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MERCHANT PROCESSING
GLOSSARY |
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- A -
ABA Routing Number: Also referred to as Transit Routing Number.
Directs electronic ACH deposits to the proper bank institution.
Account Number: Unique sequence of numbers assigned to a cardholder
account that identifies the issuer and type of financial transaction
card.
ACH (Automatic Clearing House): Nationwide electronic funds
transfer network which enables participating financial institutions
to distribute electronic credit and debit entries to bank accounts
and to settle such entries.
Acquirer: Bank that sponsors merchants for the acceptance
of credit card transactions.
Acquiring Bank: Financial institution (also called a merchant
bank, or acquirer) that processes a merchant's transactions and
credits payment to the merchant account. A merchant account at the
acquiring bank receives funds from a cardholder when a transaction
is complete.
Approval: Code issued by a card issuing bank allowing a sale
to be charged against a cardholder's account. Approval means that
the amount is within the cardholder's remaining credit limit and
the card has not been reported lost or stolen. Approvals are requested
via an AUTHORIZATION.
Approval/Authorization: All participants in the chain from
the retailer to the cardholder have said that they are ready, willing,
and able to complete this Sale, Refund or PreAuth. The transaction
is queued for completion during the next batch closure.
AMERICAN EXPRESS (Amex): Organization that issues cards
and acquires transactions, unlike VISA and MasterCard, which are
bank associations.
Annual Fee: A fee charged to merchants, which can be used
to lower the discount rate.
Application Fee: A fee for processing the paperwork and setting
up the merchant account.
Association: Any entity formed to administer and promote
Cards, including without limitation MasterCard International, Incorporated
("MasterCard"), Visa U.S.A., Inc. and Visa International
("Visa"), Discover Financial Services LLC ("Discover")
and any applicable debit networks.
Auth Only: Transaction in which the merchant does not intend
to charge the cardholder until a later time, if at all. See PRIOR
AUTHORIZATION.
Authorization: The request to charge a cardholder. If not
used within a certain time period, the authorization will expire.
Time period determined by issuing bank.
Authorization Center: Department that electronically communicates
with a merchant's request for an authorization on credit card transactions
to the cardholder's bank. Transmits the authorization via voice
authorization or electronic point of sale equipment.
Authorization Code: Numerical or alphanumerical code sent
by the card issuer, given to a sales transaction as verification
that the sale has been authorized. The authorization code is always
included on the merchant sales draft.
Average Ticket: The average amount of a merchant's bank card transaction.
Generally used in pricing decisions and calculations.
AVS (Address Verification System): System available to merchants
who key transactions which matches the street number and zip code
of the cardholder with the information given to the merchant. This
allows the merchant to verify that the person requesting the goods
or services is the person who owns the cards.
- B -
Bank Card: A plastic card accepted by merchants as a result
of a standard set of rules for the authorization of its use, clearing,
and settlement of transactions. Used to credit an account for processing
a sales transaction.
Bank Identification Number: Digits of a credit card that
identify the ISSUING BANK. Sometimes the first six digits. Often
referred to as a BIN.
Bank Routing Number: First nine digits that appear across
the bottom of a personal check, they identify the financial institution.
Basis Point: 1/100th of a percentage point.
Batch: Collection of credit card transactions saved for
submitting at one time, usually at the end of each day. Batch fees
are charged to encourage a merchant to submit his or her transactions
at one time, rather than throughout the day.
Batch Fee: Incurred for settling each batch from the terminal.
Batch Processing: Type of data processing where related transactions
are transmitted as a group for processing.
- C -
Cancellation Fee: Incurred if a merchant cancels prior to
the completion of the 3-year contract term.
Capture: Submission of a credit card transaction for processing
and settlement. POS terminals and real-time processing software
capture transactions to submit to merchant account providers or
credit card processors.
Card Not Present Sale/Transaction: A transaction that occurs
when the Card is not present at the point-of-sale, including Internet,
mail-order and telephone-order Card sales
Card Present: A transaction evidenced by the swiping a card
through a terminal or by an imprinted and signed credit card draft.
Card Issue: Financial institution (or its agent), which
issues the financial transaction card to the cardholder. The card
issuer remains unchanged throughout a transaction.
Cardholder: Person or company who has an active credit card
account with which transactions can be processed.
Card Validation Code (CVC): Unique encrypted 3-digit value
that is encoded in the magnetic stripe and printed on the back of
a
MasterCard. It is used as an additional means of Cardholder validation
during the authorization or referral process.
