GLOSSARY

Below is a comprehensive list of key merchant banking service terms and definitions that will be helpful during the process of establishing your new merchant services account with NDMS.

ABA Routing Number

A unique nine-digit number assigned to each banking institution used to identify the bank and direct ACH debits and credits. The ABA routing number is usually found at the bottom of a personal or business check.

ACH

Automated Clearing House or ACH is a group of processing institutions linked by a computer network to process electronic payment transactions between financial institutions.

Acquirer

An Acquirer is a Visa / Master Card Affiliated Bank or Bank/Processor alliance that is in the business of processing credit card transactions for businesses and is always Acquiring new merchants.

Address Verification Service or AVS

The process of validating a cardholder's given address against the issuer's records to determine accuracy and deter fraud. This service is provided as part of a credit card authorization for mail order/telephone order transactions. A code is returned with the authorization result that indicates the level of accuracy of the address match and helps secure the most favorable interchange rates.

Adjustment

AAn adjustment is initiated by the acquirer to correct a processing error. The error could be a duplication of a transaction or the result of a cardholder dispute. The acquirer debits or credits the merchant DDA account for the dollar amount of the adjustment.

Affinity Card

A card offered by two organizations, one a lending institution, the other a non-financial group. Schools, non-profit groups, pro wrestlers, popular singers and airlines are among those featured on affinity cards. Use of the card usually entitles holders to special discounts or deals from the non-financial group. See also co-branded cards.

American Express or AmEx

A company that specializes in the issuance of Travel and Entertainment (T&E) payment cards. American Express services the cards it issues, acting as its own transaction processor with its own processing network.

Approval

The indication that a sales transaction was approved.

Arbitration

A procedure used by an acquirer on behalf of the merchant to resolve a chargeback-related dispute with a payment card issuer.

Association

A group of licensing regulatory agencies for bankcard activities, that include MasterCard International, Visa U.S.A. or Visa International.

ATM or Debit Card

The payment card used in an ATM for deposits, cash withdrawals, account transfers and other related transactions. A PIN must be entered to withdraw cash and access account functions. An ATM card may also be used to make a debit purchase if the merchant has a PIN pad to accept the key entry.

Authorization

The process of verifying that a credit card has sufficient funds or credit available to cover the amount of a sales transaction. An authorization is obtained for every sale. An approval response in the form of a code is sent to a merchant's POS equipment from a card-issuing financial institution that verifies availability of credit or funds in the cardholder's account to make the purchase. Also see Point-Of-Sale.

Authorization Code

A code that a credit card issuing bank returns in an electronic message to the merchant's POS equipment that indicates approval of the transaction. The code serves as proof of authorization.

Authorization Only or Auth Only

Used to reserve an amount against a credit card's available credit limit for intended purchases. Authorization Only is most frequently used in the lodging (check-in), restaurant (tab) and car rental (pick-up) industries, where an approval is received for an estimated amount prior to the finalization of the charge amount.

Authorization Request

A merchant's request for an authorization to accept a cardholder's sales transaction. An authorization request can occur electronically via a credit card processing terminal or via telephone as a voice authorization.

Authorized User

Any person to whom you give permission to use a credit card account.

Auto Close

A terminal feature that allows an end-of-day batch closing to occur automatically at a specified time, without having to be initiated by the merchant.

Auto Re-presentment

Automatically sending information to resolve a chargeback on a merchant's behalf without the need for merchant intervention.

Average Ticket or Average Sale

The average dollar amount of a merchant's typical sale. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

AVS or Address Verification Service

A service supported by Visa, MasterCard, Discover and American Express that verifies a payment cardholder's billing address against the one on file with the issuer. AVS is designed to help combat fraud in non-face-to-face transactions.

Back-End Network

The settlement provider responsible for finalizing transactions, routing payment to a merchant's account and generating statements.

Balance Transfer

The process of moving an unpaid credit card debt from one issuer to another. Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance transfer fees to discourage them from going out.

Bankcard

A credit card issued by a Visa or MasterCard-sponsored financial institution. (American Express, Discover, Diners Club, JCB, etc., are issued directly from their respective operations, rather than through banks.)

Batch

The accumulation of captured credit card transactions in the merchant's terminal or POS awaiting settlement.

