Glossary

ACH (Automated Clearing House)
One of a group of processing organizations that is networked together to exchange (clear and settle) electronic debit transactions.

ACH Credit

A transaction through the ACH system originated to pay a receiver (put money into their account).

Account Number

Unique series digits used to numerically identify each Cardholder.  The unique identification number assigned to the account of a specific party, within a given institution.

Acquiring Bank

The bank that maintains the Merchant relationship and receives all transactions from the Merchant.

Activity File

A file maintained within the MasterCard or Visa processing system, which lists account numbers for which stand-in authorization has been approved within a four-day period.

Adjustment

An entry initiated by an Acquirer for the purpose of correcting a system error or an inaccurate record of a transaction, and effecting the movement of funds between the Issuer and Acquirer with respect to such transaction.

Agent Bank

A bank that, by agreement, participates in another bank’s card program, usually by turning over its Cardholder and Merchant applications for bank cards to the bank administering the bank card program and by acting as a depository for Merchants.

Application

A program consisting of special codes stored in memory used to control a terminal and its operations.

Arbitration

The procedure a Member can use to resolve a chargeback-related dispute between two Members. MasterCard or Visa resolves the dispute between Members and decides responsibility for the fines, which may be assessed to the participating Members.

Authentication

Verifying the identity of a person or computer process.

Authorization

A process defined in operational regulations whereby an Issuer approves a transaction or by an authorized agent or MasterCard/Visa on behalf of that Issuer, before the Merchant completes the transaction. In this process, the Merchant receives a sales validation by telephone or via the authorization terminal.

Approval Code

A number issued to a participating Merchant by the authorization center, or stand-in processing which confirms the authorization for a sale or service.

Authorization Center

A department usually controlled by the card processor that can electronically communicate a Merchant’s requests for authorization on credit card transactions to the Cardholder’s bank.

Average Ticket

The average dollar size of a Merchant credit card transaction. Generally used in pricing decisions and calculations.

AVS (Address Verification Software)

A product designed to combat fraud predominantly in Internet; mail order or telephone order transactions through usage of cardholders name and address information.

Balance Inquiry

A debit card transaction that has no dollar amount and that permits the Cardholder to obtain the current balance of his checking and/or savings account.

Bandwidth

The amount of data that can flow through a channel. The higher the bandwidth the more data that can travel at once.

Bankcard

MasterCard, Visa or other credit cards issued by a bank.

Bankcard Association

A group of banks formed either for the purpose of sponsoring a single identity (i.e. MasterCard or Visa) or a group of banks formed to jointly operate a credit card plan through the use of common processing and administrative facilities.

Banking Day

With reference to a participating depository financial institution, any day on which it is open to the public during any part of the day, for carrying on substantially all of its financial functions.

Bank Wire Transfer

Transfer of funds to any bank within the Federal Reserve System.

Batch

Usually a day’s worth of transactions, including sales, credits’, voids, etc., to be processed by the card processor.

Bank Card

A financial transaction card issued by a bank or other financial institution such as a MasterCard/Visa.

Batch Processing

A type of data processing operation and data communications transmission where related transactions are grouped together and transmitted for processing, usually by the same computer and under the same application. Batch processing is generally regarded as non real-time processing. Batch processing should be used only when response time is not critical.

Cancellation Number

A number provided by a hotel/motel to verify a shareholders notification to cancel a guaranteed reservation or advance resort deposit.

Cardholder

The person to whom a card has been issued or the additional individual authorized to use the card.

Cardholder Bank

The bank that has issued a credit card to an individual. The term is frequently used in conjunction with interchange arrangements to identify the card-issuing bank.

Chargeback

Paper returned by card Issuer to the Acquirer after a presentment.

Chargeback Period

The number of calendar days from the central processing date during which period the Issuer may exercise a chargeback right.

Check Guarantee

A service provided by a third party vendor who guarantees Customers payment by check for a specified amount. Stipulations require that the Merchant follows correct authorization procedures.

Cirrus

Cirrus Systems, Inc., is a wholly owned subsidiary of MasterCard International, Inc. It operates as an international ATM sharing association.

Clearing

The process of exchanging financial transaction details between an Acquirer and an Issuer to facilitate posting of a Cardholders account and reconciliation of a Customer’s settlement position.

Combined Terminated Merchant File (CTMF)

A file containing the business name and the names and identification of Merchant principals who have been terminated by an Acquirer for specified reasons. The CTMF is operated jointly by MasterCard and Visa.

Credit

A chronicled reversal of a purchase.

Credit Card

MasterCard, Visa or other credit cards issued by a bank. A plastic card with a credit limit, which is used to purchase goods and services and to obtain cash advances on credit, for which a Cardholder is subsequently billed by an Issuing institution for repayment of the credit extended.