Card Verification Value 2 (CVV2): Unique encrypted 3-digit
value that is encoded in the magnetic stripe and printed on the
back of a Visa Card. It is used as an additional means of Cardholder
verification during the authorization or referral process.
Cash Benefits: An EBT account maintained by an Issuer that represents
pre-funded or day-of-draw benefits, or both, administered by one
or more Government entities, and for which the Issuer has agreed
to provide access under the EBT program. Multiple benefits may be
combined in a single cash benefit account.
Cash Over Transaction: Dispensing of cash by a merchant in connection
with a Card sale, other than a PIN Debit Card transaction, for the
purchase of goods or services
Certification: Process during which a terminal or software
provider MerchantSphere certain standards required by the certifier.
Chain: A series of merchant locations that are managed/owned
by the same entity.
Chargeback: Fee charged for transactions that are successfully
challenged by a credit card holder. After a charge is disputed and
adjudicated in the cardholder's favor, the transaction total and
chargeback fee are deducted from the merchant account.
Chargeback Reason Code: Two-digit code identifying the specific
reason for a chargeback.
Check Services: Authorization of a check.
Check Verification: A service provided in which a merchant
accesses a national negative file database through its terminal/register
to verify or authorize that a person has no outstanding bad check
complaints at any of the member merchants. This is not a guarantee
of payment to the merchant
Clearing: Process of exchanging financial details between
an AQUIRER and an ISSUER to facilitate posting of a cardholder's
account and reconciliation of a customer's settlement position.
Close Batch: Process by which transactions with authorization
codes are sent to the processor for payment to the merchant.
Cookies: Small files that are automatically downloaded from
a web server to the computer of someone browsing a web site. The
data can then be accessed any time the user returns to the site.
Corporate Card: A bank card issued to companies for use
by company employees.
Credit (aka Refund): Transaction that transfers money from
the merchant to the cardholder's account.
Credit Card: A bank card establishing the privilege of the
person to whom it is issued to present it as payment to a merchant.
The card bearer must reimburse the credit card company the amount
of the sale.
Credit Card Processors (or third-party processors): Merchant
service providers that handle the details of processing credit card
transactions between merchants, issuing banks, and merchant account
providers.
Credit Limit: Maximum amount the cardholder may owe an issuer
on the card.
Customer Activated Terminal (CAT): A magnetic stripe terminal
or chip reading device (such as an automatic dispensing machine, Limited
Amount Terminal, or Self-Service Terminal) that is not an ATM.
- D -
Dial-Up Terminal: An Authorization device which, like a telephone,
dials an Authorization Center for validation of transactions.
Data Encryption: Scrambling of information sent over the
Internet. Data encryption ensures that only the intended recipient
has the ability to read and understand the information.
Database: File or file system containing organized information
and a filing and retrieval system for storing information. Most
database software (i.e., Oracle, Sybase, and Microsoft Access) also
includes tools for data analysis.
Debit: Charge to the customers bank card account.
Debit Card: Used by consumers in place of cash and purchases
are deducted automatically from the cardholder's account. Requires
a PIN (Personal Identification Number) for use.
Decline: The processing network or the cardholder's bank
has refused to complete a transaction for Sale, Refund or PreAuth.
The processor passes back to the retailer any reason it receives
if a Decline is issued.
Deposit: When a merchant closes a batch and sends the transactions
to the host computer for settlement. Typically, batches should be
closed on a daily basis to ensure the lowest discount rates.
Digital Certificate: Online identification that authenticates
a consumer, merchant and financial institution. Digital certificates
are used during SET transactions.
Discount Rate: Amount charged to a merchant for the daily
processing of credit card transactions. This fee that applies to
all retail card present & magnetic stripe read items that are
authorized and batched out on a daily basis.
Doing Business As (DBA): Refers to the specific name and
location of the merchant establishment where credit card purchases
were made.
Domain: Designation for a particular location on the Internet.
A domain, for example "FastTransact.com," contains files
that make up the content of web pages under that address. Domain names
are associated with IP addresses.
- E -
E-Check: Electronic equivalent of a paper check.
E-commerce: 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 via web sites.
EBT (Electronic Benefit Transfer): An electronic system that
allows a government benefit recipient to authorize the transfer
of their benefits from a Federal, State or local government account
to a merchant account to pay for products and services received.