Batch Deposit

The electronic depositing of a batch file transmitted to the transaction processor for settlement.

Batch Processing

The authorization of transactions offline when immediate approval is not required. Transactions are collected in a batch and sent as one transmission for authorization and/or settlement. Batch processing is generally used with mail/telephone order transactions.

BIN or Bank Identification Number

A unique series of numbers assigned by Visa and MasterCard to a member institution, which identifies that institution in sales transaction processing. The BIN comprises the first six digits of a standard credit card number.

Business Card

Similar to a Corporate Card, but issued to a business with fewer employees. Each employee is responsible for his or her purchases with this payment credit card.

Capture

The submission of an electronic credit card transaction for financial settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales. Also see Settlement.

Cardholder

The person to whom a payment card is issued, or an additional person authorized by the original cardholder to use the card. It also means any person who holds a payment card account for a bankcard or otherwise. Any person who uses a credit card to purchase goods and services is a cardholder.

Card Issuing Bank

An EFT Network Member bank that runs a credit card or debit card "purchasing service" for their account holders. An example is Citibank, which offers the Citibank Visa Card.

Card Not Present

A transaction whereby a payment card is not present at the time of the sales transaction, such as mail order or telephone order. Credit card data is manually entered into the terminal, as opposed to swiping a card's magnetic stripe through the terminal.

Card Present

A type of transaction in which a payment card is present and is swiped through an electronic device that reads the informational contents of the card's magnetic stripe.

Card Reader

Input device on a card terminal that translates the information stored on a payment card's magnetic stripe.

Cardholder Account Number

A sequence of numbers assigned specifically to a cardholder account that also identifies the issuer and type of payment card. The cardholder account number is the embossed number imprinted on the payment card.

Cardholder-Initiated Chargeback

A chargeback that results when a payment cardholder contacts the card issuer and disputes a charge appearing on a monthly billing statement.

Card Security Code (CSC or CVV/2)

This is typically a 3 or 4 digit number on the back of the card, which is separate from the credit card number. CSC CVV/2 is referred to by different names depending on the card association.

CDPD or Cellular Digital Packet Data

A method of sending data through cellular networks. CDPD is used with wireless credit card terminals to transmit transactions and deposits in mobile environments.

Chargeback

A credit card transaction that is billed back to the merchant after the sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or service dissatisfaction. Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.

Chargeback Fee

The amount assessed by the acquirer for processing chargebacks.

Chargeback Reason Code

A numerical code that identifies the specific reason for a chargeback. MasterCard and Visa each have their own chargeback codes.

Check Digit Verification

A check digit is the last position of a card account number, generated from an algorithm performed on a primary card account number. Verification of this number is referred to as a MOD-10 check and is used to validate a credit card number.

Check Guarantee

A service that guarantees check payment to a merchant up to a specified amount. However, merchants are required to perform correct authorization procedures.

Check Reader

A device that reads the numbers encrypted on the bottom of most checks.

Check Verification

A service that provides merchants with some security against bad checks. The person writing the check is matched against a national negative file database to flag outstanding or bad checks on record from other members of this service.

CID or Card Identification Number

An association verification process that utilizes a non-embossed three or four-digit number printed when authorizing credit card transactions where the physical card is not present.

On American Express cards, the CID is a four-digit code printed on the front of the card.

On Visa, MasterCard and Discover cards, the CID is a three-digit code printed next to the card number in the signature panel.

Close

Sending a merchant's completed transactions to the host for processing. See also Settlement.

Closed Account Fee

A fee charged for shutting down an account. Sometimes charged if the account is closed before a certain time period has passed.

Close Batch

The process of sending a collection of credit card transactions – including authorizations, payments, and credits – saved for electronic submission to an acquirer for settlement. Merchants are encouraged to submit one large batch rather than several small ones as they are charged a fee for each batch submitted.

Co-branded Cards

A type of affinity card issued through a partnership between a bank and another retail company. For instance, a large department store may co-brand a card with a bank. The card would have two brand names on it: the bank's name and the store's name. Usually, the attraction of the card is special deals with the retail partner. Many co-branded payment cards – particularly the ones affiliated with airlines that offer air miles – are popular enough to command a hefty annual fee.