Credit Limit

The maximum credit line set by the card Issuer for Customers account (open to buy).

Data Capture

A data processing term for the collection, formatting and storage of data in computer memory according to predefined fields: (e.g. Customer name, account number and dollar amount of purchase). When a terminal reads this information from a plastic card or from entries at a terminal, the information is stored for later output as a hard copy printout or as soft copy on CRT display.

Debit

A transaction which results in a debit against the account balance of a Cardholder.

Dial-up Terminal

A Merchant authorization device, which, like a telephone, dials the authorization, center for validation of transactions.

Discount Rate (Merchant Discount)

A fee a Merchant pays the bank to process a purchase charged to a MasterCard and Visa card.

EDC (Electronic Draft Capture)

A system in which each transaction is routed to the MasterCard and Visa host computer for processing and storage. The stored transactions are used to create settlement files and transaction reports.

EFT (Electronic Funds Transfer)

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

Encryption

The scrambling of a message or file to make it unreadable except by the intended receiver, who unscrambles it.

Factoring

The bribery of a legitimate Merchant to process another Merchant’s transactions (often fraudulent) in return for payment.

Firewall

A filter for messages. A system that has a firewall lets only certain kind of messages in.

Force/post Authorization

The after-the-fact entry of a purchase results from a referral (call center) message or a downtime interruption of service from the Network. This enables the Merchant to enter (as a force/post author) the transactions, including the approval code into the EDC batch.

Funds Availability

The time at which funds associated with paperless entries have been made available to the Merchant.

Funding

Refers to the payment to a Merchant for his submitted deposits.

Gross Deposit

Submitting credit card sales and credits at the face amount. The Acquirer later deducts the discount.

Hard Copy

The document of a transaction, such as sales drafts, credit slips, etc.

Host Based System

Using the dialup terminal as a passive device, which interacts with the host computer for control, this system captures transactions in the host computer.

Internet Gateway Provider

An Internet based communication network which completes the connection between the banks network and the actual ‘submit’ page’s data.

Imprinter

A hand or electric machine which imprints the Merchant’s name and ID number on sales drafts, as well as the cardholders name and card number.

In-one

A terminal and printer product all in one manufactured by Hypercom or Verifone.

INET

Interbank Network for Electronic Transfer. The MasterCard settlement system for the daily processing and routing of worldwide financial transactions between MasterCard and its Members.

Interchange

The domestic and international systems operated by MasterCard International and Visa International for authorization, settlement and the passing through of interchange and other fees, as well as other monetary and non-monetary information related to credit card activities.

Interchange Fee

The amount paid by the Merchant bank to the cardholder’s bank on each transaction. MasterCard International and Visa International independently establish interchange fees for their respective networks.

Issuing Bank

Cardholder’s bank or the bank, which has issued a MasterCard, Visa or other credit cards to an individual.

Local

The network telecommunications access point, which can be accessed by the terminal dialing either, a local telephone number for authorization.

Magnetic Stripe

A strip of magnetic information affixed to the back of a plastic credit or debit card. The magnetic stripe contains essential Customer and account information.

Manual Imprinter

A device supplied to the Merchant to produce an image of the embossed characters of the bankcard on all copies of sales drafts and credit slips.

Merchant

A retailer or any other person, firm, or corporation having met the qualifications of MasterCard/Visa that (pursuant to a Merchant Agreement) agrees to accept credit cards, debit cards, or both, when properly presented.

Merchant Agreement

A written agreement between a Merchant and a bank containing their respective rights, duties, and warranties with respect to acceptance of the bank card and matters related to the bank card activity.

Merchant Authorization

The means of receiving sales validation for the Merchant, by telephone or authorization terminal, to provide payment to the Merchant.

Merchant Bank

A bank that has entered into an agreement with a Merchant to accept deposits generated by bankcard transactions; also called the Acquirer or Acquiring bank.

Merchant Fraud

Fraud perpetrated by a card acceptor against other parties in a payment system.

Merchant Id Number

Number used by Merchants to identify themselves and their terminal to host computer at their bank or financial institution.

Merchant Qualification Standards

The minimum standards established by MasterCard and Visa for Merchant acceptance, requiring that the Merchant be financially responsible and of good repute.

Merchant Services Department

The department within each acquiring bank that assists Merchants with their questions.

Node

The network telecommunication access point which can be accessed by the terminal dialing a local telephone number, or a toll-free “950″ or “800″ telephone number for authorization.

Open-to-buy

The difference between the credit limit assigned to a Cardholder’s account and the present balance on the account.

Original Draft

The actual bank copy of the forms used in the transaction. Also referred to as the “hard copy”.

Paper

Sales slips, credit slips, cash advance slips, and other obligations indicating use of a card or a card account.

Pick-up Card

An Issuer’s response to an authorization request stipulating that the card be confiscated by the Merchant and returned to the Issuer.