EDC (electronic data capture): Use of a POS terminal for
validating and submitting credit card transactions to a merchant
account provider or other credit card processor. For online credit
card processing, software takes the place of the POS terminal.
EFT (Electronic Funds Transfer): 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.
Electronic Banking: A form of banking where funds are transferred
via an exchange of electronic signals between financial institutions
instead of exchanging cash or checks.
Electronic Draft Capture: System in which
each transaction is routed to the host computer for processing and
storage. The stored transactions are used to create settlement files
and transactions reports.
Embossing: Raised characters that are printed on all credit
cards. Embossing provides the cardholders information and allows
the card to be imprinted.
Encryption: Process of encoding a PIN pad with the processor's
configuration and key injection for the purpose of accepting debit
cards. Most common formats are DUKPT (Derived Unique Key Per Transaction)
and Masterkey (MasterCard's debit key encryption format).
ESN: Unique serial number assigned to a RAM Modem terminal
by the manufacturer.
Expiration Date: Date embossed on a bank card.
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- F -
Facsimile Draft: Paper record that is provided to an acquirer
as a substitute for an actual sales draft.
Factoring: The term is often applied to ISOs that offer to
process credit card transactions through their own merchant account
rather than through an account established by the merchant, in exchange
for a percentage of the transaction or other fee.
FDIC (Federal Deposit Insurance Corporation): Federal program
that protects consumers by providing insurance for bank deposits
in the event that a bank becomes insolvent.
Financial Institution: Any organization that provides an
avenue to move, invest, lend or provide financial services. This
would include federal & state savings banks, savings and loan
associations, credit unions and commercial banks.
Financial Transaction: Transaction from the acquirer to the
card issuer containing all the necessary data elements for authorization,
posting and reconciliation.
Force Transaction/ Offline Transaction: Entry of a transaction
after a referral message is displayed on the POS terminal. Network
interruption of service that allows the merchant to enter a transaction
and the approval code as a forced entry with an authorization code.
Front End: User interface that appears on a web page and
allows a visitor to interact with dynamic features including databases,
shopping cart programs, and online purchase processing software.
FTP (File Transfer Protocol): 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.
Fulfillment: The acquirer provides the issuing bank with
an original sales draft or a legible copy.
Funding: Payment a merchant receives for his settled and
captured deposits.
- G -
Gateway: An application that accepts transactions from online
merchant storefronts and routes them to a financial institution's
processing system.
GIF (graphic interchange file): File type that contains a
graphic, photo, or other image. GIFs are commonly found on the Web,
along with another graphic file format, the JPEG. GIFs tend to take
less memory and bandwidth than JPEGs, and can contain
animation. JPEGs offer greater image clarity, especially for photo
images.
Gross: When referred to in connection with transaction amounts
or fees, refers to the total amount of Card sales, without set-off
for any refunds or Credits.
Gross Deposit: Total dollar amount of bank card credit and
sales drafts submitted for payment.
- H -
Hard Copy: Original document of an application, credit slip,
sales draft/slip.
Headquarters: Main office of a business.
Holdback (aka Reserve Account): 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.
Host Capture: Type of transaction capture in which transaction
information is stored in the processor's host computer and not at
the merchant's POS system. Compare to Terminal Capture. Settlement
occurs at the host computer and is automatic: no merchant initiation
is required.
Hot Card: A bank card that has been used excessively. Usually
indicating that the card has either been stolen or counterfeit.
- I -
ICS (Internet Commerce Services): The services an Internet
commerce provider offers to enable clients to handle many aspects
of their business on the Internet.
Imprint: Can be electronic (by swiping a card thru a card
reader) or manual (by obtaining a physical imprint using an imprinter).
One of the two is always required on a credit card transaction to
prove that the card was present.
Imprinter: Equipment used by merchants to imprint embossed
information off of a bank card onto a sales draft.
Interchange: Standard format for sharing
or transferring data electronically between parties that do not
share a common application. Usually a format that is platform-independent
is agreed upon as a standard. Examples of common interchange formats
include EDI (electronic data interchange), ASCII (American Standard
Code for Information Interchange), and GIF (graphics interchange
format). Interchange is the operating system of Visa/MasterCard
for authorization, settlement, capture and passing through of interchange
and other fees in addition to monetary and non -monetary information
regarding bank card transaction/processes.
Interchange Fee: Servicing fees paid by acquirers to issuers
for transaction costs. Visa/MasterCard establishes and periodically
reviews interchange rates.
