Glossary
The GRT Glossary
A B C D E F G I K L M N O P Q R S T U V W Z
A
ABA (American Bankers Association)
The American Bankers Association is a banking industry trade association, serving, standardising, and advocating on behalf of banks across the United States. The largest financial trade group in the country, ABA represents over 95% of the industry’s assets, and focuses on the distribution of goods and services, the professional development of its members, the education of the consumer, and the maintenance of industry standards.
ABA Routing Number
The American Bankers Association assigns routing numbers, or unique identifiers, to financial institutions, through a third party company. These bank codes can be found in two forms on a personal or business check; in the MICR format, which is a magnetic, machine-readable, printed number along the bottom of a check, and also in fraction form, located near the top of the check, and used in manual processing. Routing numbers, found throughout the United States, are used to identify the specific organisation for which they are assigned, and are considered one of two types: belonging to debited or credited funds, or belonging to wire transfers of funds. ABA routing numbers are identified by the YYYY routing symbol.
ACH (Automated Clearing House)
The Automate Clearing House is a network of electronic financial processors that process large numbers of transactions, for the commercial sector, as well as the governmental sector of the United States. Systems such as direct deposits, vendor payments, and automatic bill payments are handled by the ACH. The ACH does not handle credit card payments, put can process credit transfers. The Federal Reserve Banks, are the largest ACH operators in the nation, while the Electronic Payments Network is the only private-sector ACH operator in the US. The ACH is vital to the success of business to business transactions, direct debits, tax payments, and many e-commerce transactions.
Acquirer (Acquiring Bank)
The acquiring bank is the link between the merchant and the issuing bank in a transaction. Holding a relationship with card networks such as Visa, MasterCard, Discover, and American Express, the acquirer provides lines of credit to the merchants, and accepts transactions from issuing banks. This allows customers to use credit and debit cards to make purchases for goods and services from a merchant. When a customer uses a credit or debit card in a transaction, the acquiring bank receives this information, because of their relationship with the cardholder networks, and then has the ability to either approve or deny the transaction, based on the consumer’s history with the issuing bank.
Acquittal
An acquittal is a ruling by a judge or jury verdict, that a person or persons is not guilty, or cannot be proven guilty of a crime for which they are being prosecuted. In the United States, when a defendant is acquitted of a crime, they are free of the charge and can no longer be tried for the crime, regardless of the surfacing of future evidence.
Active judge
An active judge is bar certified, appointed official of the judicial branch of the government, with the authority to preside over court proceedings and determine sentences assigned to guilty parties. An active judge is on duty from morning through evening, either in his or her office, or in the courtroom. Active judges work full time for the court, while senior judges may take reduced caseloads.
Address Verification Services (AVS)
The Address Verification Services are used when a consumer makes an online purchase using a credit or debit card. At the time of the purchase, the customer provides the merchant with their personal billing and shipping information, as well as their payment card details. Once this information is submitted, the merchant will use AVS to verify that the billing information provided at the time of the purchase matches numerically with the information on file at the card network, (Visa, MasterCard, Discover or American Express.) Because the system recognises only the numerical parts of a customer’s address, false negatives do rarely occur, occasionally the result of an apartment number or the like.
Adjustment
Adjustments occur when an error occurs during a transaction. If an error arises, an adjustment is made to the account on which the transaction is flawed. For example, funds could be reimbursed through debit or credit, to a merchant or customer’s account if the account was charged for more than intended.
Altered Card
An altered card, typically used for fraud or deceit, is a payment card, such as a debit or credit card, in which the original, accurate information has been altered to appear in a different way. The numbers, dates, names, and images may be changed on the card, allowing the cardholder unauthorised access to the original encoded information. In reverse, the encoded information may be altered, allowing the cardholder to use the original embossed textual information to deceive those with whom he will use it.
American Express (AmEx)
American Express is a card issuing multinational financial services cooperation, who is the largest credit and debit card issuer in the world, based on volume of purchases charged, as well as the largest provider of traveller’s checks. American Express operates its own network, linking their acquiring bank and issuing bank.
API (Application Programming Interface)
Advanced Programming Interface is a computer programming term, used to describe an interface which assists programmers in the specific interactions or tasks of software components. API’s are inter-program interfaces, which allow users to program in a pre-constructed format, as opposed to individual pieces of software.
Approval Response
An approval response occurs when a transaction authorisation request is processed by the issuing bank, during which the card’s credit limit or account balance are proven sufficient and the card’s status is assessed, allowing the transaction to be approved. This response is then sent back along the chain, eventually reaching the merchant and the consumer.
Arbitration
Arbitration is a procedure used to combat chargeback disputes. When a chargeback is filed, the acquiring bank is able to settle the chargeback dispute on behalf of the merchant. A customer files a chargeback through their issuing bank, and the dispute can either be approved or denied. Arbitration is used to settle these disputes outside the court system.
ASP (Application Service Provider)
An application service provider, also known as a commercial service provider, is a network with an internal central data centre that is able to host and distribute software based applications to consumers through the internet and private lines. ASPs are used as outsourced information technology teams, as well as government, commercial, and privately owned. There are five types of ASPs: Enterprise ASPs, Local or Regional ASPs, Specialist ASPs, Vertical Market ASPs, and Volume Business ASPs.