PIN (Personal identification number)

A four to 16 -digit confidential code or electronic signature used by Cardholders to identify themselves as the proper users of a credit or debit card to the host computer.

POS (point-of-sale)

The location in a Merchant establishment at which a sale is consummated.

POS Terminal

A device placed in a Merchant location which is connected to the bank’s system via telephone lines and is designed to authorize, record and forward data by electronic means for each sale.

Posting

The process of recording debits and credits to individual Cardholders accounts balances.

Pre-authorization

A non-posted pre-approval for a future transaction, followed, within a specific time interval, by the actual financial transaction posted against the Cardholder’s account. Pre authorizations are used primarily in P. O. S. situations where the Cardholder wishes to obtain “advance approval” or “verification” that sufficient funds are available to make a subsequent purchase using a debit card.

Product Coding

In the American Express Draft Capture environment, AMEX requires purchases to be labeled with specific product codes. Depending upon the type of business, AMEX will provide product codes for merchandise or service being sold. This field can also be utilized if the Merchant desires to enter additional information, i.e. rental agreement or invoice numbers.

Receipt

A hard copy description of the transaction that took place at the point of sale, which contains at a minimum: date, Merchant name/location, primary account number, type of account accessed, amount, reference number, and the action code.

Record

Information pertaining to a transaction. The data may be an item of paper, an electronic record, or a magnetic tape.

Retrieval Request

The request for either an original slip or legible reproduction of the slip as identified in the electronic record.

Roll Printer

Dot matrix printer used to print receipts and reports on carbon less roll papers. No separate transaction slips are required.

Sales Slip (draft)

The paper form given to a Cardholder as evidence of the purchase made with their credit card account; also called charge slip or sales draft.

Secure Transaction Technology (STT)

The STT specifications is a software technology designed to provide a secure method of credit card transactions across electronic network.

Settlement

The process by which the banks, representing the Merchant and Cardholder, exchange financial data and funds resulting from sales transactions, cash advances, merchandise credits, and the like.

Settlement Date

The day, on which settlement occurs, e.g., funds actually change hands as a result of an ACH entry. Settlement Frequency The frequency with which the client is credited for his/her credit card deposits.

Settlement Statement

A document issued to the Merchant, indicating the sales and credit activity, billing information, discount fee and chargebacks, if any occurring during a particular time frame (usually one week).

SIC Code

Standard Industrial Classification Code. Indicates the type of industry of a business establishment.

Slip Printer

Dot matrix printer used by a Merchant for printing sales slips and reports. The transaction slip must be manually inserted into the printer and the transaction and card information will be printed directly onto the slip.

Smart Card

A card that carries an embedded computer chip with memory and interactive capabilities so that it can be updated.

Soft Decline

A declined response in which authorization is not granted on a valid card not because it has been lost or stolen, but because the credit cards already exceeds the credit line.

Split Dial

Permitting the authorization terminal to dial directly to the company (e.g., AMEX) for authorization. In this instance, the Merchant cannot be both ED and Split Dial.

Support Documentation

The forms necessary to effect a chargeback processing cycle, and any additional material to uphold a dispute.

Switch

An electronic mechanism which routes transaction data from a POS terminal to the authorization data processor for approval of the card issuing institution. In addition, the switch can serve as an authorization center for financial institutions whose account files are maintained on another computer network.

T & E Card (Travel & Entertainment)

Travel & Entertainment card that typically requires payment in full each month. Examples are American Express, Diner Club and Carte Blanche.

T & E Merchant

An airline, car rental company, or lodging establishment whose primary function is to provide travel-related.

Terminal-based System

Using the dialup terminal as an intelligent device, which interacts with the host computer for authorizations, this system captures transactions in the terminal and later transmits them to the host for deposit.

Time-outs

When a system delivers an unable to process message for a transaction because a different response has not been received in a specific time frame.

Transaction

Action between a Cardholder and a Merchant, or a Cardholder and a Member, that results in activity on the Cardholder account; an origination message and all of its associated responses and acknowledgments, which together are used to execute a specific EFT or network management function.

Transaction Date

The date a Cardholder effects a card purchase of goods, services, or other things of value or effects a cash advance. For a credit slip, the transaction date is the date the Merchant allows a credit or price adjustment. For a no shows transaction, the transaction date is the date the Cardholder was expected to arrive at the hotel or motel and failed to appear.

Transaction Fee

A fee charged by the Acquirer for transaction activity at one of the Acquirers terminals.

T/R Number (Transit Routing Number)

Transit Routing Number. A nine digit number (eight digits and a check digit) that identifies a specific financial institution.

Zero Floor Limit

Requires that all Cardholder transactions be authorized.ns.

Merchant Services Consulting Group, Inc a member of Acquirers Group, LLC is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA. American Express may require separate approval.