Glossary

The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants, although the new 6-Tier Pricing is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a(...)

A protocol for e-commerce which is designed to increase the security of online credit card transactions by adding an extra step requiring a PIN or password for authentication. Another name for the Verified By Visa cardholder authentication protocol.

As a result of the Wal-Mart Lawsuit and to compete against PIN-based debit cards (which are processed outside of the Visa and Mastercard networks), Visa and Mastercard lowered the interchange rates for debit cards well below those for credit cards. Some providers can pass on the lower cost of(...)

Retrieval Request

A unique bank identifying number that directs electronic ACH deposits to the proper bank. This number precedes the account number printed at the bottom of the check.

A unique number assigned by a financial institution to a cardholder account which identifies that issuer and type of financial transaction card. This number is embossed and encoded on the plastic card.

(Also Automatic Clearinghouse) ACH is a form of epayment or electronic payment. There are two ways payments can be transferred: (1) by wire transfer, or (2) through an automated clearinghouse. Wire transfer is an e-payment system that is designed to handle high-dollar, time-crucial payments,(...)

Financial institution which provides the facilities and services for a business to accept credit cards as a means of customer payment.

When you have a credit card it is possible to add an additional card to the account for use by someone else. The main cardholder has responsibility for ensuring payments on the additional card are made. Purchases are shown on the credit card statement sent monthly.

A method of reducing fraud in mail order, telephone order, and Internet transactions by using cardholder billing address information in the authorization request. (Checks to see that the billing address given by the customer matches the credit card.) If you opt not to use AVS, VISA and(...)

Affinity cards are credit cards that are linked to organizations like charities, political parties and sports clubs. They are a good way of raising money as the organization receives a donation from the card issuer for every card taken out, and a small percentage based on the amount of money(...)

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.

Allow you to access cash with a credit card or other card associated with your bank account. You need to enter your personal identification number (PIN) into the machine to access cash.

For recording purposes, messages created as a by-product of data processing runs or mechanized operations.

The process of verifying that the user of a credit card in a particular transaction is entitled to conduct payment transactions. Eg. Signature, Verified by Visa or MasterCard SecureCode PIN or password.

A code that an issuer or its authorizing processor provides to indicate approval or denial for an authorizationauthorization request.

Authorization fee The Authorization fee (actually an authorization request fee) is charged each time a transaction is sent to the card-issuing bank to be authorized. The fee applies where the request is approved or declined. Note this is not the same as Transaction fee or Per Item fee.

Allow you to access cash with a credit card or other card associated with your bank account. You need to enter your personal identification number (PIN) into the machine to access cash.

(Also Automatic Clearinghouse) ACH is a form of epayment or electronic payment. There are two ways payments can be transferred: (1) by wire transfer, or (2) through an automated clearinghouse. Wire transfer is an e-payment system that is designed to handle high-dollar, time-crucial payments,(...)

The average dollar amount of merchant credit transactions for a given time period.

see Address Verification Service

The process of moving an unpaid credit card debt from one issuer to another.

Bank account number for the merchant to which funds will be deposited.

The 6 digits on the credit card assigned by the Federal Bureau of Standards that identify the card issuing institution.

A payment card issued by a bank and accepted by merchants. The credit card is the most common form of a bank card.

Discount rates are expressed as basis points. For instance, 1 basis point is expressed as .0001 or .01%

Is a collection of credit card transactions that are saved for submitting at the end of the business day.

The process of sending a batch to the financial institution for settlement.

see Bank Identification Number (VISA)Buckets

Usually issued to corporate executives or business owners in order to keep business expenses separate from personal charges more easily.

Any association member financial institution, bank, credit union, or company that issues, or causes to be issued, plastic cards to cardholders.

A device capable of reading the encoding on plastic cards. see Magnetic Stripe Reader.

Numeric security code that is printed on the back of MasterCard credit cards. Requiring this number on order checkouts can reduce credit card fraud and chargeback instances significantly when used in addition to AVS protection.

Three-digit security number that is printed on the back of most Visa credit cards. Requiring this number on order checkouts can reduce credit card fraud and chargeback instances significantly when used in addition to AVS protection.

A person who has a credit card or debit card.

Cash back returns to you a percentage of the total amount spent on your credit card over a specific period of time, usually monthly or quarterly. This is particularly useful if you normally pay your credit card bills in full each month, as it means you get an effective discount on the products(...)

The act of taking back funds that have been paid to a merchant for a disputed or improper credit card transaction.

A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

A person who has a credit card or debit card.

The act of taking back funds that have been paid to a merchant for a disputed or improper credit card transaction.