Associations
Associations are formed as an entity designed to issue and promote the sale of credit cards, including but not limited to MasterCard International®, VISA®, U.S.A., or VISA International®, that are licensing and regulatory agencies for credit card activities.
ATM (Automated Teller Machine)
An ATM, also known as a ‘cash machine,’ is an unattended electronic telecommunications terminal that allows members of financial institutions to insert a plastic ATM card and PIN number to identify their account, and then assists the user with basic financial transactions, sans bank teller. Users are able to deposit and withdraw funds, as well as make transfers, balance inquiries, and in the case of credit card users, receive cash advances.
ATM/Debit Card
An ATM or Debit Card is used when accessing an Automated Teller Machine, as well as when making transactions using the applied PIN number. Users are able to access the functions of an ATM after the insertion of their ATM card, and then submittal of the card’s individual PIN number. Once the ATM card and PIN are inserted into the ATM, users are able to deposit and withdraw cash, as well as make transfers and other account inquiries, without the assistance of a bank teller.
Authorisation
Issuing banks or card networks determine authorisation on a transaction after the customer requests to make a purchase from the merchant. At this time, the card is tested for functionality and validity, and the accounts associated are measured for sufficient funds or credit limitations. If the card is valid and the sufficient funds are available, the transaction is authorised as approved, and the message is sent through the acquiring bank to the merchant, that the charge should be processed. If the cardholder’s credit limit is insufficient or the card is invalid, the charge is then unauthorised by the issuing bank, and is denied to the customer.
Authorisation Approval Code
An Authorisation Approval Code is a numerical entity used to by the issuer to verify and identify specific approved transactions.
Authorisation Fee
Merchants incur Authorisation Fees from credit card processors, every time a message of authorisation is sent regarding a transaction.
Authorisation Only (Auth Only)
Authorisation Only sales transactions are used to reserve a specific amount of available credit against a user’s credit limit, in order to designate the funds for intended purchases. Authorisation Only transactions are intended to ensure that the merchant will not be denied payment due to insufficient funds, when the cardholder has already received the product or service. Frequently, Authorisation Only is used in the restaurant, lodging, and rental industries, where the amount charged is estimated, prior to authorisation.
Auto Representment
Auto Representment is the use of automated responses that detail the conditions of the transactions and charges, in order to settle chargeback disputes on behalf of the merchant in the case, without the intervention of the merchant themselves.
Average Monthly Volume
The average monthly volume can be determined by dividing the total amount of sales for the year by months in the year (12).
Average Ticket
The average ticket can be determined by dividing the total net merchant sales by the number of transactions from the merchant.
B
B2B (Business to Business)
The term B2B refers to communication, sales, and transactions between to businesses.
Back-End Network
The back-end network is a computing system that deals with data processing components, essentially launching the requested programs on the operating system, sent by the front-end network. Back-end networks are responsible for finalising transactions, routing payments, and generating finalised statements.
Back-end Processor
The back-end processor is a data processor that works on behalf of the acquiring banks to provide systems that coordinate and connect with interchange systems for settlement and clearing services.
BAI (Bank Administration Institute)
The Bank Administration Institute is a financial services association who performs ongoing research and offers various forms of education in the financial industry. Dedicated to advancing the industry, BAI is the financial industry’s leading educational association proving information, intelligence and innovation.
Balance Sheet
A balance sheet is a statement of financial position that summarises a company, organisation, endeavour, or partnership’s total finances. Balance sheets are separated into three parts, assets, liabilities, and equity in a specified time period, such as a year or quarter. Balance sheets are organised as the equation; assets = liabilities + equity.
Bank Card
Bank cards are plastic cards containing a unique number as well as an encoded magnetic strip that is issued to the cardholder by a bank. These cards are used to access funds, either through credit or debit accounts. Visa, MasterCard, Discover, and American Express are the four major card companies in the United States, however they do not issue bank cards themselves, they simply provide them to issuing banks.
Bankruptcy
Individuals or companies file for bankruptcy when they can no longer afford to pay back their debts to creditors, at which time they will either liquidate their assets, or register for a repayment plan. In the United States, Title 11, the bankruptcy code is divided into three main chapters, Chapter 7, Chapter 11, and Chapter 13.
Batch
A batch refers to a group of approved transactions accumulated within a certain time period, often one business day.
Batch Deposit
The electronic depositing of a batch file transmitted to the transaction processor for settlement.
Batch Processing
Batch processing is used when a group of transactions are initially processed offline, before approval is needed. The batch is authorised as approved or denied as a group of transactions.
Baud Rate
The baud rate for a PC or terminal modem is the rate at which data is transmitted through the telephone line.
BIN (Bank Identification Number)
The BIN is a 6-digit range of numbers assigned by the Federal Bureau of Standards and used by card companies to identify their financial transactions. The Discover® range begins with ‘6’ (6xxxxx), the MasterCard® range begins with ‘5’ (5xxxxx), and the VISA® range begins with ‘4’ (4xxxxx).
Bisynchronous Communication
Bisynchronous Communication is a method of communication that transmits continuously without ceasing between bytes of information.
C
Call Centre
The authorisation request response ‘Call Centre’ is displayed on the credit card terminal screen when merchants are requested to call for voice authorisation. If an approval is given, the user must enter the approval code manually into the POS device as a ‘force’ or ‘post-authorisation.’
Capital offense
Capital offenses are any crime which could be punishable by the death penalty. Guidelines for capital offenses vary from state to state and country to country.