Corporate Card

Credit or charge cards issued to businesses to cover expenses such as travel and entertainment and procurement. Includes the multiple payment card brands of purchasing cards, business cards, corporate cards and multi-utility fleet cards. Visa and Master Card now have special procedures for passing billing information back to the card-issuing bank so that it can be displayed on card holder statements; this is a program for promoting the use of credit cards for business purchases by providing purchase tracking to business users.

Credit Card

A plastic payment card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit. The size and interest rate of the payment card are determined by the borrower's income and credit report. Credit cards came into use in the late '40s when banks began giving out paper certificates that could be used like cash in local stores. The first true credit card, as we know today, was issued in 1951 by Franklin National Bank in New York.

Credit Slip

A form stating that a refund or price adjustment will be credited to a cardholder account. Also referred to as a credit voucher or credit draft.

Credit or Reversal

Nullification of an authorized sales transaction that has not been settled. If supported by the card issuer, a reversal will immediately "undo" an authorization and return it to the open-to-buy balance on a cardholder's account. Some card issuers do not support reversals.

CVC2 or Card Validation Code

A MasterCard term for the three-digit code printed next to the card number in the signature panel and used as part of the authorization process.

CVV2

Card Verification Value - Visa term for the three-digit code printed next to the card number in the signature panel and used as part of the authorization process.

DBA

Doing Business As - the name a business uses to operate.

DBA or Doing Business As

The name that a business uses to operate publically. This may be different than the name with which a company formally and legally incorporated or formed.

Debit Card

A bankcard used to purchase goods and services and to obtain cash, which debits the cardholder's personal checking account or other bank account with immediate funds. The card acts like a check with money withdrawn from the existing account balance. Debit cards that carry the logo of either MasterCard or VISA can be used at any location that displays that network's logo.

Debit Switch

A portal that transmits debit data between gateway banks and debit card issuers, which is also referred to as Debit Network. Only financial institutions may be members of debit switches.

Decline

A response from a payment card issuer denying the use of the card for an attempted transaction. If a request for approval is declined, the merchant can ask the cardholder for another form of payment.

Digital Certificate

An encrypted attachment to an electronic message, used for security purposes. The most common use of a digital certificate is to verify that a user sending a message is who he or she claims to be. The receiver is also provided with a way to encode a reply.

DIP Switches or Dual In-Line Package Switches

A series of connected switches that determine the proper configuration for a payment card terminal printer.

Direct Response

Term used to describe a merchant’s type of processing and marketing, primarily for non-face-to-face or card-not-present transactions.

Discount Rate

The percentage of sales amounts that a bankcard acquirer charges a merchant for the settlement of a transaction. The majority of this fee is the card association interchange fee.

DUKPT

A method of PIN pad encryption also known as Derived Unique Key Per Transaction.

EBT

The automation of government benefits through electronic authorization, data capture and settlement processes also know as Electronic Benefits Transfer. Plastic cards with magnetic stripes are used in EBT transactions, eliminating paper benefits and coupon distribution.

ECA/ECP

The process that converts a paper check into an electronic check at the Point of Sale. Also known as Electronic Check Acceptance/ Electronic Check Processing. The check is electronically processed through the ACH network.

eCommerce

Electronic commerce is the buying and selling of products or services over the Internet. This also includes the exchange of data to facilitate the financing and payment aspects of the business transaction.

ECR

An Electronic Cash Register that also emulates a point-of-sale terminal.

EDC

Point-of-sale process of electronically authorizing, capturing and settling a credit card transaction. Also known as Electronic Data Capture.

EFT

An electronic system that automatically moves funds, e.g., an ATM withdrawal or pay-by-phone transaction. Also known as Electronic Funds Transfer.

Encryption

Method of scrambling data to protect a payment cardholder's personal information.

Entitlement

License or permission to accept a particular type of payment card or other payment vehicle.

EPROM

An industry-initiated standards used to identify terminal types and components formally known as Erasable Programmable Read Only Memory.

Exceeded Timeliness

A transaction that is deposited too late to qualify for the best interchange rate.

Expiration Date

The embossed date on a bankcard. After that date, the card becomes invalid and should no longer be accepted.

Footer

Text printed at the bottom of a sales draft. A merchant can customize the footer with such notation or information as: Have a Nice Day, No Refunds, Thank You for Shopping With Us, etc.