The number of days from the transaction processing date during which the issuer may initiate a chargeback, typically a six month period.

The confirmation that the check presentor has not been linked to excessive returns of previously written checks.

A service that guarantees payment on each check presented. The guarantee service collects any returned items and the merchant typically follows a stringent set of procedures.

A co-branded credit card is sponsored by both the issuing bank and a retail organisation such as a department store or an airline. Cardholders may get benefits such as discounts or free merchandise from the sponsoring merchant based on account usage and terms.

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

A process where Visa or MasterCard resolves disputes between members arising from violations of the operating regulations and verification by the member that a financial loss has occurred.

see Custom Payment Service

A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

This is a type of bank card that can be widely used all around the world as a form of payment. The credit card holder must then reimburse the credit card company for the amount of the total sales the holder had charged on that particular credit card.

Unique number assigned to credit card.

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(...)

A partial profile of your financial life given within a particular time frame (usually measured in years). It shows the extent to which you pay your bills on time and how much you may owe particular parties. Credit card issuers use this information to decide whether to provide customers with(...)

The maximum amount of credit a cardholder has available to spend on their credit card.

A 17 character alphanumeric field that is used with Purchase Card transactions. The code is typically defined by the customer (cardholder) and used for accounting or project tracking purposes.

The customer service fee (also known as a maintenance fee) can be charged by some providers to pay for the cost of customer service.

Card Verification Code

Card Validation Value

Dun & Bradstreet Data Universal Numbering System. A unique 9 digit code that identifies and links more than 57 million companies worldwide.

see Demand Deposit Account

The amount the merchant pays per month to have access to all debit networks that the bank belongs to.

An ATM Bankcard requiring a PIN Code which is used to purchase goods and services and to obtain cash. The transaction will debit the cardholders personal deposit account.

Response to a transaction request meaning that the issuing bank will not authorize the transaction.

A standard checking account held by the merchant into which funds are deposited as a result of processed credit transactions.

Process of transmitting a batch of transactions from the merchant to the acquiring institution in preparation for settlement. Also known as release.

Online identification that authenticates a consumer, merchant and a financial institution. Digital certificates are used to encrypt information exchanged in secure electronic transactions.

(DRI) Utilizing this infrastructure enables consumers and organizations to prove that electronic transactions and events actually took place. In legal terms, these serve as a digital trail, as opposed to a paper trail.

An electronic signature, which cannot be forged. Instead it is generated from a computed digest of the text that is encrypted and sent with the text message. The recipient decrypts the signature and retrieves the digest from the received text. If the digests match, the message is authenticated(...)

A percentage calculated on the amount charged to the merchant by the acquiring bank for processing a transaction.

The processing of buying and selling via the Internet.

see Electronic Benefits Transfer

see Electronic Data Capture

see Electronic Data Interchange

see Electronic Funds Transfer

Obtaining authorization for use of a credit card by electronic means, as via computer equipment and telephone line.

Cards holding balance of government benefit funds

To use a Point Of Sale (POS) terminal for submitting credit card transaction information to a merchant account provider. The point-of-sale terminal reads the information encoded in the magnetic stripe of bankcards then electronically authorize and capture transaction data, eliminating the need(...)

The electronic communication of business transactions, such as orders, confirmations and invoices.

The transfer of money initiated through an electronic terminal, automated teller machine, computer, telephone, or magnetic tape. EFT also applies to credit card and automated bill payments.

Service offered by MSLTD whereby merchants can track their account online including 6 months of monetary and adjustment history, 6 months of chargeback history, 6 months of retrievals history (documentation requests), 3 months of merchant statements, cardholder inquiries, keyed or swiped(...)

Encryption is the process of disguising a message (using mathematical formulas called algorithms) in such a way as to hide its substance, a process of creating secret writing. Used as a data security technique for credit cards where their machine-readable data is scrambled and must be decoded(...)

Internet credit card and check processor (www.eprocessingnetwork.com)

EZ Check Sales Office

A card on which the embossed, encoded, or printed expiration date has passed.

see First Data Resources

This is the company that settles or clears the transactions between the merchant and the cardholder

A corporate credit card used only for the purchase of fuel and vehicle maintenance services.

An amount that Visa and MasterCard have established for single transactions at specific types of merchant outlets and branches, above which authorization is required.

A sale transaction for which a merchant received a voice authorization or authorization only. A force is done so that the previously authorized transaction can be settled and the merchant can receive funds. (also known as post auth or prior sale)

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(...)

see Interbank Card Association

Can be electronic (by swiping the card through a card reader) or manual (by obtaining a physical imprint using an imprinter) one of the two is always required to prove the card was present at the time of the transaction.

