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Account Number
A unique sequence of numbers assigned to a card account identifying the issuer and type of financial transaction card.

ACH (Automated Clearing House)

ACH is a group of U.S. processing institutions that have networked together to exchange (clear and settle) electronic debit/credit transactions. All electronic draft capture (EDC) merchants receive credit for their deposits via ACH and discount fees are debited from all merchants via ACH.

Acquirer

A credit card processing company that maintains a relationship with merchants and that has an agreement to process the data relating to a credit card transaction. An Acquirer is often referred to as a merchant bank.

Approval/Authorization Code

A transaction response code from the card issuer that identifies whether there are sufficient funds available on the card to accommodate the transaction, and at this time no blocks have been placed on the account. Approvals are requested during the authorization process, but do not guarantee the sale from future disputes or chargebacks by the cardholder.

Authorization

A procedure by which card issuers either approve or decline a merchant's request for authorization. Authorizations are based on the cardholder account status and available credit.

Automated Teller Machine (ATM)

An unattended, self-service terminal activated by a card and cardholder validation method (CVM) that provides cash withdrawals. It also may perform other functions including basic banking functions such as deposits, account transfers, balance inquiries, etc.

ARU (Audio Response Unit)

ARU occurs when the merchant calls an appropriate authorization center, and keys in "exact" cardholder and purchase information through the telephone keypad. The authorization centers stores and records the specific data "key entered" and an electronic voice provides the merchant with an authorization number over the phone that the merchant MUST write on the sales draft. If more than two errors are key entered, the ARU system rolls over to a "live" operator to obtain the information. The system also rolls over to "live" operators for referrals.

Average Ticket

The average dollar amount of sales drafts processed within a given time period. Calculate the average ticket by taking the total dollar amount of sales drafts processed and dividing it by the total number of sales drafts processed.

Bank Card

A financial transaction card issued by a bank or other financial institution; examples are Visa and MasterCard credit or debit cards.

Bank Card Transaction or transaction
Transactions between the merchant and a cardholder for the sale or rental of goods or provision of services are evidenced by a sales drafts or credit voucher, or, where permitted by agreement between the bank and merchant, by an electronic equivalent of a draft or credit voucher which the merchant presents to the bank for processing through the interchange system. (See transaction)

Batch

A set of records within Visa and MasterCard clearing transmission. A batch is introduced by a batch header record, and contains a batch detail record including the transactions that were captured.

BIN (Bank Identification Number)

4-6 digit identification numbers assigned to both cardholder and merchant banks.

Cardholder

The authorized user of a card issued by a licensed member.

Card Imprint

Printing appearing on a sales draft, credit voucher, or cash advance draft. A mechanical device (Imprinter) is used to produce the imprint. It includes the embossed characters of the credit card. Imprints are valuable for protecting against possible chargebacks and cardholder disputes. (See Imprinter)

Cash Advance

A cash loan obtained by cardholder through presentation of his/her credit card at a bank office or automated teller machine.

Cash Dispenser

The simplest form of ATM that permits only cash withdrawal.

Chargeback

A procedure whereby an issuer reverses all or part of the amount of an interchanged transaction back to the acquirer in accordance with Visa and MasterCard regulations. A chargeback is initiated when a cardholder or a cardholder's bank disputes a charge against the cardholder's credit card account.

Check Authorization

The process of determining whether a checking account balance is sufficient to cover a purchase or withdrawal of funds. Authorization can be obtained by telephone, credit card terminal, or automated teller machine (ATM).

Clearing and Settlement

The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting and reconciliation of a cardholder's account. (See ACH)

Counterfeit Card
An instrument or device embossed, printed, or otherwise bearing Visa or MasterCard marks, so as to purport to be a Visa or MasterCard issued by a member affiliate; but that is not a Visa or MasterCard because the embossing or printing thereon was not authorized, or because the Visa or MasterCard has been altered or re-fabricated.

Credit

A transaction to reverse a previously authorized and settled charge placed against a cardholder's account.

Credit Slip

Document showing the return of merchandise by a cardholder to a merchant. Also known as credit voucher.

