Payment Solutions For Every Business
ABA Routing Number
This 9-digit number is assigned by the American Bankers Association and is used to identify individual banks. When performing an ACH transfer from one bank account to another, this number is used to assist the electronic routing of funds. This number precedes the account number printed at the bottom of a check and is usually printed with magnetic ink.ACH (Automated Clearing House)
A processing organization networked with others to exchange (clear and settle) electronic debit/credit transactions (no physical checks).
Provide rules and guideline for the efficient operation of the ACH Network. There are 36 regional ACH associations whose memberships include financial institutions and affiliates. NACHA, the National Automated Clearing House Association forms the governing foundation for the regional associations.
The ACH network was established in the 1970s to facilitate direct deposit of military payroll and other federal payments. The network is made up of four central clearing facilities. In addition to three private sector facilities, the Federal Reserve became a central clearing house under the Monetary Control Act of
1980. The Monetary Control Act required the Federal Reserve to make its center clearing services available to all financial institutions and required it to price those services. The Federal Reserve now processes 1/3 of all paper checks, and around 80% of all ACH transactions.
This is the status of a Visa/Master Card member bank that establishes and maintains the merchant relationship and processes merchant transactions.
Address Verification Service (AVS)
AVS is a tool for merchants to reduce the risk associated with card not present (CNP) transactions, such as mail order, telephone order (MOTO) or e-Commerce transactions. The billing address given by the customer is passed in the transaction and it is checked against the billing address on file at the customer’s card issuing bank. Address Verification does not guarantee that a transaction is valid.
The codes are as follows:
|Y||Exact Match||Street and Zip Code match|
|A||Partial Match||Street matches, Zip does not|
|Z||Partial Match||Zip Code match, Address does not match|
|N||No Match||Nothing matches|
|U||Unavailable||Information is Unavailable|
|R||Retry||Issuer auth system is unavailable, retry later|
A bank that participates in another bank’s card issuing program. This bank turns over the merchant applications to the processing bank and acts as a depository for merchants.Annual Fee
A fee charged to Merchants, for the right to have a merchant account with a specific provider.
This is a fee for processing the paperwork and setting up a merchant account.
A code issued by the card-issuing bank allowing a sale to be charged against the cardholder’s account. Approvals are requested via an authorization.
The procedure a member can use to resolve a chargeback-related dispute between two members. MasterCard or Visa resolves the dispute between members and decides responsibility for the fines that may be assessed to the participating members.
Visa and MasterCard are members of the associations. They establish and administer rules and regulations for the credit card industry.
The request to charge a cardholder for goods or services. This is a process where an issuing bank or authorized agent approves a transaction for the specified amount. Authorization process takes place by the merchant before the transaction is completed, and must be settled in order to post the authorization to the cardholder’s account. If not processed within a certain time frame authorizations will be cancelled. The time period is usually from 3-7 days.
Auth Only (Pre Auth)
A transaction in which the merchant does not intend to charge the cardholder until a later date. For instance if the merchant is running a bar tab he may want to see if a $100.00 charge is good, so he would obtain a pre auth to verify an open to buy.
This code is given by the credit card issuer and authorizes a specific transaction. This number should be saved for future reference.Authorization Fee
A communication charge for each transaction (Sale, Credit, Void), and each time a merchant closes a batch of transactions.
Automated Response Unit (ARU)
An ARU allows the manual keyed entry and subsequent authorization of a credit card over a cellular or land-line telephone. A business typically imprints their customer’s card with an imprinter and then processes the transaction instantaneously over the phone.
Average Ticket Size (AVT)
The average Visa/MasterCard dollar amount of each transaction the merchant anticipates processing or actually processes over time.
When the term back end is used, it’s referring to the capabilities of the processor. Many processors will have multiple back ends that allow for different services and capabilities. The back end is connected to the front end (which is merchant facing) enabling the acceptance of credit and debit cards.
Bankruptcy Notification Service
This service is a joint effort between MasterCard and Visa. Bankruptcy filings and cases are gathered from all the bankruptcy courts and sent to the credit bureau for account numbers. Bankruptcy information is routed daily to appropriate members.