Factoring

When a legitimate merchant processes another merchant's transactions in return for payment. This practice is forbidden by the credit card associations.

Fair Credit Billing Act

Passed by Congress in 1975 to help customers resolve billing disputes with payment card issuers. Disputes include everything from computational errors and incorrect charges to the crediting of payments. The act requires issuers to credit payments to a customer's account the day they are received. To be protected under the law, the consumer must write to the issuer within 60 days of the mailing date on the bill with the error. The issuer is then required to investigate and either correct the mistake or explain why the bill is correct within two billing cycles. The issuer also must acknowledge a customer's complaint in writing within 30 days. Each issuer is allowed to set specific payment guidelines. If any of the guidelines are not met, the issuer can take as many as five days to credit the payment.

Financial Institution

Any organization in the business of moving, investing or lending money, dealing in financial instruments, or providing financial services. This includes commercial banks, thrifts, federal and state savings banks, saving and loan associations, and credit unions.

Fleet Card

Payment card designed mainly for fueling, maintenance and repairs of corporate motor vehicles. Fleet cards are normally used to provide specialized reporting.

Folio

A number assigned by a lodging merchant for tracking a guest's payment card charges.

Force

The process by which an authorized transaction is key-entered, which is to be settled electronically with a batch of transactions. Also known as a post-auth.

Foreign Currency Surcharge

A charge imposed by some credit card issuers that imposes a fee on purchases made in a foreign currency.

FPO

A product that allows merchants to design flexible payment plans to increase incremental sales. Also known as Flexible Payment Options.

Frame Relay

A TCP/IP link for data that has high transmission speeds, low network delay, high connectivity and efficient bandwidth use.

Fraud Investigation

The process of identifying suspicious merchant or payment cardholder activity.

Front-End Network

Network provider responsible for authorizing and capturing payment transactions and forwarding the information to the back-end network.

Gateway

A payment gateway is an eCommerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical terminal located in most retail outlets. Payment gateway protects credit cards details encrypting sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant and also between merchant and payment processor.

Gift Card

A reusable, stored-value card that enables merchants to have an electronic alternative to paper gift certificates.

Hard Decline

A declined authorization attempt resulting from a lost or stolen payment card.

HCS or Host Capture System

A transaction that is transmitted with an authorization request to the host computer at the front-end. The information is captured at the host, then sent back to the POS device. Since the information is already stored at the host, it can be settled without the merchant performing a settlement function.

Idle Prompt

The standard display on a payment card terminal waiting to process the next transaction.

Imprinter

A device used to imprint embossed card information onto a sales draft for payment card transactions. An imprinter is used if the card is present and the POS device cannot read the contents of the card’s magnetic stripe.

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. These major payment card associations charge an interchange fee based on how a transaction is sent and the type of merchant account for processing each transaction.

Interchange Fee

A fee paid by an acquirer to an issuer for transactions entered into interchange. The interchange fee is a percentage applied, according to Visa/MasterCard regulations, to the dollar value of each transaction. There are multiple categories of interchange, and Visa and MasterCard each have their own criteria for their categories. A transaction must meet the specified criteria for a category in order for that category's rate to be applied. Each transaction is evaluated individually, so various interchange rates may apply within one batch of merchant transactions.

Issuing Financial Institution

The financial institution that extends credit to a payment cardholder through bankcard accounts. The financial institution issues a credit card and bills the cardholder for purchases against the bankcard account. Also referred to as the cardholder's financial institution.

Leased Line

A dedicated telecommunications connection with either a point-to-point or multi-point configuration.

Level I Data

Level I purchasing payment card data includes the same information captured during a traditional credit card purchase transaction, such as: total purchase amount, date, merchant category code and supplier/retailer name.

Level II Data

Level II purchasing card data includes the same information captured at Level I, plus the following: sales tax amount, customer's accounting code, merchant's tax ID number, applicable minority- and women-owned business status, and sales outlet zip code.

Level III Data

Level III purchasing card data includes the same information captured at Levels I and II, plus the following: quantities, product codes, product descriptions, ship to zip, freight amount, duty amount, order/ticket number, unit of measure, extended item amount, discount indicator, discount amount, net/gross indicator, tax rate applied, tax type applied, debit or credit indicator, and alternate tax identifier.