Capture
When processors receive transaction date to be processed at a later date, they capture the information, storing it in the host computer.
Card Association
A card association is any company who issues, or acquires credit or debit cards or payments.
Card Not Present Transactions
Card no present transactions occur when the cardholder cannot present the physical card at the time of the purchase. Common card not present transactions include mail orders, telephone orders, and online orders. These transactions require the information printed on the specified card in order to process.
Card Present
During a transaction the card is either present or not present. A transaction where a debit or credit card is physically present and swiped through an electronic device is known as Card Present. This type of device is formatted to read the contents of the magnetic stripe on the back side of the card.
Card Reader
All card terminals must have a way to translate the information that is stored on the back of a credit or debit card. The Card Reader is an input device that is located on the card terminal allowing access to all of the cardholder’s information.
Card-Not-Present
A type of card transaction in which the card is not physically present during the time of purchase. In this type of transaction the magnetic stripe which holds all of the cardholder’s information is unable to be read. These types of transactions are said to be higher risk transactions then those where the card is present.
Cardholder
The person to which a payment card is issued, they have the ownership of that specific card which contains all of their information.
Cardholder Account Number
The sequence of numbers imprinted on either the front or the back of the payment card. These numbers are specific to each individual cardholder as well as the type of payment card (Visa, Discover etc.).
Cardholder-Initiated Chargeback
Cardholder-Initiated Chargebacks occur when a cardholder disputes a charge that appears on their account balance or billing statement, because they believe it to be unauthorised. This dispute is initiated with the cardholder’s issuing bank, within 90 days of the charge, and the funds are temporarily refunded to the cardholder until the dispute is settled between the merchant and the issuing bank.
Cash Advance
Credit card holders may obtain cash on credit through a cash advance from a financial institution or ATM for which they are a member.
Chargeback
Chargebacks occur when a credit or debit card transaction is disputed by the cardholder or issuing bank on the cardholder’s behalf. A chargeback will result in the amount disputed being temporarily refunded to the customer filing the chargeback. The dispute is then handled by arbitration, to determine whether or not the chargeback was valid. Charges that are unauthorised by the customer, such as fraud or identity theft, are valid chargebacks. However, customers sometimes file for chargebacks on authorised charges, and will lose the dispute. Whether or not the dispute is a valid chargeback, the merchant is charged a standard non-refundable chargeback fee every time a chargeback is filed against them.
Chargeback Fee
A chargeback fee is a standardised amount charged to the merchant by the acquiring bank, every time a chargeback is filed. This fee is non-refundable, not matter the outcome of the dispute.
Chargeback Reason Code
Reason codes are two digit numbers inputted into a system in order to communicate why the change or adjustment was made. Every time a chargeback is filed, a reason code is used to inform all parties why the dispute has been initiated. Visa, MasterCard, Discover, and American Express each have their own set of reason codes.
Check Card
A check card is a plastic payment card, similar to a debit card, but also known as an offline debit card. In order to use a check card at an ATM, the cardholder must still use the registered PIN number, however, when making purchases the card may be used as a credit card, authorised by user’s signature, however, the funds are still removed from the cardholder’s checking account.
Check Conversion
Check Conversion is the process that automatically converts a check into a debit payment. The image created by this conversion becomes an official record.
Check Guarantee
A check guarantee is a payment of a check up to the amount specified on the check that is provided to the individual accepting the check when following bank procedures. However merchants are required to perform correct authorisation procedures.
Check Verification
A check verification is a service that provides a merchant with verification and prevention from fraud with ‘bad’ checks.
Ciphertext
Ciphertext is the result of an encryption performed on plaintext using a cipher which is an algorithm.
Clearing
A clearing is a term for the transfer of data between Issuers and Acquirers.
Code 10 Authorisation
A Code 10 Authorisation occurs when the point of sale device reads either lost, stolen, or pick up card. The merchant then refers to the authorisation centre reporting a Code 10 Authorisation.
Commercial Cards
A commercial card is the title given for three different types of payments cards: Corporate, Purchasing, or Business card.
Commercial Paper (CP)
A commercial paper is a short-term unsecured promissory note issued by companies.
Compliance
Compliance refers to the need for all parties involved to adhere to the requirements set out by cardholder networks, such as MasterCard, Discover, Visa, and American Express. The success of a merchant relies on a relationship with cardholder networks. Compliance can also refer to a way in which a challenging member of a chargeback dispute may prove financial loss due to the noncompliance of the opposing member, if no chargeback reason codes apply to the specific dispute.
Consumer Fraud
Consumer fraud deals directly with fraudulent charges occurring during or after seemingly secure and legitimate transactions between a consumer and a merchant, resulting in financial loss, or loss of services or product purchased. Consumers are susceptible to consumer fraud if their information is obtained by someone other than the intended merchant during a transaction, or if a merchant receives the funds from the consumer, but does not provide the intended product or service as described prior to the purchase.
Control Number
A control number is the number that correctly identifies a chargeback or retrieval request.
Counterfeit Card
A plastic card which has been fraudulently printed, or encoded to be a genuine bankcard which has not been issued by a Visa or MasterCard member.