Unique four digit identification number assigned by MasterCard to identify its members.

The exchange of information, transaction data and money among banks. Interchange systems are managed by Visa and MasterCard associations according to their requirements 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 term that covers all commercial transaction activity on the Internet.

Various credit cards offer a low introductory rate that switches to a higher variable or fixed rate in order to attract customers. It could be described as a special offer, or discount. Make sure that you know how long the introductory rate is applicable and what APR the card will carry after(...)

see Independent Sales Organization

Japanese Credit Bureau

Purchasing Cards

The ability for a merchant to review, from their terminal the contents of a batch either before or after settlement (also referred to as a bacth report)

A stripe of magnetic information affixed to the back of a plastic credit or debit card. It contains customer and account information required to complete electronic financial transactions.

A transaction where a cardholder orders goods or services from a merchant by telephone, mail or other means of telecommunication, and neither the card nor the cardholder is present at the merchant outlet. Defined as a merchant that keys in more than 50% of their transactions without getting(...)

Credit card information that is entered via terminal keypad or keyboard instead of swiping the card through a card reader.

A bank that has a merchant processing relationship with Visa and Mastercard, also known as a member bank, can issue merchant accounts directly to merchants. To reduce risk, some banks limit approval to merchants in its geographical area, those with a physical retail storefront, or those that(...)

Member Alert to Control High Risk

Merchant Category Code

This is an organization licensed by MasterCard that processes merchants online credit card transactions in exchange for a percentage of the sales or transaction fees.

An account that is established by a merchant to receive payment via credit cards.

Merchant accounts are marketed to merchants by two basic methods: either directly by the processor or sponsoring bank, or by an authorized agent for the bank and additionally directly registered with both Visa and MasterCard as an ISO/MSP (Independent Selling Organization / Member Service(...)

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.

Bank that has an agreement with a merchant to accept (acquire) deposits generated by bankcard transactions.

A code assigned by an acquirer to a merchant to identify the merchants principle trade, profession or line of business. This four digit code is also known as the Sic Code.

A group of digits provided by a merchant bank to uniquely identify the merchant in an e-commerce transaction. Also called the Merchant ID or Merchant Number

Today a majority of credit card transactions are sent electronically to merchant processing bank for authorization, capture and deposit. The method of processing credit cards will vary by industry. In all circumstances either the entire magnetic strip is read by a swipe through a credit card(...)

Magnetic Ink Character Recognition (checks swiped for verification of funds)

see Merchant Identification Number

This reflects the amount of activity that was hand keyed into the terminal or voice authorized or not processed by closing the terminal within 24 hours. This activity is assessed a higher discount rate (an additional 1%)

see Mail Order/Telephone Order

see Member Service Providers

see Marketing Unit Director

Electronic communications process where multiple authorization requests and responses are exchanged during a single phone connection with the third-party transaction processor.

National Automated Clearing House Association

North American Industry Classification System. Common industry definitions for Canada, Mexico and the United States. This system is replacing the SIC Code system.

Charged on anything not qualified or mid-qualified as well as on business cards and manually keyed foreign cards. This activity is assessed the maximum discount rate

A 17 character alphanumeric field that may be used between the Cardholder and the Merchant for accounting or tracking purposes.

The original copy of the forms and signature used in the transaction

This process is when the credit card terminal dials into our bank to be partially reprogrammed, normally for updated information generally this term is used whenever verifone equipment is programmed.

A company that specializes in the provision of payment services for merchant on the Internet. The PSP will handle the capture, authorization and settlement of Credit and debit card payments and all the electronic and physical security required. They will often provide additional services such(...)

Fees paid by the merchant to the merchant bank or other contracted party on a per transaction basis.

A sequence of digits used to verify the identity of the holder of a bank card. It is a kind of password.

see Personal Identification Number

This devise is used in conjunction with a terminal when processing debit sales to insure authorized usage. The pin pad will ask for the customers secret 4 digit # during the sale (Pin #)

Refers to Plural Interface Processing. Capabiltiy that allows the processing of American Express directly through the AMEX Network, thereby eliminating AMEX authorization fees.

This is a generic term used to identify any of the various cards issued to cardholders.

Location in a merchant establishment at which the sale is conducted by payment for goods or services received.

Electronic device used by retail businesses to process credit card transactions. If the customer is present, they swipe or slide their credit card through the machine.

see Point of Sale

The process of updating individual cardholder account balances to reflect merchandise sales, instant cash, cash advances, adjustments, payments, and any other charges or credits.

A clearing record that an acquirer presents to an issuer through interchange, either initially (a first presentment) or after a chargeback (a re-presentment).