Magnetic Stripe

A strip of magnetic tape affixed to the back of credit cards containing identifying data, such as account number and cardholder name.

Magnetic Stripe Reader

A point-of-sale device that reads the encoded information from the magnetic stripe when the card is passed through the reader. Readers may read Track Two, which contains the cardholder account number and expiration date, or both Track Two and Track One, which contains the cardholder name.

Manual Close

A batch close that must be initiated by the merchant on a daily basis, as opposed to an auto close at a pre-set time.

MCC

Merchant Category Code - a universal four-digit merchant classification code that identifies the merchant by type of processing, authorization and settlement. Similar to a Standard Industrial Classification (SIC), but more defined.

Mail Order/Telephone Order (MOTO)

Credit card transactions initiated via mail, email or telephone. Also known as card-not-present transactions.

MasterCard International Incorporated

A member-owned international bankcard association, governed by a board of directors, which licenses members to issue cards or accept merchant drafts under the MasterCard Program. MasterCard owns and operates its own international processing network.

MasterCard

MasterCard, a product of MasterCard International, is distributed by issuing financial institutions around the world. Card holders borrow money against a credit line and pay it back with interest if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in 220 countries and territories

Media Retrieval Requests

Media retrieval is the process of obtaining paper documents from a centralized location. There are two types of media retrieval requests: 1) requests for sales records from cardholders, and 2) requests for documentation in defense of a chargeback from card issuers.

Member

A financial institution that is a member of Visa and/or MasterCard. A member is licensed to issue cards to cardholders (issuer) and/or accepts merchant drafts (acquirer).

Merchant

Store owner or seller of products.  In credit card processing, a business that accepts credit cards. Also a customer of a processor or acquirer.

Merchant Account

A merchant account is a type of bank account that allows businesses to accept payments by debit or credit cards. A merchant account also serves as an agreement between a retailer, a merchant bank and payment processor for the settlement of credit card and/or debit card transactions.

Merchant Agreement

The written contract between the merchant and acquirer that details each of their respective rights, responsibilities and warranties.

Merchant Bank

See Acquiring Financial Institution.

MICR Number or Magnetic Ink Character Recognition

The bank routing and transit, checking account number and check number encoded at the bottom of a check that can be used to authorize the check.

MID

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.

MOP or Method of Payment

The way a merchant chooses to accept payment for products or services. Payment. Examples include: MasterCard, Visa, American Express, Discover, Carte Blanche, Diners Club, JCB, Electronic Check and private label cards.

Network

An entire system of communication hardware and software used to transfer electronic information during the authorization and settlement process.

Non Face-to-Face Transaction

Any transaction in which a payment card is not presented, such as a telephone, mail or Internet purchase. See Card-Not-Present.

Non-Qualified Transaction Fees or NON-Qual

Bankcard sales transactions that do not meet set Visa/MasterCard criteria for a particular merchant and are processed at a higher interchange rate. An example of this is a retail merchant or card present scenario that processes a card-not-present transaction, in which a cashier manually enters card data rather than swipes the magnetic stripe card through the terminal. The merchant will pay the difference between what they should have paid of the retail transaction and what they actually qualified for (card not present). This difference is called non-qualified interchange fees.

Offline Debit Card

Payment cards that share traits of both ATM and credit cards. Offline debit cards have the VISA or MasterCard logo on them and can be issued by a bank, either instead of or in addition to an ATM card. These cards can be used at any establishment that displays the VISA or MasterCard logo, but using them doesn't access a line of credit – it debits a customer's checking account. It is "offline" because the account isn't directly accessed – there's a delay of 24 to 72 hours before the debit is made in the account. If you sign a slip of paper to conclude the transaction, it was offline. In the U.S., no Personal Identification Number or PIN is required to use an offline debit card.

Offline Transaction

A transaction that is authorized through a voice authorization and later keyed into a POS terminal prior to sales transaction settlement.

OK Number

A validation number from the host computer confirming a successful batch deposit.

Online Transaction

A transaction that is authorized electronically from the front-end network.

Pick Up Card

An issuer's electronic response to a payment authorization request, asking that a payment card be retained by the merchant and returned to the issuer.

