Glossary of terminus

termins

A              

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


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.


The numerical code designated by the issuer, assigned to a sales transaction as verification that the sale is authorized.


The average dollar amount of a merchant’s credit card transaction is generally used in pricing decisions and calculations. For example, the Merchant Services Provider may use the average ticket amount to determine the fee structure that will be charged to a merchant for credit card processing.


An affirmative reply following a transaction authorization request.


A procedure used by an acquirer on behalf of the merchant to resolve a chargeback-related dispute with a card issuer.


MasterCard International, Visa U.S.A. or Visa International, which are licensing regulatory agencies for bank card activities.


A particular set of rules and specifications that software programs can follow to communicate with each other. API serves as an interface between different software programs and facilitates their interaction, similar to the way the user interface facilitates interaction between humans and computers.

B              

Business to Business – refers to one business communicating with or selling to another.


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 order/telephone order (MOTO) transactionsBank Identification Number (BIN) – An identification number consisting of a two-part code assigned to banks and savings associations. The first part shows the location and the second identifies the bank itself. This identifies the institution that issued the card to the cardholder, as well as the card type.

C              

A customer who does not receive his goods or services, or says he did not place an order, can ask his Issuing Bank to chargeback the Merchant. The Issuing Bank sends the chargeback request to the Merchant Bank, which forwards it to the Merchant asking to validate the charge. Information such as the amount, an invoice or folio, customer signature, or shipping documents, as well as the shipping address (used in AVS during the authorization), is needed to defend against a chargeback.


The blocking of a credit card after which it cannot be used.


The seller does not have physical access to both the buyer and the credit card.  For example, this will result if information cannot be retrieved from the magnetic strip or hologram, which verifies the customer’s signature.  In this case, in order to increase the reliability of the payment system, an Address Verification Service is used.


The Card Verification Value is calculated from the data encoded on the Card Verification Code  on the magnetic strip using a secure cryptographic process.


Card Validation 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.


An individual issued a credit card or authorized to use an issued card. The cardholder is able to make purchases using the credit card.


A transaction returned through interchange by an issuing bank to an acquiring bank. A transaction may be returned because of rules and regulations violations, because the sale is disputed by a cardholder or as a result of fraud. In the case of a cardholder dispute, the merchant has the opportunity to appeal and prove that the sale is valid.


The clearing process includes all of the functions necessary for the acquiring bank to recover funds related to a transaction in the transaction currency from the issuing bank. Clearing is part of the settlement process. In the clearing process, the acquirer and the issuer exchange financial details in order to complete a sale. As a result of clearing, the amount of the purchase is posted to the cardholders account.


Merchant services providers that handle the details of processing credit card transactions between merchants, issuing banks and merchant account providers. Website operators usually must first establish their own merchant account before starting to work with a third party processor.


The Card Associations make regulations for each industry that accepts credit cards. These regulations are designed (according to the Card Associations) to prevent fraud.

D              

Doing Business As – the name a business uses to operate.


A response to a transaction attempt that means the card-issuing bank will not accept the charge, and the merchant should finalize the sale with another form of payment.


The dollar amount paid by the merchant to the acquirer, or other contracted party, for processing the merchant’s credit card transactions.


The percentage rate that an acquirer charges the merchant for handling credit card transactions. The discount rate is a small percentage of the value of each credit card purchase.

E              

Electronic Commerce – the sale and purchase of goods or services over the Internet.


The embossed date on a bankcard. After that date, the card becomes invalid and should no longer be accepted.

F              

The process of identifying suspicious merchant or cardholder activity.

G              

Manages the electronic connection between consumers and their financial institutions and transmits data.


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.

I              

The exchange of transaction data between acquiring and issuing institutions.


Fees paid by the acquirer to the issuer to compensate for transaction-related costs. MasterCard and Visa establish interchange fee rates.


An organization that provides access to the Internet in some form, usually for money.

M              

The way a merchant chooses to accept payment for products or services. Examples include: MasterCard, Visa,  Diners Club, JCB, and private label cards.


A written agreement between a merchant and a bank or other organization containing their respective rights, duties, and warranties with respect to acceptance of credit cards as a form of payment.


E-commerce website owner providing electronic sales function.


A 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 an agreed fee on the same purchase.


Four-digit classification codes used to identify the type of merchant business in various stages of transaction processing. For example 5999 is the code given to miscellaneous and specialty retail stores. Related term: SIC code.


An identification number that represents a Merchant’s operating/profit center to its Acquiring Bank for the purpose of processing credit card transactions.


A Merchant Services Provider (MSP) is an organization that quotes a Discount Rate to the Merchant and handles the setup with the front-end and back-end Processors to ensure the Merchant’s funds are correctly routed to their bank. An MSP can be a Merchant Bank or an Independent Sales Organization (ISO) with ties to many Merchant Banks.

N              

Any transaction in which the card is not presented, such as a phone, mail or Internet purchase.

O              

A transaction that is authorized through a voice authorization and later keyed into a POS terminal prior to settlement.


A transaction that is authorized electronically from the front-end network.

P              

Payment Service Provider.


A payment processor is a company (often a third party) appointed by a merchant to handle credit card transactions for online merchants.


See Payment Card Industry Security Standards Council (PCI SSC).


PCI DSS is a multifaceted security standard that includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures. This comprehensive standard is intended to help organizations proactively protect customer account data.

R              

An online transaction, such as an ATM withdrawal, that is usually settled immediately.


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


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.


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.

S              

A system for encrypting data sent over the Internet, including e-commerce transactions and passwords.

T              

An industry term, first coined by Shift4, describing the concept of using a non-decryptable piece of data to represent (by reference) sensitive or secret data.


Describes a set of general design guidelines and implementations of specific networking protocols that enable computers to communicate over a network. TCP/IP provides end-to-end connectivity and specifies how data should be formatted, addressed, transmitted, routed, and received at its destination. Protocols exist for a variety of different types of communication services between computers.

U              

User authentication is the process of validating a credit card user’s identity or authorized user status.

V              

A mechanism for providing secure, reliable transport over the Internet. The VPN uses authentication to deny access to unauthorized users and encryption to prevent unauthorized users from reading the private network packets. The VPN can be used to send any kind of network traffic securely.


This terminal allows you to accept credit-card information chargeable via telephone or fax.

W              

An electronic debit from a consumer’s bank account created during a secure Internet session between a company and consumer.

Z                

Requires that all transactions receive authorization.