ABA
American Bankers Association - the trade association of American bankers.
This body also has the registration authority to assign identification
numbers.
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.
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."
Association
MasterCard International, Visa U.S.A. or Visa International, which are
licensing regulatory agencies for bankcard 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 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.
Auto Representment
Automatically sending information to resolve a chargeback on a merchant's
behalf without the need for merchant intervention.
Average Ticket
The average dollar amount of sale for credit card transactions.
AVS
Address Verification Service - a Visa/MasterCard service that verifies
the cardholder's billing address against the one on file with the issuer.
AVS is designed to help combat fraud in non-face-to-face transactions.
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.
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.
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 - a unique series of numbers assigned by
Visa/MasterCard to a member institution, which identifies that institution
in transaction processing. The BIN comprises the first six digits of
a standard credit card number.
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.
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."
Capture
Receiving and storing transaction data at the processor's host computer,
to be submitted later for processing and payment.
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.
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.
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.
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.
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.
Chargeback
A challenge to a transaction initiated by the issuer or cardholder that
is returned to the acquirer for resolution.
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 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.
Ciphertext
The encrypted text of a message, which may be decrypted only by someone
who has the correct key.
Close
Sending a merchant's completed transactions to the host for processing.
(See also "Settlement")
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.
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.
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 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.
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.
CVC
Card Verification 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.
CVV
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.
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.
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.
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
The fees charged by the card acquirer to the merchant for processing
payment card transactions.
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.
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.
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.
E-Commerce
Electronic Commerce - the sale and purchase of goods or services over
the Internet.
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.
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.
Factoring
When a legitimate merchant processes another merchant's transactions
in return for payment. This practice is forbidden by the associations.
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.
Fleet Card
Payment card designed mainly for fueling, maintenance and repairs of
corporate motor vehicles. Fleet cards are normally used to provide specialized
reporting.
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.
FPO
Flexible Payment Options - a product that allows merchants to design
flexible payment plans to increase incremental sales.
Frame Relay
A TCP/IP link for data that has high transmission speeds, low network
delay,high connectivity and efficient bandwidth use.
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.).
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.
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.
Idle Prompt
The standard display on a payment card terminal waiting to process the
next transaction.
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.
Interchange
The exchange of transaction data between acquiring and issuing institutions.
Interchange Fees
Fees paid by the acquirer to the issuer to compensate for transaction-related
costs. MasterCard and Visa establish interchange fee rates.
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, Issuing Bank
The financial institution and member of Visa or MasterCard that holds
contractual agreements with, and issues cards to, cardholders.
no terms found
no terms found
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.
Line of Credit
The amount of credit a lender will extend to a borrower over a specified
period of time.
Lockbox
A service that processes payments by check and credits the appropriate
business.
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.
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.
MCC
Merchant Category Code - a universal four-digit merchant classification
code that identifies the merchant by type of processing, authorization
and settlement. Similar to a Standard Industrial Classification (SIC),
but more defined.
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.
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.
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.
Network
An entire system of communication hardware and software used to transfer
electronic information during the authorization and settlement process.
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.
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.
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.
PBX Access Code
An access number that is dialed to reach an outside line.
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.
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.
Posting
The process of recording debits and credits to an 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.
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 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.
no terms found
RAM
Random Access Memory - short-term memory for a computer or payment card
terminal.
Reason Code
A two-digit code identifying the reason a chargeback was initiated.
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.
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.
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 equipment to support a traditional phone line.
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.
Settlement
The process in which a merchant transmits batches of transactions to
the acquirer. In interchange, it is the process by which acquirers and
issuers exchange financial data resulting from sales transactions, cash
advances, merchandise credits, etc.
SIC
Standard Industrial Code - a universal four-digit code that designates
a merchant's industry type. Similar to an MCC code.
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.
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
Communication method that transmits continuously with no stops and start
bytes between information bytes.
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.
Telemarketing
Selling goods or services over the phone, for payment by credit card.
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
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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
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.
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no terms found
no terms found
Zero Floor Limit
Requires that all transactions receive authorization.
