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.
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.
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.
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.
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
A financial transaction card issued by a bank or other financial
institution; examples are Visa and MasterCard credit or debit cards.
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
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
The authorized user of a card issued by a licensed member.
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
A cash loan obtained by cardholder through presentation of his/her credit
card at a bank office or automated teller machine.
The simplest form of ATM that permits only cash withdrawal.
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
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)
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.
A transaction to reverse a previously authorized and settled charge placed
against a cardholder's account.
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
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
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
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)
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
to validate the transaction.
A response that may be issued by the card issuer when a credit or debit
transaction is attempted.
A business checking account designated by the merchant through which all
bankcard transactions and adjustments will be processed by the bank.
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.
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.
A card by which the embossed or encoded expiration date has passed.
The date embossed on the card beyond which the card must not be honored.
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.
Any commercial bank, federal, or state savings and loan association, federal
or state savings bank, or credit union. (See Bank Card)
A transaction where a cardholder's account number or credit card was used
without the cardholder's consent or authorization.
A gateway processor charges your customers' credit cards via the web and
sends the funds to your merchant account.
A laser-created photograph that produces a three-dimensional image. Used as
an anti-counterfeiting measure on bankcards.
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
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).
The financial institution (or its agent) that holds contractual agreements
with Visa and MasterCard to issue cards to its clients. (See Bank card)
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.
A transaction engaged in by a cardholder through correspondence with a
merchant. See also Non-face-to-face Transaction.
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.
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.
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.
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.
A summary of merchant transactions, which is produced and mailed to a
merchant on a monthly basis.
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.
This occurs when the dollar amount of credit vouchers submitted for deposit
to the deposit account exceeds the dollar amount of sales drafts submitted
Merchant Category Code (MCC)
A classification code identifying the merchant's business type with
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
Sales slips, credit slips, cash disbursement slips, drafts, vouchers, and
other obligations indicating use of a credit card or card account. (See
(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.
A cardholder's written authorization to make one or more charges to the
cardholder's account at a future date.
The merchant's location where a customer makes a purchase.
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
method of credit card charging authorizes and charges the customer's credit
card at the time of purchase.
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.)
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.
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.
The process by which the merchant transmits authorized transactions to the
acquirer for payment.
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.
This charge is exactly as it sounds. The fee you pay for the bank to
generate and mail you a statement outlining your transactions.
A credit card transaction that is completed between the merchant and the
cardholder via the telephone.
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
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
The date a cardholder affects a card purchase or goods, services, or other
things of value or effects as cash disbursement.
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 =
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)