
A company responsible for processing interchange transactions – operated by an acquirer or acting on the acquirer’s behalf.
Protocol
A set of rules that allow data communications to work.
Purchasing Card
A payment card used by companies to replace paper invoices.

Q

Qualification Level
Each transaction is assigned a Qualification Level at interchange. The level assigned depends on how well the transaction met the requirements for the merchant’s industry. For example, for a retail merchant’s transaction to be assigned the Qualified level, the card must be swiped, the terminal must be settled each day, and all other criteria for that level must be met.
Qualified Rate
The discount rate level, at which the transaction qualifies when it met all requirements for the best (lowest) rate.
Quasi-cash purchase
A transaction representing sale of items that are directly convertible to cash such as money orders and travelers cheques.

R

RAM
Random Access Memory – short-term memory for a computer or payment card terminal.
Re-authorization (re-auth, add auth)
To request an additional amount to be authorized on an existing transaction. Used in the lodging industry when the original authorization is not sufficient to cover the charges.
Re-presentment
The re-submission by an Acquirer of a previously charged back sale in an attempt to re-charge the Cardholder. Chargebacks requires some form of additional documentation confirming the validity of the charge and disputing the chargeback reason.
Reason Code
A two-digit code identifying the reason a chargeback was initiated.
Recurring Transaction
A transaction charged to a cardholder’s account (with prior permission) on a periodic basis for recurring goods and services, i.e., health club memberships.
Referral
The message received from an issuing bank when an attempt for authorization requires a call to the Voice Authorization Center.
Refund
A refund occurs when the merchant rebates all, or a portion, of an original transaction amount to the cardholder. Refunds are made to the same card that was used for the original transaction. Similar to a Credit.
Representment
An attempt to reverse a chargeback initiated by a merchant or acquirer to the issuing bank that presented the chargeback, backed by supporting documentation.
Retail Transaction
A face-to-face transaction in which the cardholder presents a card to the merchant to pay for goods or services.
Retrieval Request
A request by the issuer to the acquirer for a copy of the original sales ticket.
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Return Policy
The merchant’s limitations and/or requirements on accepting returned merchandise.
Reversal
When an acquirer successfully represents a chargeback to the issuer, the chargeback is reversed and the funds are returned to the merchant.
ROM
Read-Only Memory – memory and information that cannot be changed.
RS232
The standard port on POS device used to support a wireless transmission via VSAT, Frame, VPN or Motient. May also be used with various peripheral devices i.e. Check Reader or Personal Computer.

S

Sales Draft
The paper or electronic evidence of a purchase.
Sales Transaction Fee
The amount the financial institution charges a merchant for each sales transaction.
SDK
Software Development Kit – a “kit” that is built to help a developer incorporate software into another program or system.
Secure Payment Page
A secure payment page assures customers that their payment information is encrypted for privacy and data integrity before it’s sent over the Internet. This page is typically identified by the “s” in https:// (instead of http://). Payment gateway providers make this necessary e-commerce link possible by hosting the payment gateway software and individual secure payment pages on their own servers.
Securecode
A fraud prevention tool, MasterCard Issuers confirm consumers’ identities in real time during transactions at participating merchant sites. When the consumer clicks “buy” at checkout, software installed on the merchant server recognizes registered MasterCards and an authentication screen appears in the consumer’s browser. The consumer enters his/her password and the password is verified.
Seller Account or Online Seller Account
The bank account a Seller identifies as the sole account from which monthly and/or transaction fees are debited.
Seller Bank
(Acquirer or Processor) The financial institution with which a Seller contracts to accept credit cards for payment of goods and services.
Seller Fees or Fees
Sellers are charged several types of fees for screening and processing online payments. Fees for products and services include, but are not limited to costs for the following:
Seller or Online Seller
An individual or business that sells products or services and is capable of accepting payment for products and services via a Seller account.
Settlement
The process of transferring funds for sales and credits between Acquirers and Issuers, including the final debiting of a Cardholder’s account and crediting a Seller’s account.
Settlement Currency
The currency in which a merchant receives funds after the completion of a foreign exchange conversion.
Settlement or Settling
The sending through the interchange of the credit card transactions accumulated by the merchant in the terminal or Host so the merchant can be paid for them.
SIC
Standard Industrial Code – a universal four-digit code that designates a merchant’s industry type. Similar to an MCC code.
SIC or Standard Industry Codes
Special numbers assigned by the Card Associations to Seller types for identification and tracking purposes. MasterCard® uses MCC (Seller Category Code), while VISA® uses SIC (Standard Industry Codes).
SIFMA Index
A 7-day high-grade market index comprised of tax-exempt floating rate securities. The index serves as a benchmark to gauge the cost of borrowing in tax-exempt money markets.
Smart Card
A payment card with a built-in microprocessor (chip) that stores information. Smart cards can be used for stored-value cards, credit cards, loyalty programs and security access.
Soft Decline
A declined authorization attempt that does not necessarily mean the card is bad (i.e., call referral, issuer unavailable or cardholder over limit). These transactions may be resubmitted a day or two later in an attempt to obtain a valid authorization.
Split Dial
The capability of a card terminal to dial different telephone numbers to obtain an authorization or settlement of different card types.
Stored Value Card
A stored value card is used by a merchant to issue spending credit to their customers. The merchant’s customers are given a magnetic stripe card in exchange for money received, merchandise returned or other considerations. The card represents a dollar value that the merchant’s customer can either use or give to another individual. There is no security associated with the card itself. The actual record of the balance on the card is maintained on a stored value card database. Learn more…
Submission
A file sent by the merchant that contains one or more transactions.
Summary Adjustment
A correction to a deposit, made by the acquirer, when there is an error in the submitted deposit.
Synchronous
SWIFT
The Society for Worldwide Interbank Financial Telecommunication (‘SWIFT’) runs a worldwide network by which messages concerning financial transactions are exchanged among banks and other financial institutions. As of December 2001 it linked over 7,000 financial institutions in 194 countries and estimates that it carries payment messages averaging more than six trillion US dollars per day.
Swipe
Running a credit card’s magnetic stripe through a reader that interprets the data encoded on it.
Synchronous
Communication method that transmits continuously with no stops and start bytes between information bytes.