1/100th of a percentage point is a basis point. In merchant processing terms there are three distinct categories: Qualified, Mid-Qualified, and Non-Qualified. Concerning the discount rate, there is an increase of basis points from Qualified to Mid-Qualified and an increase from Mid-Qualified to Non-Qualified.
Once a batch is settled, it receives a batch ID. Every transaction in the batch shares this ID. If a transaction does not have a batch ID associated with it, the transaction has not been settled.
The credit card transactions remaining on a merchant’s terminal are stored in an “open” batch. They will remain there unless the merchant “batches out”. Once the merchant batches out, the daily sales are submitted for processing, and the batch is now “closed” or “settled”.
An electronic bookkeeping procedure that causes all funds from captured transactions to be routed to the merchant’s acquiring bank for deposit. Batches are settled from the terminal either manually or on auto-close.
BIN (Bank Identification Number)
The 6-digit range of numbers assigned by the Federal Bureau of Standards 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)
Business Financials are a set of reports including a: Profit and Loss (P&L) Statement, Balance Statement, and Statement of Cash Flow.
A discount rate that includes communications costs as well as transaction fees. Also referred to as a flat rate.
A card association is a network of issuing banks and acquiring banks that process payment cards of a specific brand. Familiar payment card association brands include Visa, MasterCard, American Express, Discover, Diner’s Club, and JCB. Visa, MasterCard and American Express issuers co-brand with their card association. for example, “WellsFargo-Visa” and “Citi-MasterCard”.
The person who the credit card is issued to and whose name is embossed upon the face of the card.
Card Issuing Bank
The financial institution or company that has provided a card to a cardholder, and is responsible for billing and collections to the cardholder
Card Not Present (CNP)
(CNP, MO/TO, Mail Order / Telephone Order, MOTOEC) is a credit card purchase made over the telephone or over the Internet where the physical card has not been swiped into a reader. It is a major route for credit card fraud. If a CNP fraudulent transaction is reported, the acquiring bank that hosted the merchant account that received the money from the fraudulent transaction must make restitution. Whereas in a swiped transaction the bank that issued the credit card is liable for restitution.
A transaction evidenced by the action of swiping a card through a terminal or by an imprinted and signed credit card draft.
Card Validation Code (CVC)
This is a tool is used by MasterCard to prevent fraud. It requires that a number usually located on the back of the card above the magstripe be entered in to verify the card is present and authentic.
Card Verification Value (CVV or CVV2)
Card Verification Value Service is used by Visa and is a three digit security number indent printed on the back of Visa cards to help validate two things: that the customer has a genuine visa card in their possession and that the card account is legitimate.
CVV – Procedure
Each transaction needs to include one of the following from the merchant:
1. CVV is intentionally not provided.
2. CVV is present.
3. CVV is present but illegible.
4. Cardholder states that no CVV value is on the card.
The CVV Response from the bank will be:
1. CVV match.
2. CVV no match.
3. Not Processed.
4. Merchant has indicated the CVV is not on the card.
5. Card Issuer is not certified and/or on the system.
The act of creating an electronic transaction. Captured transactions are ready for settlement.
A transaction in which only a bank or financial institution can submit, for cash to a cardholder. The transaction is posted against the cardholder’s bankcard account. Interest fees for cash advances are charged from the day of the transaction.
CDPD (Cellular Digital Package Data)
Wireless network owned by At&t and Verizon.
The situation in which the issuer is faced with a delinquent loan of such severity that it must absorb the amount of the debt, at least temporarily, in order to clear the amount from its ledgers. The issuer may still attempt to collect some or the entire amount owed through a recovery process.
A chargeback is the result of an action taken by a cardholder who disputes a credit card transaction through their credit card issuer. The card issuer initiates a chargeback against the merchant’s account and the funds are withdrawn unless the chargeback is reversed.
The number of days a merchant can be chargedback.
A system that acts as the gatekeeper of merchant processing. Applications are entered into the system, checked for completeness, and are summarized to quickly determine the status of a file.
Check Conversion or Truncation
The process of scanning and electronically transmitting the MICR line of a check from the POS terminal to the paying bank for settlement. The check is processed similar to a credit card transaction and is ACH debited from the customer’s checking account.
Service that guarantees the amount of a check written to the merchant. Check guarantee companies will set the merchant’s check limit and provide approval codes. If the check is returned the check guarantee company will refund back to the merchant the amount of the bad check. This service can usually be programmed on the merchant credit card terminal.