Internet Commerce: A broad term covering all commercial transactional
activities on the Internet. Internet commerce can range from vendors
selling software from a Web storefront (Web site) to large corporate
procurement systems using an Internet-based VPN (virtual private
network) to deal with trading partners. Internet commerce is not
synonymous with e-commerce, which covers all electronic commercial
activities.
IP Address (Internet Protocol Address): Designation for a
particular location on the Internet, such as "140.23.719.6."
IP addresses are associated with domain names.
ISO (Independent Sales Office): Firm or organization that
offers to process online credit card transactions, usually in exchange
for transaction fees or a percentage of sales. Merchants must generally
establish a merchant account before contracting for ISO services,
although some ISOs claim not to require separate merchant accounts.
See also factoring.
ISP (Internet Service Provider): Company that provides access
to the Internet, including Web browsing and e-mail. ISPs often offer
connections that can be accessed by dialing a telephone number through
your computer's modem.
Issuer/Issuing Bank: A licensed member of Visa/MasterCard
that holds the contractual agreements with other financial institutions
and issues bank cards.
Issuing 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.
- J -
Japanese Credit Bureau (JCB): Issuers of the JCB bank card.
JPEG (or JPG ): File format used for storing graphic images,
usually photographs. JPEG files are larger than GIFs of the same
image but offer better color control and clarity. See also GIF.
- K -
Kiting: A scam in which a merchant submits a sales draft
from his or her personal account(s) to get cash advances from their
business.
- L -
Limited Amount Terminal: A Customer Activated Terminal that
has data capture only capability, and accepts payment for items
such as parking garage fees, road tolls, motion picture theater
entrance, or magnetic-stripe telephones.
Local Area Network (LAN): Data communication network confined to
a limited geographic area with moderate to high data information.
The area consists of single or cluster buildings. It is owned solely
by its user and does not use common carrier circuits although it
may have gateways or bridges to other public or private networks.
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- M -
Magnetic Stripe: Stripe on the back of a bank card that
contains magnetically encoded cardholder account information. The
name of the cardholder is stored on Track I and the account number
and expiration date are stored on Track II.
Mail Order/Telephone Order (MOTO): This type of account
is used by mail order companies, anyone accepting phone orders or
any other system where the merchant can't physically see the card
and/or the cardholder. Currently this is the type of account is
used for Internet Businesses accepting credit cards online. The
merchant and the cardholder do not need to be in the same physical
location. MOTO accounts are also known as Card Not Present or CNP
accounts.
Manual Entry: Credit card information that is entered via
terminal keypad or keyboard instead of swiping the card through
a card reader.
MAP (Merchant Account Provider): Bank or other institution
that hosts merchant accounts and processes online credit card transactions.
The term is also often used broadly to include any credit card processing
service, including ISOs.
MasterCard: Association of banks that govern the issuing
and acquiring of MasterCard credit card transactions and Maestro
debit transactions.
Media: The documentation of monetary transactions (i.e.,
Sales Drafts, Credit Drafts, computer printouts, etc.)
Member: Financial institution that is a member of VISA USA
and or MasterCard International. A member licensed to issue cards
to cardholders and to accept merchant sales receipts.
Merchant Account: Bank account established by a merchant
to receive the proceeds of credit card purchases. By establishing
a merchant account, the merchant bank agrees to pay the merchant
for valid credit card purchases in exchange for the right to collect
on the debt owed by the consumer.
Merchant Account Number (Merchant Number): A number that
numerically identifies each merchant, outlet, or line of business
to the Processor for accounting and billing purposes.
Merchant Account Types: There are two basic types of merchant
accounts. A Retail account is merchant account that is approved
for use in a physical store where the cardholder and the card are
present. Typically the merchant swipes the card through a card reader
to get your card numbers so this account is sometimes referred to
as a "swipe" account or "cardholder present"
account. Retail accounts are the least risky type of account and
therefore the merchant account provider charges the merchant must
less than the riskier "card not present" type of accounts.
A "card not present" account is also called a Mail Order
- Telephone Order (MOTO) account. This is the account used by mail
order companies, anyone accepting phone orders or any other system
where the merchant can't physically see the card and/or the cardholder.
Currently this is the type of account used for Internet Businesses
accepting credit cards online. Because there is increased risk for
charge backs and fraud with MOTO accounts, merchant account providers
always charge the merchant higher rates and fees for this type of
account.
