Glossary

An Account Number is a unique sequence of numbers given to a cardholder account that identifies the issuer and type of credit or debit transaction card.

Allows for the exchange and settlement of electronic payments between financial institutions. Debits and credits are deducted automatically as they occur.

The bank that does business with merchants who accept credit cards. A merchant has an account with this bank and each day deposits the value of the day’s credit card sales. Acquirers buy (acquire) the merchant’s sales slips and credit the tickets’ value to the merchant’s account.

The processor provides credit card processing, billing, reporting and settlement and operational services to acquiring and issuing banks. Many financial institutions don’t do their own bankcard processing because it’s more cost-effective to let someone like First Data invest in the equipment and people and do it for them.

Also known as AMEX is one of the main international credit card issuing schemes. It issues its own credit cards – unlike Visa and MasterCard and is responsible for its own relationships with retailers.

Some issuers charge for the management of your credit card account. They sometimes provide access to a number of additional benefits as part of the charge. Expressed as % P.A.

The authorization assesses the transaction’s risk (based on a number of different points), confirms that a given transaction does not raise the account holder’s debt above the account’s credit limit, and then reserves the specified amount of credit

A department that electronically communicates with a merchants request for an authorization on credit card transactions to the cardholders bank and transmits the authorization via voice authorization or electronic point of sale equipment.

A string of characters returned to IBill from the processing network to confirm that the request for Sale, Refund or Pre-Auth has been Approved/Authorized and is awaiting batch closure.

A predetermined dollar amount that the merchant can process on a per-sale basis. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

AVS is a service that is provided by Visa that checks to match the street number and zip code of the cardholder’s address with the street number and zip code provided by the merchant. This provides a level of fraud protection that helps to prevent fraud and charge-backs.

Bank account number for the merchant to which funds will be deposited. Bank Identification Number (BIN) – The first six digits of a Visa or MasterCard account number. This number is used to identify the card issuing institution.

The accumulation of captured transactions waiting to be settled. Multiple batches may be settled throughout the day.

A fee incurred if a merchant cancels prior to the completion of the 3-year contract term.

Converting the authorization amount into a billable transaction record within a Batch. Transactions cannot be captured unless previously authorized, and authorizations cannot be captured until the goods or services have been shipped or transmitted to the consumer.

Financial institution (or its agent), which issues the financial transaction card to the cardholder. The card issuer remains unchanged throughout a transaction.

This is the security number that is printed on the back of most MasterCard credit cards. When this code is transmitted along with the rest of the credit card transaction information, the possibility for credit card fraud is reduced, as it the likelihood of chargebacks.

This is the 3 digit code, or security number, that is printed on the back of most Visa credit cards. When this code is transmitted along with the rest of the credit card transaction information, then the possibility for credit card fraud is reduced, as is the likelihood of chargebacks.

The Cardholder is the person associated with the credit or debit account number that is paying the Merchant.

A chargeback occurs when a customer calls his/her credit or debit card company to dispute a charge because the products/services were not received. If the merchant cannot prove otherwise, then the charge is refunded to the customer at the merchant’s expense and the merchant is also charged a Chargeback Fee.

Authorization of a check.

A general name for cards typically issued for business use and may include Corporate Cards, Purchase Cards, Business Cards, Travel and Entertainment Cards.

A company that performs authorization and settlement of credit card payments, usually handling several types of credit and payment cards (such as Visa, MasterCard, and American Express). If merchants wish to sell their products to cardholders, they retain the services of one or more processors who handle the credit cards that the merchant wishes to accept. When a merchant retains the services of a credit card processor, it is issued a merchant ID.

The value of a merchant’s credit card purchases that are credited to its bank account after the acquirer buys the merchant’s sales slips. The deposit is credited. It is not funded until the acquirer gets the monetary value from the issuer during settlement.

An approval by the cardholder of the debit to his account. At the same time it provides a claim of funds made by the acquirer (and/or the merchant) against the card issuer.

Either the processing network or the cardholder’s bank has refused to complete a Sale, Refund or PreAuth. The cardholder’s account balance was not changed. IBill passes back to the retailer any reason it receives for a Decline having been issued. Unfortunately, reasons stated by banks and processing networks tend to be vague. This is often due to there being a problem between the cardholder and his bank, and bank policies rightly leave us out of such private conversations.

The fee a merchant pays its acquiring bank/merchant bank for the privilege to deposit the value of each day’s credit purchases. The fee is usually a small percentage of the purchase value.

Refers to the specific name and location of the merchant establishment where credit card purchases were made.