PIN or Personal Identification Number

A numeric code used as verification to complete a transaction via a payment card. The number is entered into a keypad and is encrypted to travel along with the authorization.

Point Of Sale or POS

The location where a payment card transaction occurs, usually by way of a device such as a credit card terminal or cash register. Also, an increasingly popular way for consumers to avoid ATM surcharges is to get cash returned from their debit card via a cash return at the point of sale, such as a grocery store.

POS Terminal

A terminal at the point of sale, connected via telecommunication lines to a central computer. Authorization, recording and transmission of electronic transactions are performed through the terminal.

Post-Auth

A Post Auth confirms that a merchant is ready to capture payment of his or her existing Pre Authorized transaction.

Posting

The process of recording debits and credits to an account.

Prenote

In the electronic check-processing environment, a non-dollar transaction sent through the ACH network for the purpose of verifying the accuracy of a payment cardholder's account data.

Pre-Auth

A Pre Auth is a type of authorization that reserves a pre-determined dollar amount on the customer’s credit card for the merchant to capture at a later time. If this transaction is not Post Authorized, then at the end of the hold period, the funds are automatically returned to the cardholder’s available credit. The customer is not billed in this example.

Private Label Cards

Credit, debit or stored-value cards that can be used only within a specific merchant's store. A private label card is issued by a retail outlet, such as a department store or gasoline company, and contains the logo of the retailer. It is accepted only by the retailer who issued it. Retailers partner with a bank or a card-issuing management company to back the cards.

Processor

The company responsible for processing interchange transactions. A processor is the company that actually routes an authorization request from a point of sale device to Visa or Master Card, and then arranges for fund settlement to the merchant. Such processors are traditionally accessed via direct dial out modems connecting to their system.

Processing Fees

The fees associated with the processing of credit card transactions.

Procurement or Purchasing Cards

Charge cards used by businesses to cover purchasing expenses, such as raw materials or office supplies.

Purchasing Card

A payment card used by companies to replace paper invoices.

Protocol

A set of rules that allow data communications to work.

Reason Code

A two-digit code identifying the reason a chargeback was initiated.

Re-Authorization or re-auth, add auth

To request an additional amount to be authorized on an existing sales transaction. Used in the lodging industry when the original authorization is not sufficient to cover the charges.

Rebate Card

A card that allows the customer to accumulate cash, merchandise or services based on card usage.

Recurring Transaction

A transaction charged to a cardholder's account, with prior permission, on a periodic basis for recurring goods and services, i.e., subscriptions or club memberships.

Referral

The message received from an issuing bank when an attempt for authorization requires a call to the voice authorization center.

Refund

A refund occurs when the merchant rebates all, or a portion, of an original sales transaction amount to the cardholder. Refunds are made to the same payment card that was used for the original transaction. Similar to a credit.

Re-presentment

An attempt to reverse a chargeback initiated by a merchant or acquirer to the issuing bank that presented the chargeback, backed by supporting documentation.

Reserve Account

One method that ACH processor's use to mitigate risk is to require that merchants maintain a reserve account at the processor's sponsoring bank. This allows the processor to issue a hold on funds in this account when fraud has been detected or an excessively large number of returns is received. Merchants with good credit and history can usually meet the expectations of ACH processors for covering returns and so are not always required to keep a reserve account. In cases where a reserve is required, the minimum-reserve-balance in the account is set at about 20% of the anticipated processing volume. New merchants are usually allowed to build up their reserve by sending in transactions which are not withdrawn until the minimum reserve balance is achieved.

Retail Transaction

A face-to-face transaction in which the cardholder presents a payment card to a merchant to pay for goods or services.

Retrieval Request

A request by the issuer to the acquirer for a copy of the original sales ticket.

Reversal

When an acquirer successfully represents a chargeback to the issuer, the chargeback is reversed and the funds are returned to the merchant.

RS232

The standard port on a POS device used to support a wireless transmission via VSAT, Frame, VPN or Motient. May also be used with various peripheral devices i.e. check reader or personal computer.

Sales Draft

A form showing an obligation on the cardholder's part to pay money – the sales amount – to the card issuer. This is the piece of paper that is signed by a cardholder when making a purchase. Sales draft data can be captured electronically and sent to be processed over the phone lines. Also see Electronic Data Capture.