A hardware device that the check is passed thru in order to read the routing and account number and transmitted to the terminal for processing. Check readers are used to decreased user error and speed up processing time.
A service that verifies that the check writer has no outstanding bad checks in their database. If the check is returned the merchant is responsible for collecting the insufficient check.
The exchange of data between the Acquirer and Issuer. This data is then posted to the cardholder account and reconciliation takes place.
The process by which transactions from the merchant are sent to the processor for payment.
Code “10″ Authorization
This is a voice authorization code for Visa that the merchant may initiate when they suspect a card is stolen or fake, or when a customer is acting suspiciously.
Contingent Liability refers to a situation created when a merchants processes transactions before the date a cardholder receives the goods or services purchased. Travel agencies and mail order / telephone order merchants pose contingent liability risks to the bank.
A document used by a corporation that designates individuals to allow them to act as signers on behalf of the company.
Credit or Return
A return of funds posted by the merchant back to the cardholder. These funds will be taken from the merchant’s bank account and posted by to the cardholder’s account.
A plastic card having a magnetic strip, issued by a bank or business authorizing the holder to buy goods or services on credit. Also called charge card.
Credit Card Fraud
Credit card fraud is a kind of fraud where a merchant (business, service provider, seller, etc.) is “tricked” into releasing merchandise or rendering services, believing that a credit card account will provide payment for goods/services. The merchant later learns that they will not be paid, or the payment they received will be reclaimed by the card’s issuing bank.
Credit Card Processing
Obtaining immediate authorization of a credit card purchase when ordering online. The card processing company notifies the merchant, and the merchant confirms or denies the order with the customer.
Credit Card Processors
Merchant services providers that handle the details of processing credit card transactions between merchants, issuing banks, and merchant account providers. Web site operators usually must first establish their own merchant account before contracting for credit card processing services.
Credit Card Terminal
A credit card terminal is a stand-alone piece of electronic equipment that allows a merchant to swipe or key-enter a credit card’s information as well as additional information required to process a credit card transaction. A credit card terminal is a dedicated piece of equipment for processing credit, debit and gift cards. A credit card terminal typically must be plugged in to a power supply and connected to a telephone line.
The measure of a customer or businesses credit worthiness. This will determine your lease funding factor. Normal grades are usually A,B,C,D and E. Check with your leasing company for grading criteria and grades.
A credit report is run on every signing principal on the merchant account application and is used to make approval decisions.
The collection, formatting and storage of information in computer memory. Some point-of-sale terminals perform data capture functions. See EDC terminal.
A multitude of companies that honor card transactions by debiting the cardholder’s checking account for the purchase amount. Debit Networks are smaller than their credit based counterparts and are more numerous.
An ATM card used to purchase goods, services or obtain cash. The amount is debited from the cardholder’s deposit account at their bank. Requires a PIN (personal identification number) for use.
An ATM card used to purchase goods or services. The amount is debited from the cardholder’s deposit account at their bank. DOES NOT require a PIN (personal identification number) for use. These are called check cards.
A response from the issuing bank that they will not approve the transaction.
An account used by a customer to make deposits and withdrawals at a financial institution.
An encrypted data file that contains information specific and unique to the certificate’s owner. The certificates are issued by third-party certification authorities (CA). When you receive the digital certificate from a customer, you contact the certification authority to decrypt, or unscramble the file, and verify the identity of the sender.
Direct Mail Merchant
Indicates merchants that submit actual sales drafts for payment (paper merchant) through the mail for payment.
Direct Marketing is a scenario where a merchant solicits business to people who did not ask to be solicited, otherwise known as “junk mail”. Direct Marketing is often confused with “Mail Order / Telephone Order”. A merchant that sends catalogs or brochures to their prior customers or current subscribers is not a direct marketer. A merchant that sends catalogs or brochures to everyone is a targeted area IS considered a direct marketer.
A percentage of each transaction that the merchant is charged by the Merchant Service Provider for facilitating a credit card transaction. Discount rates vary depending on the type of business and how the card is accepted. Discount rate includes Dues and Assessments and Interchange.
Doing Business As (DBA)
The DBA is the name the public sees, whether on a physical storefront or on the web. If the merchant has another business, then we would need a separate application for both.