Credit Card
A small, plastic card that is issued by a bank or a business that allowed the holder to purchase goods or services on credit. Credit cards are handheld plastic cards, issued to customers by issuing banks, which contain a magnetic strip which allows users access to money, belonging to the issuing bank. Credit cards enable cardholders to obtain advanced funds, based on their credit scores, and up to a specified credit limit. The funds borrowed, using the credit card, obtain interest until they are paid back by the cardholder.
Credit Rating
An estimate of the ability of a person or organisation to fulfil their financial commitments, based on previous dealings.
Credit/Pending Settlement
Transactions of this status have been entered as credits, but have not yet been submitted for settlement. Once a credit has been settled, its status changed to credited.
Cryptography
The routine of protecting information by transforming it into an indecipherable format. The information is encrypted using a ‘key’ that makes the data unreadable and is decrypted at a later time and readable again.
CSP (Commerce Service Provider)
An institution that hosts commerce software applications on its own services within its own facilities.
CVC2 (Card Validation Code)
MasterCard term that is used for the three digit code printed next to the card number in the signature panel and used as part of the authorisation process.
CVV2 (Card verification Value)
Visa Term that is used for the three digit code printed next to the card number in the signature panel and is used as part of the authorisation process. This is an important feature for credit card transactions on the internet.
CVV2/CVC2
Is the three digit security code that is printed on the back of credit cards.
D
Data Capture
Data Capture is the automatic identification and data capture referring to the methods of automatically identifying, collecting, and entering data directly into computer memory.
Data Encryption
The act of changing electronic information by altering data so intended users can understand the encrypted information.
DDA
Demand Deposit Account or DDA is a checking account. Most demand deposit accounts allow for the withdrawal of money without advance notice including accounts requiring at least 6 days of advance notice.
Debit Card
A card issued by a bank allowing for the cardholder to transfer money electronically to another bank account while making a purchase.
Debit Switch
A debit switch is a portal in which data is transmitted between gateway banks and card issuers known as the ‘Debit Network’. This portal is only designed for members of financial institutions.
Decline
A decline is a response from the card issuer denying the use of the card due to insufficient funds, this occurs during the attempted transaction. The merchant can then ask the cardholder for another form of payment.
Demand Deposit Account (DDA)
The Demand Deposit Account or DDA is a bank operated checking account where the merchant’s deposits are made or the funds are debited.
Dial-Up Terminal
A dial up terminal is the most widely used terminal type in which connections are made over a standard phone line.
Digital Certificate
A digital certificate is an encrypted message usually attached to an electronic mail message and used solely for security purposes to verify the sender, also providing a receiver a code to reply.
DIP Switches
Dual In-Line Package Switches or DIP Switches are an arrangement of switches in a dual in-line package used to select the operating mode of a device.
Direct Response
Direct Response is a term used to define a merchant solely processing card-not-present or non-face-to-face transactions.
Discount Rate
A discount rate is the minimum interest rate set by the Federal Reserve for lending to other banks.
Display
The display is the backlit panel on a payment on a card device demonstrating characters on the screen.
Duality
The membership of a financial institution in both Visa and MasterCard associations.
DUKPT
Derived Unique Key Per Transaction or DUKPT is the standard that manages encryption key management for credit card readers.
E
E-Commerce
E-Commerce or electronic commerce is a commercial transaction of goods or services conducted over the internet. E-commerce relies on the use of computer networks, such as the Internet, to conduct business transactions, often times allowing parties to exchange goods, services, and financials, electronically. E-commerce enables the user to purchase or sell something online, resulting in innumerable marketable products, from streaming media and electronic books, to floral arrangements, food deliveries, movie rental services, and a countless assortment of goods and services available for purchase through digital marketplaces and online retailers. E-commerce, is not, however, limited to the consumer/merchant relationship only, but also allows businesses to buy and sell from each other, as well as allowing for the transfer of funds electronically, from person to person.
EBT
Electronic Benefits Transfer or EBT is the issuing of a debit card eliminating paper benefits through electronic authorisation. This is an automation of government benefits for data capture and the settlement process.
ECA/ECP
Electronic Check Acceptance and Electronic Check Processing is a process that converts paper checks into electronic checks during the point of sale.
ECR
Efficient Consumer Response or ECR) is a joint trade and industry body working towards making the grocery sector as a whole more responsive to consumer demand and promote the removal of unnecessary costs from the supply chain.
EDC
Electronic Draft Capture or EDC is the action of using a point of sale device to authorise a transaction made by a credit card and then settle those transactions.
EFT
Electronic Funds Transfer or EFT is a system that moves funds automatically, for instance a pay by phone transaction or an ATM withdrawal.
Encryption
An encryption is the jumble of data in order to protect a cardholder’s security.
Entitlement
An entitlement is the permission or valid license for payment cards or payment vehicles to be accepted by the appropriate member.
EPROM
Erasable Programmable Read Only Memory or EPROM is an industry initiated standard that is used to identify terminal types.
Exceeded Timeliness
Exceeded Timeliness is the term used to describe a transaction that has been deposited too late. This affects the transaction’s qualification for best interchange rate.
Expiration Date
The expiration date is the imprinted date on a bank or payment card. Cards can either be accepted or denied based on this date.
F
Factoring
Factoring is when a legitimate merchant deposits card transactions with its processing bank on behalf of another merchant.
Fedwire
A real-time gross settlement system of central bank money used in the United States by its Federal Reserve Banks to settle final payments in U.S. dollars electronically between its member institutions.