Credit Card Transaction

The action by which a merchant charges or credits a cardholder's card. At the same time, it provides details of funds acknowledged as payable by the acquirer, the card acceptor, or both to the issuer.

CTMF (Combined Terminated Merchant File)

A file maintained by MasterCard, reported to by members to identify merchants and businesses that have experienced financial loss, excessive cardholder disputes, or other problems related to the acceptance of credit cards

Data Capture

This is the collection, formatting, and storage of a cardholder's credit card transaction information in computer memory. Most point-of-sale devices perform data capture functions.

Doing Business AS (DBA)

A trading name of a merchant, which appears on business signs, customer literature, etc.

Demand Deposit Account (DDA)

A commercial checking account that is used as the depository account for a merchant's credit card deposit. (See Deposit Account)

Debit Card

A plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the issuer debits the cardholder's asset account. Debit transactions require the cardholder to enter a Personal Identification Number (PIN) to validate the transaction.

Decline

A response that may be issued by the card issuer when a credit or debit transaction is attempted.

Deposit Account
A business checking account designated by the merchant through which all bankcard transactions and adjustments will be processed by the bank.

Discount Rate

The fee paid by a merchant to their merchant bank for the processing of the credit card transactions. Discount is calculated by multiplying a pre-established Discount Rate by the volume of credit card transactions. Example: If a customer makes a credit card purchase worth $10.00 and your discount rate is 2.4%, you pay $0.24 for the $10 sale.

Down Load

Loading of data (usually a program) from an acquirer's computer system to a merchant's credit card terminal.

Electronic Commerce Transaction

A non-face-to-face online transaction that uses electronic media over a public (such as the Internet), or private (such as an Extranet) network.

Electronic Draft Capture (EDC)

A system in which transaction data is electronically captured at the merchant location and transmitted for authorization and clearing processing.

Electronic Funds Transfer (EFT)

A paperless transfer of funds initiated from a bankcard terminal, computer, telephone instrument, or magnetic tape.

Expired Card

A card by which the embossed or encoded expiration date has passed.

Expiration Date

The date embossed on the card beyond which the card must not be honored.

Face-to-face Transaction

A transaction by where the card and cardholder are both present at the merchant's location to facilitate the magnetic stripe of the credit card being read by the merchant's terminal or a manual imprint being obtained.

Financial Institution

Any commercial bank, federal, or state savings and loan association, federal or state savings bank, or credit union. (See Bank Card)

Fraudulent Transaction

A transaction where a cardholder's account number or credit card was used without the cardholder's consent or authorization.

Gateway Processor
A gateway processor charges your customers' credit cards via the web and sends the funds to your merchant account.

Hologram

A laser-created photograph that produces a three-dimensional image. Used as an anti-counterfeiting measure on bankcards.

Imprinter
A device used by the merchant to produce an image of the embossed characters of the bankcard on all copies of sales drafts and credit slips. (See Card Imprint)

Interchange Fee

The amount paid by the merchant bank (acquirer) to the cardholder institution (issuer) on each sales transaction. Interchange rates vary according to the type of merchant (retail, travel, and entertainment, mail order, etc.) and the method or processing (paper, EDC).

Issuer

The financial institution (or its agent) that holds contractual agreements with Visa and MasterCard to issue cards to its clients. (See Bank card)

Magnetic Stripe

A stripe located on the back of a card. This stripe contains magnetically encoded cardholder account information.

Magnetic Stripe Reader

A device capable of reading the encoded information contained within the magnetic stripe of a credit card, debit card, ATM card, etc.

Mail Order

A transaction engaged in by a cardholder through correspondence with a merchant. See also Non-face-to-face Transaction.

Manual Entry

This is also known as key-entered; manual entry is a transaction where the credit card number, expiration date, and transaction information are entered manually into a terminal or computer.

Merchant

Any business having met the qualification standards of MasterCard and Visa and has been approved by an acquiring member, to accept credit cards as payment for goods and services.

Merchant Agreement

A written contract between a merchant and an acquirer that details their respective rights responsibilities, and warranties.

Merchant Identification Number

A number each merchant is provided under the card acceptance agreement, which is unique to that merchant.