A downgrade occurs when the merchant does not meet the Visa/MasterCard requirements for a transaction and as a result the transaction is moved to a lower level of interchange. The merchant pays a higher rate for downgrades.
Derived Unique Key Per Transaction. Pin pad key management method.
e-Commerce stands for Electronic Commerce. E-Commerce is the process of buying or selling goods or services via the internet. This is most commonly done though a merchant’s or service provider’s website and usually involves an online catalog and shopping cart. Payments are processed with an online gateway.
Also referred to as Electronic Data Capture terminal. A point-of-sale device that reads information encoded in the bankcard’s magnetic stripe, performs authorization functions, stores transaction data and batches and transmits that data to the acquirer for processing.
Electronic Benefits Transfer (EBT)
The electronic transfer of insurance, food program or state benefits.
Electronic Check Conversion (ECC)
This is the process of accepting a paper check and converting it to an electronic transaction similar to a credit card transaction.
Electronic Check Council (Also ECC)
A program of NACHA, the ECC designs, proposes and monitors pilot programs for electronic payment services that enable the conversion of paper checks to electronic entries conveniently, reliably, securely and at an affordable cost. ECC also provides information on check conversion, as well as legal and regulatory matters.
Electronic Check Imaging
The process where the retailer can scan, capture and store an exact image of the consumer’s check, enabling it to be downloaded should the need arise due to a returned ACH.
Electronic Draft Capture (EDC)
Entering and processing the sales drafts by electronic means. In online payment schemes, capture is used to denote the electronic deposit of the sales draft with the acquiring bank. System in which the transaction data is captured at the merchant location for processing and storage. The storage of information in a terminal’s memory to be forwarded to a host computer at a later time. Process of electronically authorizing, capturing and settling a credit card transaction.
Electronic Funds Transfer System – An electronically-based system that eliminates the need for paper (such as a check) in the movement of funds from one bank account to another using the ACH network.
Electronic Ticket Capture (ETC)
An ETC system reaches out and “grabs” sales ticket information electronically. Buyer information is contained on the magnetic strip on the back of the credit card. The merchant “swipes” the card through a terminal, and the buyer information is “read” by the computer system and merged with the sales information. It then processes the ticket just as if the merchant was making a manual deposit at a bank. This action is normally done in “batches” of tickets, such as at the end of the day.
Electronic Transactions Association (ETA)
ETA is the association for the electronic payments industry and serves the needs of organizations who offer transaction processing products and services.
The process of printing data, in the form of raised characters, on the bankcard. Provides identification of the card and allows the imprinting of sales drafts.
The method used to scramble financial information for security purposes. For example, all Personal Identification Numbers (PIN’s) are encrypted when transmitted for authorization.
Europay, MasterCard, Visa (EMV)
Standard developed to allow cross payments and interoperability among Europe and MasterCard and Visa.
In a face-to-face environment, transactions take place with the cardholder and merchant face-to-face. The cardholder either swipes the terminal or signs an imprinted sales draft. This type of transaction has the lowest discount rate as it is considered low risk.
Fair Market Value (FMV)
The worth of a product at any given time in the marketplace. Refers to the fair market value at the end of a lease term. Fair market value is usually determined by a set formula provided by the lease company. This is the amount the merchant will pay to own the equipment at the end of the lease term.
A transaction from which the merchant received a voice authorization. This allows the merchant to post the sale and settle the transaction. Also known as a Post Authorization.
When the term front end is used, it’s referring to the connection between the merchant and their processor. The front end delivers the capabilities of the back end to the merchant.
Full Business Name
The full name of a business, which directly corresponds to a Federal Tax ID Number. When submitting an application, a merchant must use their full business name.
This is a service which connects the merchant’s Website shopping cart with the card processor. Essentially, the gateway accepts the data in the shopping carts format, translates it to the card processor’s format and sends it to the card processor. It then does approximately the same thing, but in reverse, when it returns the authorization and other codes to the shopping cart.
A prepaid card that is loaded with a specific amount that the cardholder can spend at the sponsoring retailer.
Global Payment Systems
The primary data transport communications facility that links all MasterCard customers and MasterCard data processing centers into a single on-line financial network (also called a packet-switching network.) Global Payment Systems separates communications processing from financial applications to transmit messages over a single communications network.
