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Glossary of Merchant Services Terms

ABA Routing Number

Also referred to as a Transit Routing Number. Directs electronic ACH deposits to the proper bank institution.

ACH (Automated Clearing House)

The paperless funds transfer system maintained by the Federal Reserve or other entities that have networks to exchange electronic funds transfer items.

Acquirer

Any bank, financial institution, and public or private company that maintains a Seller's credit card processing relationship and receives all transactions from the Seller to be distributed to the credit card issuing banks.

Address Verification Service (AVS)

A service provided in which the Seller verifies the Cardholder's address with the Issuing Bank. Address verification is not a guarantee that a transaction is valid.

Adjustment

A debit or credit to a Cardholder or Seller account to correct a transaction error.

Arbitration

The process followed by the Card Associations to determine whether an Issuer or an Acquirer has ultimate responsibility for a chargeback. Either member initiates this process after the re-presentment process is completed.

Associations

Any entity formed to administer and promote 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.

Authorization

Approval of a bankcard transaction by the card-issuing banks or approved independent service providers, for a specified dollar amount. An authorization indicates only the availability of the card member's credit limit at the time the authorization is requested.

Authorization response

The reply to a request for approval on a transaction.

Authorization response code

A code returned in the authorization response to indicate approval of a transaction. The code is recorded on the transition receipt as proof of Authorization.

Back-end Processor

A data processing company that contracts with Acquirers to provide communication and processing systems that connect with the interchange systems for clearing and settlement services on behalf of those Acquirers. (In some cases the Acquirer may act as its own back-end processor.)

Bankcard

Any valid card issued by a Card Association or other card-issuing organization that is presented in payment for goods and services or to obtain cash advances.

BIN (Bank Identification Number)

The 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).

Card Association

Any entity whose members issue credit or debit cards or acquire card payment transactions on behalf of their customers.

Card not present transactions

Transactions that are processed without the card or the cardholder being present, e.g., phone or Internet orders.

Card present transactions

Transactions in which the cardholder and the card are present.

Cardholder

A person or entity that is issued a credit or debit account that is accessed through the use of a card.

Chargeback

When a credit card transaction is disputed (either at the request of the Cardholder or by a card Issuer), the dispute is handled through a chargeback. A chargeback will cause the amount of the original sale and a chargeback fee to be deducted from the checking or savings account you provided.

Clearing

The transfer of data between Issuers and Acquirers.

Control Number

Number that uniquely identifies a retrieval request or chargeback.

Credit/Pending Settlement

Transactions of this status have been entered as credits, but have not yet been submitted for settlement. These transactions will remain in this unsettled state until they are submitted for settlement. Once a credit has been settled, its status changes to Credited.

Credit Slip

A paper or electronic representation of credit that is issued to a Cardholder on a prior credit card sale.

CVV2/CVC2

CVV2/CVC2 is the three-digit value printed on the signature panel on the bank of cards immediately following the card account number. The 3-digit value helps validate that the cardholder has a card in his/her possession, and the card account is legitimate. A paper or electronic representation of credit that is issued to a Cardholder on a prior credit card sale.

Discount Rate

A discount rate is a fee associated with collecting, assessing, approving, processing, and settling credit card transactions. This fees is often a percentage of the transaction value.

Fees

Fees for screening and processing online payments may include, but are not limited to, costs for the following:
– Monthly Account
– Discount rate
– Per item charges for credit card and electronic check transactions.

Imprint

When a credit card cannot swiped through a terminal, it is necessary to obtain an emboss of the card by using a manual imprinter.

Interchange Network

An electronic network maintained by Discover®, MasterCard®, American Express, or VISA® that exchanges data relating to the value of card sales and credits among Issuers and Acquirers.

Interchange Fees

Fees generally collected from Acquirers on the value of their card sales and paid to Issuers.

Issuer

Any Discover®, MasterCard® American Express or VISA® member, or a commercial organization that establishes and maintains customer credit lines that are accessed through the use of a card. (Public and private companies and financial institutions that offer card-accessed lines of credit to consumers and businesses.)

Magnetic stripe reading

When the credit card is swiped through the terminal to record the card information. Obtaining a magnetic strip reading proves the card's presence at the time of a transaction.

MasterCard®

A registered mark 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

Special numbers assigned by the Card Associations to Seller types for identification and tracking purposes. MasterCard® uses MCC (Seller Category Code), while VISA® uses SIC (Standard Industry Codes).

Payment Gateway

An Internet-based service that transports credit card information from a computer terminal or Web site to a credit card processor, where it can be verified.

Quasi-cash purchase

A transaction representing sale of items that are directly convertible to cash such as money orders and travelers cheques.

Re-presentment

The re-submission by an Acquirer of a previously charged back sale in an attempt to re-charge the Cardholder. Chargebacks requires some form of additional documentation confirming the validity of the charge and disputing the chargeback reason.

Retrieval Request

A retrieval request occurs when your customer requests more information about a transaction that appears on his or her credit card statement.

Return Policy

The merchant's limitations and/or requirements on accepting returned merchandise.

Sales Draft

The paper or electronic evidence of a purchase.

Secure Payment Page

A secure payment page assures customers that their payment information is encrypted for privacy and data integrity before it's sent over the Internet. This page is typically identified by the "s" in https:// (instead of http://). Payment gateway providers make this necessary e-commerce link possible by hosting the payment gateway software and individual secure payment pages on their own servers.

Securecode

A fraud prevention tool, MasterCard Issuers confirm consumers' identities in real time during transactions at participating merchant sites. When the consumer clicks "buy" at checkout, software installed on the merchant server recognizes registered MasterCards and an authentication screen appears in the consumer's browser. The consumer enters his/her password and the password is verified.

Seller or Online Seller

An individual or business that sells products or services and is capable of accepting payment for products and services via a Seller account.

Seller Account or Online Seller Account

The bank account a Seller identifies as the sole account from which monthly and/or transaction fees are debited.

Seller Bank

(Acquirer or Processor) The financial institution with which a Seller contracts to accept credit cards for payment of goods and services.

Seller Fees or Fees

Sellers are charged several types of fees for screening and processing online payments. Fees for products and services include, but are not limited to costs for the following:
– Monthly Online Seller Account
– Discount rate
– Per item charges for credit card and electronic check transactions
– Chargebacks.

Settlement

The process of transferring funds for sales and credits between Acquirers and Issuers, including the final debiting of a Cardholder's account and crediting a Seller's account.

SIC or Standard Industry Codes

Special numbers assigned by the Card Associations to Seller types for identification and tracking purposes. MasterCard® uses MCC (Seller Category Code), while VISA® uses SIC (Standard Industry Codes).

Transaction

An act between a Seller and a Cardholder that results in either a paper or an electronic representation of the Cardholder's promise to pay for goods or services received from the act.

Unauthorized Transaction

Any sale for which a Cardholder does not provide his/her specific authorization (This should not be confused with the failure to receive an authorization response from the Issuer.)

VISA®

A registered mark for Visa U.S.A., Inc and Visa International, Inc.