Fees
Fees are used for processing online payments. This action is made in payments to someone in return for their goods or services.
Fixed Rate
A fixed rate is an interest rate on a liability, such as a loan or mortgage, which remains fixed for the remaining time of the liability. Fixed interest rates are interest percentages established from the commencement of the loan, which do not fluctuate or change throughout the life of the loan. The party who receives the loan will pay the same amount of interest for the entirety of their payments.
Fleet Card
A fleet card is a payment card primarily used for fuelling by purchase of gasoline, diesel, and other fuels at gas stations.
Floating Rate
A floating rate is a mutual fund that invests in financial instruments with a variable or floating interest rate.
Folio
A term used for a number assigned by lodging merchant for tracking a guest’s charges.
Force
A force or commonly known as a post-authorisation is a process where a voice-authorised transaction is entered using a key in order to be settled electronically within a batch of transactions.
Frame Relay
A term for a TCP/IP link for data that involves high transmission speeds, high connectivity, efficient bandwidth use, and a low network delay.
Fraud Investigation
A fraud investigation is the process of identifying suspicious merchant or cardholder behaviour.
Friendly Fraud (Chargeback Fraud)
Friendly Fraud occurs when a customer files a dispute of charges with their bank or cardholder, receiving a refund from their bank through a chargeback, for goods or services that they did, in fact, order and receive. Friendly Fraud can be used to deceptively receive the good or service ordered, without having to pay for the product, leaving the merchant financially responsible.
Front-End Network
A front end network is a network provider who is responsible for the authorisation and capture of transactions to forward information to the back end network.
FTP
File Transfer Protocol or FTP is a standard network protocol used to transfer computer files from one host to another over a TCP Network.
FX (Foreign Exchange Rate)
Foreign Exchange Rate or FX is the exchange rate between two currencies which one currency can be exchanged for the other.
G
Gateway
A gateway manages the electronic connection between financial institutions and consumers to transmit data.
Gift Card
A gift card is a restricted monetary equivalent or scrip that is issued by retailers or banks to be used as an alternative to a non-monetary gift.
Good Faith
This term is used to describe an attempt by a card association member in order to resolve a dispute with another card association member in writing. This resolution must be created before filing a compliance case.
I
Identity Theft
Identity theft and identity fraud are crimes during which one or more people illegally obtain another individual’s personal information for use in deceptively creating financial or personal gain, at the expense of the other individual. Numbers unique to one individual, such as credit or debit card numbers, social security numbers, and identification numbers, are often fraudulently used against the person from whom they belong, to benefit the person committing identity theft. Identity theft has risen steadily with the use of E-commerce and the Internet in business transactions, as well as personal identification being brought online.
Idle Prompt
The display that is located on a payment card when processing the next transaction.
Imprint
When dealing with online transactions credit cards cannot be swiped through terminals therefore we must obtain an imprint of the card and its details.
Imprinter
The device which is used to imprint card information into a draft to complete card transactions. The only time an imprinter is used is when the card is present.
Interac
National debit card network in Canada.
Interchange
The process when the acquiring and issuing banks exchange their transaction data amongst one another.
Interchange Fees
This term describes a fee that is paid between banks for accepting card based transactions. They are set by the payment networks (Visa, MasterCard).
Interchange Network
An electronic network which is maintained by numerous credit card companies (Visa, Discover, American Express, MasterCard) that exchanges data in regards to the value of the card sales.
Interest Rate SWAP Contract
The exchange of one set of cash flows for another one. Since they are usually traded OTC they are simply contracts amongst two or more parties which makes it easy to customise them differently.
ISDN
Integrated Services Digital Network: an international communications standard that allows the sending of voice, video and data over digital telephone lines.
ISP
Internet Service Provider: A company that provides Internet access.
Issuer (Issuing Bank)
The issuing bank is the link between the customer and any transaction involving a credit or debit card. The issuing bank issues credit and debit cards to customers, providing them with a line of credit or access to their personal accounts. When the customer then uses his card in a transaction, the issuing bank provides the funds accessed to the acquiring bank, who then forwards them to the merchant. While the issuing bank distributes cards to customers, they depend on the acquiring bank for their relationship with card networks, such as Visa and MasterCard.
K
Key Performance Indicators (KPI)
Key Performance Indicators are quantifiable measurements of some aspect of an organisation’s success. Used to track progress and measure and define successful or unsuccessful aspects of a company. All organisations will set their own Key Performance Indicators, depending on their goals and priorities as a business. KPI’s can range from net income, to customer service calls resulting in satisfied customers.
L
Leased Line
A permanent telephone connection between two points set up by a carrier, they are used by businesses to connect offices which are not located in a close proximity.
Level I Data
Refers to business-to-consumer (B2C) transactions where customers use their personal credit cards to make purchases. The data required for a Level 1 transaction is: merchant name, transaction amount, supplier/retailer name and date needed.
Level II Data
Designed to support business-to-business (B2B) payments. The data required for a Level 2 transaction is: merchant name, transaction amount, date, tax amount, customer code, merchant postal code, tax identification, merchant minority code and merchant state code
Level III Data
This level requires the most detailed data and most of the transactions are made with government or corporate purchasing cards. The data for this Level include all of those from Level 2 as well as: item product codes, item descriptions/quantities, item tax rate, ship from postal code, freight amount, duty amount, destination postal code and destination country code.