Merchant Acquirer: A member that has entered into agreement
with a merchant to accept deposits via bank card transactions.
Merchant Agreement: Written contract between the merchant
and the acquirer regarding their rights, rates, and responsibilities.
Merchant Bank: 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. See also merchant account
provider.
Merchant Category Code (MCC): Merchant classification code
that identifies the merchant by business type and or processing
type, authorization and settlement.
Merchant Number: Number that identifies each merchant to
the processing company.
Merchant Services Provider (MSP): A bank, ISO, or other
firm that provides services for processing financial transactions,
usually credit card sales. Many MSPs provide merchant accounts,
while others require their clients to establish merchant accounts
on their own. Some MSPs claim that they do not require merchant
accounts; this may indicate factoring, which is illegal in many
areas. See also holdback.
MID (Merchant Identification Number): Refers to the Merchant
Identification Number. This unique number identifies a merchant.
Mid-Qualified: Transaction that did not interchange at the
best rate because it was entered manually or was not settled in
a timely manner.
MID/TID: MID - Merchant ID number and TID - Terminal ID
numbers. For example, a grocery store typically has a single MID
but has a distinct TID for each cash register terminal. By sorting
all of that MID's traffic by TID, management can see which register
contributed which set of transactions. Most Web retailers have just
one terminal, so all traffic is associated with a single MID/TID.
However, you may have more than one account associated with the
same MID/TID. In that event, you'll find that batches often contain
transactions from more than one account.
Minimum Discount Fee: A fee that is assessed a merchant that
does not process at least $25 per month.
MODEM: Stands for MOdulatorDEModulator. An electronic telecommunications
hardware device used by the terminal or PC POS to dial up the processor.
MO/TO discount rate (mail order / telephone order discount rate):
The discount rate charged by the merchant account provider for credit
card transaction in which the actual credit card was not available
to the merchant.
Monthly Minimum: Amount in fees and percentages charged
by a merchant services provider in a given month. If account activity
does not generate the monthly minimum, the account holder must make
up the difference.
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- N -
Net Payment: Payment to the merchant for sales drafts less
credits minus the specified discount fee.
Net Revenue: Discount income less interchange expenses.
Net Settlement: The settlement through an actual transfer
of funds.
Non-Bankcard: A non-bank company that deals directly with
the cardholder i.e.: American Express, Diners, Discover, Carte Blanche
and JCB.
Non-Qualified Interchange Fee: The difference between the
interchange fee associated with the Anticipated Interchange Level
and the interchange fee associated with the more costly interchange
level at which the transaction actually processed.
Non-Qualified Surcharge: A surcharge applied to any transaction
that fails to qualify for the Anticipated Interchange Level and
is therefore downgraded to a more costly interchange level.
Non-Qualified Rate: A fee that applies to all retail, MO/TO
Internet items without an AVS match, AVS Request, delayed or incomplete
transactions/batches/batch settlements for foreign cards, business
cards and or corporate cards.
Non-Sufficient Funds (NSF): A term used in the banking industry
to indicate that a demand for payment a check cannot be honored
because insufficient funds are available in the account on which
the instrument was drawn. In simplified terms, a check has been
presented for clearance, but the amount written on the check exceeds
the available balance in the account. It is often colloquially referred
to as a bad check, a "bounced" check, or a rubber check.
Businesses frequently use the term dishonored check.
Notification: A message where the sender notifies the receiver
of an activity taken, requiring no approval or response.
- O -
Online Storefront: A commerce-enabled Web site available
on a public network, such as the Internet, that offers goods and
services for sale. An online storefront is the equivalent of a store
or place of business that a customer would visit to purchase goods
and services.
Open to Buy: The amount of credit available at a given time
on a card holder's account.
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- P -
PIN (Personal Identification Number): Personal Identification
Number used by cardholder to authenticate card ownership for ATM
or debit card transactions. The cardholder enters his/her PIN into
a PIN pad. Customer entry of his/her PIN is required to complete
an ATM/Debit card transaction.
Point of Sale (POS): The place and time at which a transaction
occurs. This term also refers to the devices or software used to
capture transactions.
Post Authorization: A sale transaction for which you received
a VOICE AUTHORIZATION at an earlier time.
POS Terminal: A piece of equipment used at a merchant location
that is connected to the bank and or their authorization service
provider via phone lines to authorize, record and forward information
electronically. If the credit card is available, the merchant can
swipe the card through the terminal. See also swipe discount rate
and MOTO discount rate.