Merchant Plate

A plastic or metal plate containing merchant information such as the merchant name, merchant account number, city and state. The merchant plate is affixed to the imprinter so that the merchant information can be embossed on the sales drafts.

Merchant Statement
A summary of merchant transactions, which is produced and mailed to a merchant on a monthly basis.

Monthly Minimum

The monthly processing minimum is the minimum monthly fee you must pay to the credit card company. A competitive monthly minimum is approx $30. Example: If you sell $1000 in goods over one month, your total Discount Rate (see explanation above) would be $23.90. This amount does not meet the $30 minimum so the credit card company will round your charge up to $30. If the discount rate and transaction fees exceed $30, then you have met the Monthly Processing Minimum and the fee does not apply.

Negative Deposit

This occurs when the dollar amount of credit vouchers submitted for deposit to the deposit account exceeds the dollar amount of sales drafts submitted for deposit.

Merchant Category Code (
MCC)
A classification code identifying the merchant's business type with MasterCard.

Non-face-to-face Transaction

This is a transaction where the card and cardholder are not present at the merchant's business location at the time of the sale. Mail order, telephone order, and electronic commerce transactions are examples of non-face-to-face transactions.

Paper Draft

Sales slips, credit slips, cash disbursement slips, drafts, vouchers, and other obligations indicating use of a credit card or card account. (See sales drafts)

PIN (Personal Identification Number)
A four to twelve character secret alphanumeric code that enables an issuer to positively authenticate the cardholder for the purpose of approving an ATM or terminal transaction occurring at a point-of-interaction device.

Preauthorized Order

A cardholder's written authorization to make one or more charges to the cardholder's account at a future date.

Point-of-Sale

The merchant's location where a customer makes a purchase.

POS Terminal
A POS Terminal is a bankcard-processing device that communicates and transfers data via telecommunication lines. Authorizations and transaction transmittals are examples of transactions performed through the POS terminal.

 

Real-Time Processing

This method of credit card charging authorizes and charges the customer's credit card at the time of purchase.

Recurring Payments/Recurring Transactions

A transaction by which the cardholder gives permission to a merchant to place charges on the cardholders account regularly. (i.e., monthly billings of magazine subscriptions or fitness club dues.)

Receipt

A hard copy (paper) document recording a transaction. The receipt usually includes: date, merchant name/location, cardholder's account number, amount of sale or credit/return, and authorization code.

Sales Slip (Draft)
Paper forms that merchants give to cardholders as evidence of purchases or credit/returns made to the cardholders credit card accounts; also called charge slips, sales drafts, or sales tickets.

Settlement

The process by which the merchant transmits authorized transactions to the acquirer for payment.

Split
Sale
Preparation of two or more sales drafts for a single transaction on one card account in order to avoid authorization procedures and/or to circumvent the applicable floor limit.

Standard Industry Code (SIC)

A classification code identifying the merchant's business type with Visa.

Statement Fee
This charge is exactly as it sounds. The fee you pay for the bank to generate and mail you a statement outlining your transactions.

Telephone Order

A credit card transaction that is completed between the merchant and the cardholder via the telephone.

Terminal

A small box-like device that is placed at the merchant location to electronically process credit card transactions. Attached to a telephone line at the merchant location, the terminal is capable of authorizing, capturing, and settling credit card transactions. (See Point-of-Sale Terminal)

Transaction

Any action between a cardholder and a merchant or member that results in activity on the cardholder's credit card account, such as a purchase or credit adjustment.

Transaction Date

The date a cardholder affects a card purchase or goods, services, or other things of value or effects as cash disbursement.

Transaction Fee

A per item fee charged to the merchant by the acquirer for transaction activity such as sales, credit/returns, batch closures, etc. Example: A common transaction fee for keyed transactions is around $0.30. If you make 50 sales per month… the total transaction fee would equal (0.30 x 50 = $15.00).

Voice Authorization

Occurs when the merchant calls the appropriate authorization vendor and provides the operator with "exact" cardholder and purchase information over the phone. The authorization center operator records the specific data and provides the merchant with an authorization number over the phone that the merchant MUST write on the sales draft. The authorization operator may direct the merchant to contact the Issuing bank or decline the authorization. (see ARU)

 

 

 

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