Sales Transaction Fee

The amount the financial institution charges a merchant for each sales transaction.

SDK or Software Development Kit

A "kit" that is built to help a developer incorporate software into another program or system.

Secured Card

A credit card that a payment card holder secures with a savings deposit to ensure payment of the outstanding balance if the card holder defaults on payments. It is used by people new to credit or people trying to rebuild their poor credit ratings.

Secure Payment Gateway

Secure Payment Gateway companies help other Processors conduct secure business on the internet using Secure Socket Layer (SSL) technology. They provide a system that passes credit card data, authorization requests, and authorization responses over the internet using encryption technology. The transaction information is sent by the payment gateway secure server via leased line to the credit card network where the validity of the card is checked and the availability of funds on that account is verified. An authorization code is returned via leased line to the payment gateway; the authorization is encrypted by the payment gateway and transmitted in encrypted form to the web server of the merchant, which triggers fulfillment of the order.

Settlement

The process in which a merchant transmits batches of sales transactions to the acquirer. In interchange, it is the process by which acquirers and issuers exchange financial data resulting from sales transactions, cash advances, merchandise credits, etc.

For non-bankcards, the issuer pays the merchant directly (less applicable fees) and then bills the cardholder. For bankcards, the acquirer pays the merchant (less applicable fees) with funds from Visa/MasterCard. The bankcard issuer then bills the cardholder for the amount of the sale. Also see Capture.

Shopping Cart Software

These applications typically provide a means of capturing a client’s credit card information, but they rely on the software module of the secure gateway provider, in conjunction with the secure payment gateway in order to conduct secure credit card transactions online. Any given shopping cart can work with any given secure gateway provider, the only requirement being that some computer code be written or provided to communicate with the secure gateway of choice, and that this code be integrated into the shopping cart application.

SIC or Standard Industrial Code

A universal four-digit code that designates a merchant's industry type. Similar to an MCC code.

Smart card

A payment card with a built-in microprocessor chip that stores information. Smart cards can be used for stored-value cards, credit cards, loyalty programs and security access. Smart cards, sometimes called chip cards, contain a computer chip embedded in the plastic. Where a typical credit card's magnetic stripe can hold only a few dozen characters, smart cards are now available with larger amounts of memory. The cards can perform a number of functions or access data stored in the chip when read by a special terminal.

Soft Decline

A declined authorization attempt that does not necessarily mean the card is bad, such as a 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 authorization.

Split Dial

The capability of a card terminal to dial different telephone numbers to obtain an authorization or settlement of different card types.

Standard Card

A basic payment card offered by issuers. Customers with higher incomes and good credit reports can qualify for the higher-limit gold and platinum payment cards.

Stored Value Card

A stored value card is used by a merchant to issue spending credit to their customers. The merchant's customers are given a magnetic stripe card in exchange for money received, merchandise returned or other considerations. The card represents a dollar value that the merchant's customer can either use or give to another individual. There is no security associated with the card itself. The actual record of the balance on the card is maintained on a stored value card database.

Submission

A file sent by a merchant that contains one or more transactions.

Summary Adjustment

A correction to a deposit, made by the acquirer, when there is an error in the submitted deposit.

Synchronous

Communication method that transmits continuously with no stops and start bytes between information bytes.

T and E cards

Credit or charge card used by businesses for travel and entertainment expenses. Examples of these cards are American Express, Diners Club, and Carte Blanche.

T and E Merchant

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

Terminal

Equipment used to capture, transmit and store credit card transactions.

TCS or Terminal Capture System

The process in which transactions are stored in the terminal until the batch is settled to the host. Most often used in restaurant applications where tip adjustments need to be made.

TID or Terminal Identification Number

A unique number assigned to each POS terminal identifying a merchant to the front-end network.

Track One

Information stored on one portion of the magnetic stripe on the back of a card, which contains the cardholder's name in addition to the account number and expiration date.

Track Two

Information stored on another portion of the magnetic stripe on the back of a card, which has the account number and expiration date.

Transaction

Any action between a cardholder and a merchant or member that results in activity on the account, such as a purchase, cash advance or credit.

Transaction Date

The actual date on which a payment or other transaction occurs.

Transaction Fee

The amount that a merchant pays per sales or other payment transaction for processing.