Posting: The process of recording debits and credits to
individual cardholder account balances.
PreAuth: An event where no money flows but the cardholder's
account is asked whether a pending Sale is likely to be successful.
The authorization/approval of a PreAuth usually indicates that a
follow-up Sale will also be approved, but do keep in mind that the
favorable condition of the cardholder's account may change before
you can issue a Sale.
Presentment: The process the acquirer uses to send transaction
information to the issuer for reimbursement.
Prior Authorization: An authorization that has been obtained
previously, either through operator or through credit card equipment.
Processor: A transaction processor; a large computer center
that processes data from credit card transactions and settles funds
to merchants.
- Q -
Qualification: A level at which a transaction interchanges.
Level of qualification (qualified, mid-qual, et cetera) is dependent
on how credit card number is entered, how quickly a transaction
is settled, the type of industry, specific information, etc.
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- R -
Real-Time Authorization: Authorizes a credit card in real-time,
as a customer makes their purchase.
Real-time Processing: The verification and processing of
credit card transactions immediately following a purchase. Real-time
verification on the Web usually takes less than five minutes. Real-time
verification is especially important for Web sites that sell products
and services that consumers expect immediately, such as memberships
to the site or software downloads.
Reason Code: A code used to provide additional information
to a member regarding chargebacks, presentments, or retrieval requests.
Receipt: A hard copy of an invoice or sales draft that took
place at the point of sale that includes a date, merchant name and
or location, account number, dollar amount, reference code and the
type of account.
Reconciliation: An exchange of messages between two institutions
(acquirer, card issuer, or their agents) to reach agreement on their
financial totals.
Recurring Fees: Regular, usually monthly, charges for maintaining
a merchant account. Recurring fees include the discount rate, transaction
fees, statement fee, and monthly minimum.
Recurring Payment Indicator: A value used to identify transactions
for which a consumer provides permission to a merchant to bill the
consumer's Card account at either a predetermined interval or as
agreed by the Cardholder for recurring goods or services.
Recurring Transaction: A transaction that is charged to
the cardholder on regular scheduled intervals for goods and or services
provided.
Reference Number: A code given to a transaction by Host
based processors.
Referral: This message is received from an Issuer when an
attempt for Authorization requires a call to the Voice Authorization
Center or Voice Response Unit (VRU).
Replacement Authorization: An authorization used when a
previous authorization was approved and a subsequent authorization
is required because the amount of the transaction is now different
from the originally approved amount.
Representment: A financial transaction originated by a merchant
to recover funds charged back by a card issuer.
Request: A message where the sender informs the receiver
that a transaction is in progress and a response is required to
complete the activity.
Reserve Account (aka Holdback): 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.
Reserve Account: A fund established and managed by us to
protect against actual or contingent liability arising from Chargebacks,
adjustments, fees and other charges due to or incurred by us.
Resubmission: A transaction that the merchant originally
processed as a Store and Forward transaction but received a soft
denial from the respective debit network or Association. The resubmission
transaction allows the merchant to attempt to obtain an approval
for the soft denial, in which case you assume the risk should the
transaction fail.
Retrieval Request: A request to a merchant for documentation
concerning a transaction, usually a cardholder dispute or suspicious
sale/return. A Retrieval Request can lead to a CHARGEBACK.
Reversal: 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.
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- S -
Sales Draft: An actual paper documentation of a transaction.
Secure Serve: A Web server or other computer connected to
the Internet that is capable of establishing encrypted communication
with clients, generally using SSL or SET.
Security: 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.
Settlement: The process by which transactions with authorization
codes are sent to the processor for payment to the merchant.
Settlement Account: An account at a financial institution
designated by Client as the account to be debited and credited by
Processor or Bank for Card transactions, fees, Chargebacks and other
amounts due under the Agreement or in connection with the Agreement.
Setup Fees: Fees charged for establishing a merchant account,
including application fees, software licensing fees, and equipment
purchases.
Shopping Cart Program: A software package that runs as part
of a Web site to collect and record purchasing decisions by a visitor.
Shopping cart programs are stored on Web servers.
S.I.C. Code (Standard Industry Classification): Refers to
Standard Industry Classification. These codes are four digits used
to identify the business type.
Spam: Unsolicited e-mail. There are two common usages: 1)
mass e-mailings by commercial sites to recipients who have not requested
any contact, and 2) e-mail sent to intentionally annoy or harass
the recipient, including crashing his or her computer by overloading
its e-mail capacity.
