Credit Card Processing
Glossary |
|
|
Address
Verification System |
A system used to
verify the identity of the person claiming to
own the credit card. The system will check the
billing address of the credit card provided by
the user with the address on file at the credit
card company. |
|
ACH |
See Automated
Clearing House Below |
|
Authorization |
The process of
verifying that the credit card has sufficient
funds available to cover the amount of the
transaction. An authorization must be obtained
for every sale, and is not a guarantee of
payment. |
|
Authorization Code |
A code that the
credit card issuing bank returns in an
electronic message to the merchant's equipment.
The code serves as a proof of the authorization
and indicates approval of the transaction. |
|
Authorization Response |
An issuing
financial institution's electronic message reply
to an authorization request. It can indicate a
decline or an approval among others. |
|
Auto-Batch |
A feature of the
merchant's terminal that allows batch settling
to occur automatically at a specified time every
day. |
|
Automated Clearing House |
An electronic
banking network operating in the United States.
ACH processes large volumes of both credit and
debit transactions which are originated in
batches. Rules and regulations governing the ACH
network are established by the
National Automated
Clearing House Association (NACHA). |
|
AVS |
See
Address
Verification
System
above. |
|
Bankcard |
A card issued by
MasterCard or Visa. |
|
Cardholder |
The person that
uses a payment card account purchase goods or
services from a merchant. |
|
Card Issuing Bank |
This is the bank
that a card was originally issued from and
contact information can be found on the back of
the card.
|
|
Card Not Present |
A sales
environment where the cardholder (and the card)
is not physically present at the time of
purchase. Such transactions take place in
businesses focused on mail order/telephone
order, business to business, and Internet-based
transactions. |
|
Chargeback |
An amount that
is charged by the acquiring bank and deducted
from a merchant account for any transactions
that are disputed by a credit card holder as
being unauthorized or fraudulent. |
|
Check Guarantee |
A service that
guarantees the check writer's payment and
assumes the collections risk of check payments
for a merchant. |
|
Code 10 Authorization |
If you suspect a
card is fraudulent at the time of the
transaction, the merchant can call their voice
authorization phone number and ask for a code
10. The voice operator will instruct the
merchant on how to proceed. |
|
Debit Card |
Funds are
withdrawn directly from the cardholder's
checking account when a debit card is used for
the transaction |
|
Decline |
A transaction
for which authorization is declined by the
issuing bank. |
|
Discount Rate |
A
percentage-based fee that is paid to the
acquiring bank and the credit card processing
organization for the time and expense involved
in the handling of any electronic transaction. |
|
Gateway |
A computer-based
software application that takes the transactions
from online merchant storefronts and then routes
them to a processing system. |
Interchange
|
The
standardized electronic exchange of financial
and non-financial data associated with sale and
credit data between merchant acquirers and card
issuers on various types of MasterCard and Visa
transactions. |
|
Mail Order/Telephone Order |
Credit card
transactions initiated via mail, email or
telephone. Also known as card-not-present
transactions. |
|
MATCH |
See Member Alert
To Control High Risk Merchants. |
|
Member Alert To Control High Risk
Merchants |
The
MATCH file is maintained by MasterCard. It lists
merchants that have been terminated for special
causes, like excessive chargebacks or fraud. |
|
Merchant Identification Number |
This number is
generated by a processor/acquirer and is
specific to each individual merchant location.
This number is used to identify the merchant
during processing of daily transactions,
rejects, adjustments, chargebacks, end-of-month
processing fees, etc |
|
MID |
See Merchant
Identification Number. |
|
Magnetic Stripe |
This is the
black stripe that is on the back of a credit
card that holds the account information. |
|
MOTO |
See Mail
Order/Telephone Order. |
|
POS |
See Point Of
Sale. |
|
Point Of Sale |
A location where
credit card transactions are performed with the
cardholder present, such as a retail store. The
card is read magnetically, and the cardholder's
signature is obtained as insurance against the
transaction. This is the most secure form of
credit card commerce |
|
Processor |
A data center
that processes credit card transactions and
settles funds to merchants. A processor connects
to the merchant on behalf of an acquirer via a
gateway or POS system to process payments
electronically. Processors edit and format
messages and switch to bankcard networks. They
provide files for clearing and settlement and
other value-added services. |
|
Receipt |
This is the
paper that prints out of the credit card
terminal when you run a sale. |
|
Retrieval Request |
A request to a
merchant for documentation concerning a
transaction, usually initiated by a cardholder
dispute or suspicious sale/return. A retrieval
request can lead to a chargeback. |
|
Terminal |
This is the
credit card machine. |
|
Terminal Software |
This is the
merchant information that we load into the
credit card terminal so that the transactions
know where to go to. |
|
Transaction |
This is when you
run a credit, debit or Electronic Bank Transfer
sale. |
|
Sponsoring Bank |
A Sponsoring
Bank is a Chartered Bank or S & L that has
obtained membership in Visa or MasterCard in
order to allow a Processor access to the Visa
and MasterCard networks ( in order to process
these types of transactions).
Since only a Bank may join Visa or MasterCard,
many Processors make deals with a Sponsoring
Bank in order to gain access to the Visa and
MasterCard networks.
Because these Sponsoring agreements are usually
like a partnership, the line between the
Sponsoring Banks and their Processors is not
always clear; sometimes the partnership is
referred to by the name of the bank, while other
times they are referred to by the name of the
Processor.
|
|
Swiped Card |
This is when you
physically swipe the card through the terminal,
as apposed to keying in the account number
manually |
|
Terminal Identification Number |
This is the
unique ID number that we use to find out which
terminal that you are currently using.
|
|
Transaction Fee |
The fixed amount
charged to the merchant for each credit card
transaction. Does not vary based on the dollar
amount of the transaction. |
|
TID |
See Terminal
Identification Number. |
|
Voice Authorization |
Credit card
authorization obtained by telephoning an
operator as opposed to swiping the card. |
|
Void |
The reversal of
an approved transaction, one that has been
authorized but not settled yet. In order to
reverse a settled transaction, processing of a
credit is required. |