LIBOR
London Interbank Offered Rate: A benchmark rate that most of the banks worldwide charge each other for short-term loans and gauges the cost of unsecured borrowing in the different money markets.
Line of Credit
Any credit source extended to a government, business or individual by a bank of other financial institution.
Lockbox
A service provided by banks to companies for the receipt of payment from customers. Rather than going to the company direct, these payments are sent to a special post office box where the bank retrieves the payments and deposits funds directly into that specific company’s bank account.
M
Magnetic Stripe
A panel on the back of a payment card (credit, debit) which contains magnetically encoded information about the cardholders account.
Magnetic Stripe Reader
An intelligent, programmable magnetic stripe reader that reads encoded information when the card is passed through.
Magnetic stripe reading
This happens when a credit card is swiped through the terminal to record all of the information on the card.
Mark-To-Market
A measure of the fair value of accounts that can change over time. Mark to Market aims to provide explain a specific company’s current financial situation.
MasterCard International Incorporated
An American multinational financial service headquartered in New York, United States. Their main business is to process payments between the banks of merchants and the issuing banks of the purchasers who use the MasterCard brand debit/credit cards.
MasterCard®
A registered trademark for MasterCard International, Inc.
MATCH
A shared database maintained by the Card Associations that lists all Sellers terminated for cause by Acquirers.
MCC or MCC Codes
Specific numbers assigned by each Card association for identification and tracking purpose. MasterCard® uses MCC (Seller Category Code).
Media
The documentation of monetary transactions (sales, drafts, credit slips, etc.).
Media Retrieval Requests
The process of obtaining paper documents from a specific location. Two types: 1) requests for sales records from cardholders, and 2) requests for documentation in defence of a chargeback from card issuers.
Member
Members are licensed to issue cards to cardholders (issuer) and they accept merchant drafts (acquirer).
Merchant
A store owner or seller of products.
Merchant Agreement
A legal contract that outlines the terms of working relationships between retail merchants and different types of acquirers.
Merchant Bank
A financial institution that provides capital to companies in the form of share ownership as opposed to loans.
Merchant Discount
The rate charged to a merchant by a bank for providing debit and credit card services. The merchant has to set up this service with a bank and agree to the rate prior to accepting debit and credit cards.
Merchant File
A file used by an Acquirer to list important information on merchants.
Merchant Processing Agreement (MPA)
In order to for credit card transaction to be processed a contract must be signed between the merchant and the credit card processor that describes the responsibilities of both parties.
Merchant Identification Number (MID)
A Merchant Identification Number, commonly referred to as a MID, is a distinct number assigned to a merchant account, used to identify the merchant throughout the span of a transaction. MID’s are assigned to the merchant by a processor or acquirer, and are entirely unique to the specific merchant involved. This number is crucial to the processing of transactions, and is used to identify the merchant during each step of the process, from adjustments to chargebacks and fees.
Merchant Qualification Standards
In order for MasterCard and Visa to have cardholders they first explain to the merchant that they need to be responsible and show a good reputation.
MICR Number
Magnetic Ink Character Recognition: the banks routing, account and check number located at the bottom of a check which can be used to authorise checks.
Minimum Discount Fee
Merchants agree to pay a certain discount fee each month based on their expected sales volume. The Credit Card Processor charges the merchant the amount of fees that were generated or the minimum discount fee. The typical monthly minimum charged by most companies on a merchant account is $25.
MMD
A high-grade municipal bond index.
MOP
Method of Payment (Examples: MasterCard, Visa, Discover, Electronic Check, Private Label cards etc.)
N
NACHA
National Automated Clearing House Association: manages the development, administration, and governance of the ACH Network and is the backbone for all the electronic movements of money and data in the United States. https://www.nacha.org/
Network
An entire system of communication hardware and software used to transfer electronic information during the authorisation process.
No-Show
If a person fails to arrive or cancel a guaranteed reservation then their account is charged by a lodging merchant.
Non Face-to-Face Transaction
Any transaction where a card is not presented: a phone call, the internet or through the mail.
Non-Qualified Rate
The rate assigned to a transaction which has failed to meet the qualification criteria set by the issuer. This is the most costly.
NSF (Not Sufficient Funds)
A bank account which doesn’t have enough sufficient funds to make charges on.
O
Off-Line Debit Card
Also known as a check card, this card has the characteristics of both a traditional debit card and a credit card, enabling the cardholder to pay for goods immediately from his or her bank account. With the off-line debit card, only the user’s signature is required and not the PIN number.
Official Statement
A legal document that serves as the description for a municipal bond. This is a disclosure of the finances surrounding the issue of the municipal bound, and is prepared by the local or state government.
Offline Transaction
Is a payment method that uses a debit card to transfer funds from a checking account to a merchant across a credit card network. Usually referred to as a signature debit transaction.
OK Number
A validation number from the host computer confirming a successful batch deposit.
Online Transaction
A password- protected payment method that enables a transfer of funds over an electronic funds transfer (EFT).
P
Payment Gateway
Is an e-commerce request service provider service that enables credit card payments for online retailers, e-businesses, or traditional brick and mortar.
Personal Identification Number (PIN)
A number assigned to an individual and used to approve electronic transactions.
PBX Access Code
An access number that is dialled to reach an outside line.