A personal guarantor is somewhat like a co-signer. The guarantor agrees to personally guarantee any processing losses we incur as a result of doing business with the merchant. A personal credit report may be ordered for review by our underwriters.
A merchant that is considered a high risk based upon the credit, product, method, ticket size or volume. Common examples of high-risk merchants are pharmaceuticals, telemarketing, adult entertainment, and travel related industries.
A portion of the revenue from a merchant’s credit card transactions, held in reserve by the merchant account provider to cover possible disputed charges, chargeback fees, and other expenses. After a predetermined time, holdbacks are turned over to the merchant. Note: Merchant account providers almost never pay interest on holdbacks.
Type of transaction capture where the transaction information is stored at the processor’s host computer system. Settlement occurs at the processor level.
The computer system located at the processor that is dialed for authorization and settlement.
A physical impression of the customer’s credit card. This proves that the card was present when the sale was made. The imprint is made with a device called an imprinter.
Note: An imprint can be created electronically by using a magnetic-stripe-reading terminal at the point-of-sale.
Independent Contractor/Independent Sales Organization (IC/ISO)
This is an acronym for a registered sales representative, people that have been contracted by a company to sell its merchant processing services. An ISO acts as a third party between the merchant and the acquiring bank. ISOs must register with Visa/MasterCard.
Industry Service Provider (ISP)
Independent companies who offer credit card processing services to merchant banks (i.e., FDR, NDC, and VISANET).
Integrated Point of Sale (IPOS)
This acronym refers to conventional terminals that are “smarter” and more sophisticated in that they may be set-up to communicate with like terminals owned by the same merchant -even if they are located at different locations and with different merchant numbers.
The exchange of transactions between clearing members for Visa and MasterCard transactions, according to the associations operating rules and regulations. During this process transactions are routed to the appropriate card issuing bank.
The exchange of debit and credit transaction data between merchant banks and cardholder banks based on an agreement (governed by BASE II [VISA] or INET [MasterCard]) between the participants. A term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”) however there are instances where the interchange fee is paid from the issuer to acquirer, often called reverse interchange.
In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller fee for the acquiring bank or ISO, which is often referred to as a discount rate, an add-on rate, or passthru.
For cash withdrawal transactions at ATMs, however, the fees are paid by the card-issuing bank to the acquiring bank (for the maintenance of the machine).
These fees are set by the credit card networks, and are the largest component of the various fees that most merchants pay for the privilege of accepting credit cards, representing 70% to 90% of these fees by some estimates.
Internet Merchant Account
A Merchant Account is a relationship between a retailing company and a Merchant Bank, which allows the retailer to accept credit card payments from customers via the Internet.
A bank that issues credit cards to consumers.
A transaction is “keyed” when the information from a credit card is manually typed into a terminal or computer. A transaction is keyed because either the card is not present at the time the transaction is entered or the equipment being used to process the transaction can’t read the card.
A contract between a lessor (lease company) and lessee (merchant) allowing the lessee to use the equipment for a specified time period.
A number that is used to compute the gross funding amount of a lease. Factors are based upon lease term and credit rating of the merchant.
The renter of the property described in the lease (the merchant).
The owner or controller of the equipment being leased (lease company).
Loss Destruction Waiver (L&D Waiver)
A stipulation in the lease indicating that the lease company will cover the equipment if it is lost or damaged. There is an additional monthly fee associated with the L&D waiver.
A retailer or brand specific card that has cardholder benefits used to build brand or store loyalty. Cardholders are usually given an award or discount based upon the number of visits or dollars spent.
Magnetic Ink Character Recognition (MICR)
The row of numbers printed at the bottom of a check that identifies the financial institution, account number, and check number. A check’s MICR line can be scanned into a MICR reader, which translates it into a format that can be sent electronically.
A stripe on the back of a bank card that contains magnetically encoded cardholder information. The name of the cardholder is stored on Track I. The account number and expiration data are stored on Track II.
Magnetic Stripe Reading Terminal
A point-of-sale terminal which reads the encoded information from the magnetic stripe when the bankcard is swiped through the terminal “slot.” The terminal automatically transmits account and transaction information to the authorizing agent.