Split Dial: The terminal dials direct to AMEX for authorization
and settles at the VISA/MASTERCARD Host. A process which allows
the Authorization terminal to dial directly to different Card processors
(e.g., AmEx) for Authorization. In this instance, the merchant cannot
be both EDC and Split Dial. Split Dial is also utilized for Check
Guarantee companies.
SSL (Secure Socket Layer): A system for encrypting data
sent over the Internet, including e-commerce transactions and passwords.
With SSL, client and server computers exchange public keys, allowing
them to encode and decode their communication.
Starter Kit: Supplies that are shipped to new merchants
including sales drafts/slips, credit slips, batch header, Visa/MasterCard
decals, imprinter plates, terminal overlays and instruction guides.
Store & Forward: A transaction that has been authorized
by a merchant when the merchant cannot obtain an Authorization while
the customer is present, typically due to a communications failure.
The merchant will store the transaction electronically in their
host system and retransmit the transaction when communications have
been restored.
Stored Value Card: A pre-paid card that stores a monetary
value from which the purchase amount is deducted after each transaction.
Submission: The process of sending Batch deposits to Processor
for processing. This may be done electronically or by mail.
Summary Adjustment: An adjustment to your Submission and/or
Settlement Accounts in order to correct errors.
Suspect Transaction: A transaction that occurs one day prior
to or directly after an account number is listed in the Warning
Bulletin or pick up list.
Swiped Card: Credit card information that is read directly
into the terminal as a result of swiping or sliding the credit card
thru a card reader. The information magnetically encoded in the
magnetic stripe is transmitted. This information includes secret
data that helps validate the card.
Swipe Discount Rate: The discount rate charged by a merchant
account provider for transactions in which a credit card is swiped
on the POS Equipment. It is also 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.
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- T -
T & E Card (Travel and Entertainment): Travel and entertainment
card issued by a private, non-bank company that deals directly with
the cardholder and the merchant and typically requires full payment
on a monthly basis.
Terminal: 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.
T & E Merchant (Travel and Entertainment): An airline,
lodging, restaurant or card rental company whose main function is
to provide travel/entertainment related services.
Terminal Based: A system that captures credit card transactions
and holds them until settlement.
Terminal Capture: Type of software in which transaction information
is stored in software, not at the host computer. Merchants using
terminal capture must initiate SETTLEMENT at the end of each day
or shift. Compare to HOST SETTLE.
TMF (Terminated Merchant File): A file listing the names
of merchants and their principals whose bank card relationship has
been terminated by the acquirer.
Third Party Processor: A non-member agent employed by an
acquiring bank, which provides authorization, settlement, and merchant
services to a merchant.
Ticket Size: The monetary value of an order placed by credit
card.
Transaction: Action between cardholder and merchant that
results in activity on a cardholder account.
Transaction Date: The actual date on which a transaction
occurs.
Transaction Fee: A per transaction charge incurred by merchants.
This is in addition to the percentage DISCOUNT fees.
Truncation: 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.
- U -
URL (Uniform Resource Locator): An address for a file (or
page) located on the Internet, usually the Web. Example: http://www.MerchantSphere.com
- V -
Valid Date: The date embossed by the card issuer on the credit
card.
VAR (Value Added Reseller): Third party software vendors.
Voice Auth: A transaction authorization that is provided
by an operator, usually when an issuer sends a "Please Call"
message to the merchant instead of an authorization number.
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- W -
Web Host: The computer which has your active web site on
it. To host a web site, a host computer must have proper server
software, connection capacity for the traffic that comes to the
web site and a unique and static internet protocol (IP) address.
An IP address looks like 4 sequence of numbers separated by periods,
i.e. "123.11.123.1" A uniform resource locator, or URL,
is a unique name that has been assigned to a static IP of a specific
host computer making it easier to find a web site.
Web Server: A computer dedicated to storing the various
files that make up Web pages and the protocols needed for communicating
with other computers via the Internet.
World Wide Web (aka Web): The entire collection of files
written in HTML and similar mark-up languages available on the Internet.
Clients on the Internet use their browsers to request these files
from Web servers and then display them as Web pages. The Web is
only a portion of the Internet; other parts include e-mail communication
and FTP.
Wireless: Describing radio-based systems that allow transmission
of telephone and/or data signals through the air without a physical
connection.
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