Per-Transaction Fee
The fee that is compensated for every action to the merchant bank or other contracted party by the merchant.
Pick Up Card
An issuer’s electronic feedback to an authorisation request, inquiring that the card be held by the merchant and returned to the issuer.
PIN
A numeric code that is used as confirmation to finish a transaction via payment card. The PIN number is used by entering it numeric code into a keypad which grants authorisation.
POP (Point of Purchase Conversion)
A place where sales are made.
POS (Point of Sale)
The location where the payment card transaction occurs, either at the credit card terminal or cash register.
POS Terminal
An electronic transaction terminal which is comprised of a computer, a cash register, and other software used to sell goods or services.
Positive Pay
The dominant method of check fraud deterrence. The process includes a daily reconcilement of a company’s issue checks to checks granted for payment to your bank to identify possible counterfeit checks.
Posting
The procedure of documenting the debits and credits to an account.
PPD
A credit or debit entrance, aided by a merchant or a one-time approval from a consumer, to effect an electronic funds transfer to or from a consumer’s bank account.
Prenote
A non-dollar transaction that is sent through the ACH network for the purpose of confirming the preciseness of the cardholder’s account data.
Presentment
Currency-the currency in which a purchase is authorised through VISA, MasterCard, or American Express.
Private Label Card
A card issued by a merchant that is only allowed to be used in the issuing merchant’s business.
Processing
The routine by which the merchant sends information about each credit card transaction to the issuing bank which results in the issuing bank paying the merchant for the transactions.
Processing Fees
Fees associated with the processing of credit card transactions.
Processor
Processors, operated by or working with acquiring banks, are responsible for the transfer of the transaction information, from the cardholder’s initial purchase, to the merchant’s issuing bank. Through the act of processing, processors are able to transfer the information needed for the funds to be exchanged, only after the acquiring bank authorises the charge.
Protocol
A set of guidelines that allow data communications to work.
Purchasing Card
A payment used by companies to replace paper invoices.
Q
Qualification Level
For every transaction, a Qualification level is assigned at Interchange. Each level assigned depends on how well the transaction meets the requirements for the merchant’s industry.
Qualified Rate
The discount rate level, which the transaction qualifies when it meets all the requirements for the lowest rate.
Quasi-cash purchase
A transaction that appears for the sale of items that are directly convertible to cash. Examples would be money orders and travellers checks.
R
RAM (Random Access Memory)
Short term memory for a computer or payment card terminal.
Re-authorisation (re-auth, add auth)
To inquire an additional amount to be authorised on an existing transaction.
Re-presentment
The act of resubmission by an acquirer of a previously charged back sale in attempt to re-charge the cardholder.
Reason Code
Reason codes are numbers manually inputted into a system in order to communicate to the following person or persons, why the change or adjustment was made. Every time a chargeback is filed, for instance, a reason code is used to inform all parties why the dispute has been initiated.
Recurring Transaction
A transaction charged to a cardholder’s account (with prior permission) on a recurrent basis for reappearing goods and services.
Referral
A note received from an issuing bank when an attempt for approval requires a call to the Voice Authorisation Centre.
Refund
This occurs when a merchant rebates all, or a portion, of an original transaction amount to the cardholder.
Representment
An attempt to reverse a chargeback started by a merchant or acquirer to the issuing bank that presented the chargeback while also being backed by supporting documentation.
Retail Transaction
A face to face transaction where the cardholder presents a card to the merchant in order to pay for goods or services.
Retrieval Request
When the issuer makes a request to the acquirer for a copy of the original sales ticket.
Return Policy
Rules retail merchants establish to manage the process by which customers return or exchange unwanted or defective merchandise that they purchase previously.
Reversal
When an acquirer successfully represents a chargeback to the issuer, the chargeback is then reversed and the funds are returned to the merchant.
ROM (Read Only Memory)
Memory and information that cannot be changed.
RS232
Standard Port on POS device that is used to aid a wireless transmission via VSAT, Frame, VPN, or Motient.
S
Sales Draft
A sales draft is a form referencing an obligation for the cardholder to pay money to the card issuer. This is evident through a signature and either electronically or on paper for proof of purchase.
Sales Transaction Fee
This fee indicates the amount a financial institution charges the merchant for every sales transaction.
SDK
A software development kit or SDK is a set of software development tools allowing for the creation of various applications that adhere to a unique software package, framework, platform, or operating system.
Secure Payment Page
A secure payment page is a web page in which confidential information like credit card information can be submitted through a process taking place in a secure environment. This page can be indicated with the ‘s’ in the https:// versus http:// in a web address.
Securecode
A securecode is a service provided by MasterCard and an individual’s card issuer that provides an added protection when that individual is making an online purchase. This fraud prevention tool is conducted in real time when a transaction occurs on merchant websites.
Seller Account or Online Seller Account
A seller account or online seller account is bank account in which the seller identifies as the sole account from which transaction or monthly fees are debited.
Seller Bank
A seller bank is either a financial institution such as an acquirer or processor that composes a contract to accept credit cards for payment of goods and services.
Seller Fees or Fees
A fee acquired by an online seller that is charged for processing and screening ecommerce payments.
Seller or Online Seller
A seller is an individual or business responsible for selling goods or services through ecommerce or in a storefront. These individuals or businesses are capable of accepting payment for their products or services by way of a seller’s account.
Settlement Currency
A currency in which the merchant receives financial support after the completion of a foreign exchange conversion.