The number that is embossed, encoded, or both, on a plastic card that identifies the issuer and the particular cardholder account.

Principle Bank Identifier

An authorization usually done before a transaction takes place. The approved authorization request may be held for an extended length of time before a card is present or not.

A transaction for which authorization was obtained at an earlier time (I.E. A merchant had to call for voice authorization, merchant authorized card before services rendered, Hotel reservation, auto rental, etc.)

The bank that processes the transaction once a credit card number is entered.

This is the company that processes the merchants batch and submits them to FDR for settlement.

This type of equipment was specifically manufactured for a particular processor

see Payment Service Provider

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, and type of industry, etc.

charged on all swiped bankcard transactions that are electronically authorized and closed in a daily batch

A Merchant Account has a variety of fees, some periodic, others charged on a per-item or percentage basis. Some fees are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank(...)

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, truncated primary account number, amount, and reference number.

Transactions for which a cardholder grants permission to the Merchant to periodically charge his account number for recurring goods or services.

A transaction for which permission has been granted by a cardholder to a merchant that is periodically charged to a cardholders account.

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

Submits a transaction for Authorization Only. (see Authorization)

whereby the sales agent receives a portion of the fees charged to a merchant

A merchant that provides goods and/or services in the retail industry, but is not a mail/phone merchant, a recurring services merchant, or a T&E merchant.

A request to a merchant for documentation concerning a transaction, usually a cardholder dispute or a suspicious sales/return. A retrieval request can lead to a chargeback.

Sales agents receive a portion of the overall profit generated by each merchant in their portfolio

An online financial transaction used to negate or cancel a transaction that has been sent through interchange in error.

Risk Identification Service

Real Time Fraud

System to Avoid Fraud Effectively

A paper record evidencing the purchase of goods or services by a cardholder. Same as a receipt.

The step in the clearing process when the acquirer credits the merchant account with the amount of a credit card purchase, and the bankcard association (such as Visa and MasterCard) credits the acquirer and debits the card issuer for the transaction.

A fee that is charged by a merchant services provider for establishing a merchant account.

A 4-digit numbering system used to categorize businesses by industry group. This system is being replaced by the NAICS Coding system.

see Standard Industry Code.

Similar to a credit card, but has a small microprocessor built-in to the card that holds and/or processes information for financial and other applications.

A 4-digit numbering 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 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.

A credit-card-sized device, implanted with a computer chip, with stored money value. A reloadable stored-value card can be reused by transferring value to it from an automated teller machine or other device. A disposable card cannot be reloaded.

Any additional charges to a merchants standard processing fees, they are a result of mid and non-qualified transactions.

An abbreviation for Travel and Entertainment. American Express is considered a T&E Card.

An airline, car rental company, or hotel whose primary function is to provide travel-related services. A travel agency (excluding one that is primarily engaged in the sale of transportation or travel-related arrangement services by mail/phone order) is a T&E merchant to the extent that it acts(...)

The term means that a sale will be registered within the terminal only until the sale is processed for deposit. If for any reason the sale deleted from the terminal before the deposit is processed the merchant will not get paid on the transaction. The merchant is required to do a deposit on(...)

see Terminal ID

see Terminated Merchant File

Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

A fee charged by a merchant account provider for each credit card transaction completed.

A unique 15 character value that VISA assigns to each transaction and returns to the Acquirer in the authorization response. VISA uses this value to maintain an audit trail throughout the life cycle of the transaction and all related transactions, such as reversals, adjustments, confirmations,(...)

An entity that validates and authorizes credit card purchases. They may also service the actual accounts on behalf of the issuers, emboss cards, and mail cards to cardholders.

A specific type of financial detail transaction activity that can be submitted to the clearing system.

Process of validating that a user is who the user represents himself/herself as.

A unique 4 character value that VISA includes as part of the CPS/ATM program in each authorization response to ensure that key authorization fields are preserved in the clearing or settlement record.

With variable-rate cards, the APR changes when interest rates or other economic indicators change. Also known as a floating rate.

Value-Added Resellers

The Visa scheme designed to authenticate cardholders so that they cannot subsequently repudiate their use of a card to purchase goods. It will also reduce other fraud as fraudulent users will not generally know the pass phrase or PIN associated with the card.

The Visa scheme designed to authenticate cardholders so that they cannot subsequently repudiate their use of a card to purchase goods. It will also reduce other fraud as fraudulent users will not generally know the pass phrase or PIN associated with the card.

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.

The reversal of a current transaction, one that has been authorized, but not settled. Settled transactions require processing of a credit or return in order to be reversed.