T

T&E Cards
Cards that are developed for and used primarily in travel-related services.
T&E Merchant
An airline, car rental company or lodging establishment with a primary function of providing travel-related services.
TCS
Terminal Capture System – the process in which transactions are stored in the terminal until the batch is settled to the host. Most often used in restaurant applications where tip adjustments need to be made.
TEL
An electronic debit from a consumer’s bank account based on oral authorization by phone. A company can only initiate the telephone call when there is an existing relationship with the consumer.
Telemarketing
Selling goods or services over the phone, for payment by credit card.
Term
A fixed amount of time usually given to repay a loan
Terminal Based
Software through which transactions are stored in the terminal until settlement.
Terminal Identification (TID) Number
The unique number assigned to each point of sale terminal that tells the Credit Card Processor which merchant a transaction came from and where an authorization is to be sent.
Terminal Provider
A company that supplies credit card hardware and software to a merchant.
Third-Party Processor
A non-member agent contracted by a member to provide authorization, processing, and merchant services.
TID
Terminal Identification Number – number identifying a merchant to the front-end network.
Track One
Track One information, stored on the magnetic stripe on the back of a card, has the cardholder’s name in addition to the account number and expiration date stored in it.
Track Two
Track Two information, stored on the magnetic stripe on the back of a card, has the account number and expiration date.
Transaction
Any action between a cardholder and a merchant or member that results in activity on the account, such as a purchase, cash advance or credit.
Transaction Date
The actual date on which a transaction occurs.
Transaction Fee
The amount a merchant pays per transaction for processing.

U

Unauthorized Transaction
Any sale for which a Cardholder does not provide his/her specific authorization (This should not be confused with the failure to receive an authorization response from the Issuer.)

V

Valid Date
The date embossed on a payment card stating when the card may first be used.
VAR
Value Added Reseller – a third-party that certifies their software to be used on a processor’s system
Variable Rate Demand Note (VRDN)
A long-term taxable or tax-exempt bond that bears a floating interest rate and that provides investors the option to tender or put securities at any time with specified notice. The put price is par plus accrued interest.
Visa USA
A member-owned national bankcard association, governed by a board of directors, which licenses members to issue cards and accept merchant drafts under the Visa Program. MasterCard owns and operates its own international processing network.
Voice Authorization
Transactions authorized by a voice operator. Voice-approved transactions must be “forced” into a terminal batch for settlement.

W

WEB
An electronic debit from a consumer’s bank account created during a secure Internet session between a company and consumer.

Z

ZBA (Zero Balance Account)
A disbursement bank account on which checks are written even though the balances in the accounts are maintained at zero. Debits are covered by a transfer of funds from a master account at the same bank.
Zero Floor Limit
Requires that all transactions receive authorization.

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