Settlement or Settling
The act of sending through an interchange of credit card transactions the merchant accumulates in a terminal or host. This transmission is necessary so the merchant can be paid for the transactions.
SIC
A standard industry code consists of 4 digits that is universally recognised and designates a merchant’s classification in the industry.
SIC or Standard Industrial Code
A code consisting of unique numbers that are assigned to sellers by the card associations. This code is necessary for identification and tracking purposes. Credit card companies differentiate in industrial codes, for instance MasterCard uses MCC while Visa uses SIC.
SIFMA Index
The SIFMA Municipal Swap Index is a Municipal Market Data produced index consisting of a 7 day high grade market information comprised of tax exempt VRDOs from their database.
Smart Card
A type of payment card with an encoded microprocessor that is typically used for electronic processes like a financial transaction and personal identification.
Soft Decline
This term refers to a declined authorisation attempt that does not necessarily mean the card is bad (i.e., call referral, issuer unavailable or cardholder over limit). These transactions may be resubmitted a day or two later in an attempt to obtain a valid authorisation.
Split Dial
This action is the capability of a card terminal to dial different telephone numbers in order to obtain authorisation or a settlement of different types of cards.
Stored Value Card
A store valued card is a type of electronic bank debit card that have a specific dollar value programmed. Banks provide this type of card as a service for customers who cannot open checking or other depositing accounts.
Submission
A file or entity sent by the merchant that contains one or more transactions.
Summary Adjustment
An adjustment or correction made to a deposit by the acquirer when there is an error in the submitted deposit.
SWIFT
Society for Worldwide Interbank Financial Telecommunications or SWIFT is a member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) uses a standardised proprietary communications platform to facilitate the transmission of information about financial transactions. This information, including payment instructions, is securely exchanged between financial institutions.
Swipe
The action of running a credit card’s magnetic strip through a reader interpreting the date encoded on the strip.
Synchronous
A term defining the method of communication that continuously transmits information with no stops in between information bytes.
T
T&E Cards
A T&E card is an issued card assigned to an individual to support their business related travel and entertainment expenses.
T&E Merchant
A T&E merchant consists of an airline, car rental company, or lodging establishment providing the primary function of travel-related services.
TCS
Terminal Capture System or TCS is the process in which transactions are stored in the terminal until the batch is settled to the host.
TEL
TEL is an electronic debit from a consumer’s bank account based on oral authorisation via phone. A company using TEL can only initiate the telephone call when there is an existing relationship with the consumer.
Telemarketing
Telemarking is the marketing of goods or services by means of telephone calls that are typically unsolicited to potential customers.
Term
A term is a fixed or limited period usually given to repay a loan.
Terminal Based
A ‘terminal based’ system operates by capturing card transactions and holds those transactions until settlement.
Terminal Provider
A terminal provider is a company that supplies operating credit card software and hardware to a merchant.
TID
A Terminal Identification Number or TID is the unique number assigned and linked to a specific point of sale terminal or workstation that can be used to identify the merchant operating the terminal during credit card sales transaction processing.
Track One
Track One is information that is encoded on the magnetic strip on the back of a credit card that includes the cardholder’s name, account number, and expiration date.
Track Two
Track Two is information encoded on the magnetic strip on the back of a credit card that includes the account number and expiration date.
Transaction
A transaction is an occurrence in which goods, services, or money are transferred from one account or person to another. This action takes place between a merchant and cardholder resulting in account activity such as a purchase or credit. A transaction occurs any time two people or organisations make an exchange of finances, goods, or services. Transactions occur most often during the buying, selling, or trading of a good or service, but the transfer of funds, the act of conducting business, and the use of credit are also transactions.
Transaction Date
The transaction date is the date when a security or other financial entity is traded. This date signifies the time at which ownership is transferred.
Transaction Fee
A transaction fee is the charge intermediary such as a bank, assesses for assisting in the sale or purchase of a security. This amount is paid by the merchant per transaction for processing.
U
Unauthorised Transaction
A transaction or sale made without the permission of the customer or cardholder. Securities in the industry have specific rules prohibiting unauthorised transactions.
V
Valid Date
A valid date is a date imprinted on a payment card indicating when the card can first be used.
VAR
A Value Added Reseller or VAR is a company or third party whom certifies their software in a processor’s system adding a service or feature to an existing product then resells this product as an integrated entity or complete ‘turnkey’ solution.
Variable Rate Demand Note (VRDN)
A Variable Rate Demand Note or VRDN is a debt instrument that represents borrowed funds that are payable on demand and accrue interest based on prevailing money market rate, for example a prime rate.
Visa USA
The VISA USA division is a national bankcard association that is governed by a board of directors whom license members to issue credit cards and accept merchant drafts under a program created by VISA.
Voice Authorisation
An authorisation used for a security measure by the credit card industry to ensure that a particular purchase is being authorised by the actual card-holding customer and not another person.
W
WEB
The WEB is an electronic debit from a consumer’s bank account that was created in a secure Internet session between a company and consumer.
Z
ZBA (Zero Balance Account)
A zero balance account is a checking account in which a balance of zero is preserved by the automatic transfer of funds from a master account in an amount that is only large enough to equip checks presented.
Zero Floor Limit
A Zero Floor Limit is the requirement in which all transactions must receive an authorisation to be processed.