Mail Order/ Telephone Order (MOTO)
A type of payment card transaction where the order and payment information is transmitted to the merchant either by mail or by telephone. This a Card Not Present (CNP) transaction.
Cardholder credit card information that is entered manually rather than swiped through the credit card terminal.
MATCH – Member Alert to Control High-Risk Merchants
As a way to control high-risk Merchants. MATCH is an alert system that uses an electronic bulletin board to track businesses and people when their merchant account has been reported “terminated” (TMF) by an acquiring bank.
Merchant Account Provider
Merchant account providers give businesses the ability to accept debit and credit cards in payment for goods and services. This can be face-to-face, on the telephone, or over the internet.
Merchant Accounting System
The accounting system that transfers electronic funds from the Interchange to the merchant’s bank account via the Automated Clearing House (ACH) and sends the merchant monthly statements concerning the merchant’s credit card transfers.
A merchant account allows a business to accept credit cards, debit cards, gift cards and other forms of payment cards. This is also widely known as payment processing or credit card processing. Or an arrangement with a commercial bank or card issuer that permits a business to accept credit card payments and deposit those payments, less charges, to its bank account
MID – Merchant Identification Number
This is the number that the FDC assigns to a merchant to identify them along with the credit card processors that they use for accounting and billing purposes. It is not to be confused with a merchant processing account number or Terminal Identification Numbers (TIDs).
Qualification levels for MasterCard transactions. Standard, Merit I, Merit III (Merit III – being the highest rate)
Mobile Phone Standards
Global System for Mobile Communications (GSM, around 80–85 % market share) and IS-95 (around 10–15 % market share) were the two most prevalent 2G mobile communication technologies in 2007. In 3G, the most prevalent technology was UMTS with CDMA-2000 in close contention.
All radio access technologies have to solve the same problems: to divide the finite RF spectrum among multiple users as efficiently as possible.
TDMA: GSM uses FDMA (for cell separation), and TDMA (to separate users within the cell)
CDMA: UMTS, IS-95 and CDMA-2000 use CDMA
OFDM: WIMAX and LTE use OFDM (uses bundling of multiple small frequency bands to provide for separation of users)
To understand the fundamental difference of TDMA and CDMA, imagine a cocktail party, where couples are talking to each other in a single room. The room represents the available bandwidth:
TDMA: A speaker takes turns talking to a listener. The speaker talks for a short time and then stops to let another couple talk. There is never more than one speaker talking in the room, no one has to worry about two conversations mixing. The drawback is that it limits the practical number of discussions in the room (bandwidth wise).
CDMA: any speaker can talk at any time; however each uses a different language. Each listener can only understand the language of their partner. As more and more couples talk, the background noise (representing the noise floor) gets louder, but because of the difference in languages, conversations do not mix. The drawback is that at some point, one cannot talk any louder. After this if the noise still rises (more people join the party/cell) the listener cannot make out what the talker is talking about without coming closer to the talker. In effect, CDMA cell coverage decreases as the number of active users increases. This is called cell breathing.
Monthly Volume (MV)
With Visa and MasterCard transactions, a merchant account is approved to process up to a maximum dollar volume. American Express, Discover, and any other card processing volumes are not included into the calculated monthly volume. This is a major consideration for the underwriter of the file and can determine the type of documentation that will be required for the file.
National Automated Clearing House Association (NACHA)
The National Automated Clearing House Association is the chief rule making and interpretation body of the ACH. NACHA is the cooperative governing body for 36 regional ACH associations. www.nacha.org
A broad term that describes a transaction that did not interchange at the best rate because it was entered manually, not settled in a timely manner, or the data set required for the best interchange was not provided.
An operating mode in which the merchant terminal(s) is not connected to the processor, or a central computer. Responses are governed by guidelines, set by the issuer, which are housed in the terminal or in a supporting device.
Off-Line Transaction Processing
Capture of order and credit card information for later authorization and transaction processing through a traditional card swipe terminal or through a computer.
An operating mode in which terminals are connected to a central computer and have access to the data base for authorization, questions and file changes.
Open to Buy
The amount the cardholder has available on their credit card.
A company or other business entity that creates entries for introduction into the ACH network. For example, a billing company produces debit entries from customers’ financial institution accounts that have authorized direct payment for products and services.