The processing of economic transactions, such as buying and selling, through electronic communication. E-commerce often refers to transactions occurring on the Internet, such as credit card purchases at Web sites. See also Internet commerce.

A method of transferring money from one bank account to another using a variety of electronic methods such as bank wire transfer, federal wire transfer, international wire transfer.

A VISA classification level that is charged to the merchant when a credit card is not present, swipe not read, card number is manually key entered.

EMV is a payment method based upon a technical standard for smart payment cards and for payment terminals and automated teller machines that can accept them.

EMV cards are smart cards (also called chip cards or IC cards) that store their data on integrated circuits in addition to magnetic stripes (for backward compatibility).

These include cards that must be physically inserted (or “dipped”) into a reader, as well as contactless cards that can be read over a short distance using near-field communication (NFC) technology.

The Debit Process – The transformation of data for the purpose of privacy into an unreadable format until reformatted with a decryption key.

Private label credit cards designed mainly for repairs, maintenance and fueling of business vehicles.

The entry of a transaction after a referral message is displayed on the POS terminal or network interruption of service that allows the merchant to enter a transaction and the approval code as a forced entry with an authorization code.

A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover, or other fraudulent conditions as defined by the card company or the member company.

A set of standard codes for transferring files over the Internet. FTP is usually used for retrieving large files or files that cannot be displayed through a browser. Windows FTP and Fetch are examples of FTP software

The payment a merchant receives for his settled and captured deposits.

An application that accepts transactions from online merchant storefronts and routes them to a financial institution’s processing system.

Submitting the total dollar amount of bankcard credit and sales drafts for payment.

The original document of an application, credit slip, sales draft/slip.

A piece of equipment used by merchants to imprint embossed information off of a bankcard onto a sales draft.

In the payment systems industry, a third party organization that facilitates merchant registration to accept charge or credit cards.

The exchange of information, transaction data and money among banks. Interchange systems are managed by Visa and MasterCard associations and are very standardized so banks and merchants worldwide can use them.

A fee paid by the acquiring bank/merchant bank to the issuing bank. The fee compensates the issuer for the time after settlement with the acquiring bank/merchant bank and before it recoups the settlement value from the cardholder.

A payment gateway is a service that gives merchants the ability to perform real-time credit card authorizations and process credit cards from a website (Ecommerce).

A designation for a particular location on the Internet, such as “140.23.719.6.” IP addresses are associated with domain names.

The bank that extends credit to customers through bankcard accounts. The bank issues the credit card and receives the cardholder’s payment at the end of the billing period. Also call the issuing bank or the cardholder bank.

The bank that maintains the consumer’s credit card account and must pay out to the merchant’s account in a credit card purchase. The issuing bank then bills the customer for the debt.

Imprinted bank numbers at the bottom of the check.

A stripe of magnetically encoded cardholder account information affixed to a plastic card.

A batch close that must be initiated by the merchant on a daily basis, as opposed to an auto close.

A seller of goods, services, and or other information who accepts payment for these items electronically from credit and debit cards.

This is an account that a merchant establishes that enables the merchant to accept credit cards for payments.

A written agreement between a merchant and a bank containing their respective rights, duties, and warranties with respect to acceptance of the bankcard and matters related to the bankcard activity.

A bank that holds a merchant account. After a consumer buys a product using a credit card, the merchant bank places funds into a merchant account in exchange for the right to collect on the debt owed by a consumer.

This number is generated by a third-party processor and is specific to each individual merchant location. This number is used to identify the merchant during processing of any and all transactions.

This charge is levied by a merchant account provider when the processing rates/fees for a month do not total more than the monthly minimum. In that situation, the merchant is charged the Monthly Minimum. GoodMerchants.com does not impose a monthly minimum fee on its merchant account holders, whereas most merchant account providers do charge a monthly minimum.

MOTO is an abbreviated way to refer to Mail Order / Telephone Order. Credit Card transactions initiated via mail, e-mail, or telephone. Also known as Card-Not-Present transactions and/or Keyed transactions.

The settlement through an actual transfer of funds.

A non-bank company that deals directly with the cardholder i.e.: American Express, Diners, Discover, Carte Blanche and JCB.

Bankcard sales transactions that do not meet set MasterCard & Visa criteria for that particular merchant and are processed at a higher interchange rate. For example, if you are set up as 100% retail merchant and for some reason you have a transaction where the physical card is not present, you will be charged a higher rate, which is the non-qualified transaction fee.

The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that handle branded credit cards from the major card schemes.

The PCI Standard is mandated by the card brands and administered by the Payment Card Industry Security Standards Council. The standard was created to increase controls around cardholder data to reduce credit card fraud. Validation of compliance is performed annually or quarterly, either by an external assessor or by Self-Assessment Questionnaire.