Over the Counter
Indicates merchants that submit actual sales drafts for payment (paper merchant) to a local bank for payment.
Payment Card Industry Data Security Standard (PCI DSS)
A set of twelve high level requirements and more than 230 sub-requirements that detail the way in which each objective should be met. This is the guide to avoid security breaches and cardholder compromise.
A payment gateway is an e-commerce ASP service that authorizes payments for e-businesses, online retailers, or traditional brick and mortar. It is the equivalent of a physical POS(Point-of-sale) terminal located in most retail outlets. Payment gateways encrypt sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant.
Payment Gateway Provider
A company that provides code and/or software for an e-commerce site to enable it to transfer information from its shopping cart to the acquiring bank, and on through the rest of the credit card transaction. See also payment gateway.
A company that provides the processing of credit card transactions. Payment Processors are to be distinguished from issuing banks which act as the recipient of the transaction proceeds.
Personal Communication System (PCS)
Digital wireless communication system that operates on a different frequency range. Used by sprint.
Personal Digital Assistant (PDA)
Hand held digital assistant.
Personal Identification Number (PIN)
Personal Identification Number used by a cardholder to authenticate card ownership for ATM or debit card transactions. The cardholder enters his/her PIN from a PIN pad. The PIN is required to complete an ATM/debit card transaction.
Pin Entry Devices (PED)
A device used to enter a customer pin (personal identification number). This is a small box-type terminal attachment with a 10-key pad. They are used so that a cardholder may enter their PIN and are commonly used for debit card transactions.
Platform: (aka Processing Platform)
A processing platform is the foundation and entire behind the scenes system and capabilities that enables debit and credit transactions to take place.
Point of Sale (POS) Terminal
A small device that allows you to slide the credit card through to make a charge. This is what most retail stores have. It is fast, easy and accurate to make a charge on a customer’s credit card within seconds. This can also be known as a terminal machine.
The process of authorizing a card and reserving funds against the Open to Buy before a service is rendered by the merchant.
Prior to the initiation of the first ACH entry to an ACH receiver or the ACH receiver’s account with an RDFI, an ACH originator may, at its option, deliver or send a pre-notification through an ODFI to its ACH operator for transmittal to the appropriate RDFI. The pre-notification provides notice to the RDFI that the originator intends to initiate one or more entries to that receiver’s account in accordance to the receiver’s authorization.
Private Label Card
A card that can be used only in a specific merchant’s store.
A large data center that processes credit card transactions and settles funds to merchants. A processor connects to the merchant on behalf of an acquirer via a payment gateway or POS system to process payments electronically. Processors edit and format messages and switch to bankcard networks. They provide files for clearing and settlement and other value-added services.
Government agencies or corporations may issue their employees Purchase Cards. A Purchase Card is a credit card, but unlike a regular credit card it can only be used at certain types of merchant locations.
A level at which a transaction interchanges. Level of qualification is dependent on how the credit card number is entered, how quickly a transaction is settled, the type of industry, specific information, etc.
Qualified Discount Rate
This means that retail transactions are card-swiped and the merchant does an electronic batch settlement (batches-out) at the end of every day. For Keyed or Internet merchants to receive a Qualified Discount Rate they can obtain an AVS response and an order number.
Quick Service Restaurant (QSR)
This is a special qualification by Visa/MasterCard. Usually for establishments where the average ticket is below $25.00. In this case the merchant has no chargeback liability or signature requirements.
Radio Frequency Identification (RFID)
Customer card data is transferred via a chip/antenna on the credit card to the payment terminal, i.e. ExxonMobil SpeedPass, paypass.
A hard copy of the description of the transaction that took place.
A consumer, customer, employee, or business that has authorized ACH payments by Direct Deposit or Direct Payment to be applied against a depository account.
Receiving Depository Financial Institution (RDFI)
A financial institution that provides depository account services to consumers, employees, and businesses and accepts electronic debits and credits.
A transaction charged to the cardholder (with prior permission) on a periodic basis for recurring goods and services, most commonly this is use for products with subscriptions; i.e. online games, magazines memberships etc.
Refund Policies depend on the merchant but are used to form the circumstances in which a refund will be given to a customer. Having a generous refund policy can help prevent a chargeback, but this does not mean refunds should be given out for every complaint.
A request by the issuer to the acquirer for a copy of the actual ticket of a transaction. The initial step that the issuer takes in the event that either the issuer or the cardholder disputes a transaction. Retrieval requests usually precede a chargeback.
A sale that is being credited back to the cardholder.
Secure Electronic Transaction, a standard that will enable secure credit card transactions on the Internet. SET will enable merchants to verify that buyers are who they claim to be.
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.
An initial fee paid to the Merchant Service Provider for establishment of an account and for processing and reporting tools.
A software program used for Internet websites. The shopping cart totals up orders, tax, add shipping costs and transmit information to the merchant’s payment gateway in order to process the sale. When used for internet shopping, a customer can use a shopping cart as they would in a grocery store by placing items inside for eventual purchase. A shopping cart groups the chosen items so that only one online credit card transaction is needed to complete their purchases.
A plastic card with an embedded microchip that can be loaded with data; used for telephone calling, electronic cash payments, or other applications.
A funding arrangement in which the lease company pays the equipment vendor for the leased equipment when the lease is funded.
Secure Socket Layer. A method of encryptions to secure information traveling over the Internet. SSL is now the predominant security protocol for online transactions. Messages between the merchant’s server and the consumer’s browser are automatically encrypted (scrambled) when sent and then decrypted (unscrambled) when received.
Standard Industry Code/Merchant Category Code (SIC/MCC Code)
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).
Standard Industrial Classification
A federally designed standard system of numerical encoding by type of industry. These codes are four digit numbers used to identify business type.
The statement fee is a monthly fee associated with the monthly statement that is sent to the merchant at the end of each monthly processing cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result.
Any additional charges to a merchant’s standard processing fees. They are a result of non-qualified transactions of different communications methods.
A state in which a batch of transactions is not released to interchange because of problems noticed by the host risk system. Requires human intervention to fix the problem and settle the batch.
This is physical act of sliding a card through the credit card processing. The machine then reads the magnetic strip on the back of the credit or debit card, which helps validate the card. An alternative way to accept the credit card, or debit card would be to manually key in the information. However, swiping a card is far more beneficial because it documents the physical presence of the card at the point of sale. All swiped transactions are face-to-face which also lessons the chances of credit card fraud.
The device by which a transaction is transmitted to the acquiring bank.
Terminal ID (TID)
An identification number assigned to each POS terminal which tells the Host which merchant a transaction came from. When sent to the download computer, it identifies a group of terminal specific parameters to be sent along with the application program.
A terminal provider supplies the software on which a terminal operates.
Terminated Merchant File (TMF)
Terminated Merchant File is a file that Visa and MasterCard contribute to, in order to keep track of merchants that have funds due, excessive chargebacks, or have committed fraud.
A sale transaction for which a voice authorization is obtained.
Trade references are the businesses that extend credit or have business relationships with an applicant. These are needed to see if an applicant makes bill payments in a timely manner and also purchases goods and services from outside sources. We request Trade References from all of our MOTO merchant accounts.
An act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.
A fee charged for each transaction processed by the merchant. This is in addition to the percentage discount fees.
Travel and Entertainment Card (T&E)
Credit cards that typically require payment in full each month, e.g. American Express, Diner’s Club, and Carte Blanche.
Triple DES (3DES)
Data encryption standard for pin pads, POS devices and ATMs adopted by the card associations.
In ACH it normally refers to stopping or truncating a paper check as in POS or lockbox check truncation and turning that paper check into an electronic item.
Value Added Reseller (VAR)
Third party, which enhances or modifies existing hardware or software, adding value to the services provided by the processor or acquirer
A web based credit card terminal that merchants can process sales through from any location that they have Internet access from.Verification
The point in which the lease company verbally verifies (confirms) with the merchant that the equipment has been delivered and that they understand the lease terms in full.VisaNet
The Visa authorization and settlement systems.Voice Authorization
A card authorization acquired via the telephone. If the transaction is approved, the merchant is provided with an authorization code (AUTHCODE) for the transaction.Void
The reversal of an approved transaction, which has been authorized but not settled. Settled transactions require processing of a credit in order to be reversed. A void does not remove any hold on the customer’s open-to-buy.