A location where credit card transactions are performed with the cardholder present, such as a retail store. The card is read magnetically, and the cardholder’s signature is obtained as insurance against the transaction. This is the safest way to process credit cards.

Charge cards used by businesses to cover purchasing expenses, such as raw materials or office supplies.

The term “real-time” means to incur immediately. For credit card processing, this means that the validity of a customer’s credit card, as well as their available credit limit can be checked immediately before processing is accepted. This is extremely important for card-present and Internet transactions, in which it is difficult and costly to get back in touch with the customer.

Authorizes a credit card in real-time, as a customer makes their purchase

A hard copy document recording a transaction that took place at the point of sale, with a description that usually includes: date, merchant name/location, primary account number, amount, and reference number.

An exchange of messages between two institutions (acquirer, card issuer, or their agents) to reach agreement on their financial totals.

Number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.

Create a credit to a cardholder account, usually as a result of a product return or to correct an error.

A financial transaction originated by a merchant to recover funds charged back by a card issuer.

A request from a cardholder’s bank for information about a charge, which is being disputed. Retrieval requests usually precede a chargeback.

A transaction from the acquirer to the card issuer informing the card issuer that the previously initiated transaction cannot be processed as instructed, i.e., is undeliverable, unprocessed or cancelled by the receiver.

An internal department within the Credit/Risk Department that monitors the performance of the entire portfolio/merchant client base by monitoring suspect accounts and or transactions for possible fraudulent activity

A form showing an obligation on the cardholder’s part to pay for products and/or services to the card issuer. This is the piece of paper that is signed when making the purchase.

SSL is used to encrypt and protect data usually on an order from an online merchant’s website. Since the intended client machine can be identified, only that machine is able to decrypt the transmission.

As the sales transaction value moves from the merchant to the acquiring bank, to the issuer, each party buys and sells the sales ticket. Settlement is what occurs when the acquiring bank and the issuer exchange data or funds during that function.

Fees charged for establishing a merchant account, including application fees, software licensing fees, and equipment purchases.

On an e-commerce enabled web site, a method of collecting the items chosen by a consumer for purchase from an on-line catalog.

Standard Industry Classification Code. A system used to categorize businesses by industry group. This system is being replaced by the NAICS Coding system.

A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer.

The merchant account provider charges the merchant a monthly statement fee that covers the costs associated with generating the monthly reports that detail the merchant’s monthly credit and debit card processing activity.

The discount rate charged by a merchant account provider for transactions in which a credit card is available for inspection by the merchant. Swipe discount rates are generally lower than MOTO discount rates because the merchant can match signatures and perform other checks for fraud or misuse.

An end-use device (usually with display monitor and keyboard) with little or no software of its own that relies on a mainframe or another computer (such as a PC server) for its “intelligence.” A variation of this kind of terminal is being revived in the idea of the thin client or network computer. The term is sometimes used to mean any personal computer or user workstation that is hooked up to a network.

A system that captures credit card transactions and holds them until settlement.

A unique number assigned to each point of sale terminal.

Programming that determines the characteristics and features of the terminal.

A file listing the names of merchants and their principals whose bankcard relationship has been terminated by the acquirer.

A third-party processor is a company that provides a variety of bank/merchant services including billing, reporting, customer service, authorization and settlement services on behalf of the acquiring financial institution.

Another name for the sales slip or its monetary value that results when a credit card purchase is made.

1. Any agreement between two or more parties that establishes a legal obligation.
2. The act of carrying out such an obligation.
3. All activities that affect a deposit account that are performed at the request of the account holder.
4. All events that cause some change in the assets, liabilities or net worth of a business.
5. Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

The actual date on which a transaction occurs.

A per transaction fee that is charged by the banks for processing the credit card and debit card transactions.

An anti theft mechanism in which the complete credit card number and expiration date does not appear on the sales receipt. The last four digits of the credit card number will appear on the sales receipt.

A Virtual Terminal is a web-based interface that acts like an “online card machine”: it enables merchants to accept credit card payments remotely – either from customers over the phone, or by fax, letter, or email. To use a virtual terminal, merchants log in to a website and then manually enter the credit card information to process the payment.

An approval response obtained through interactive communication between an issuer and an acquirer, their authorizing processors, or stand-in processing, through telephone, facsimile, or telex communications.

Delete the transaction information.

Nullifies a transaction that has been recorded for settlement, but not yet settled. This removes the transaction from the batch of transactions to be settled

Describing radio-based systems that allow transmission of telephone and/or data signals through the air without a physical connection.