ETA CPP Study Guide

FPA

See Federal Program Agency.

FRB

See Federal Reserve Bank.

FTC

See Federal Trade Commission.

FI

See Financial Institution.

FIU

See Financial Intelligence Unit.

FIFO

See First‐In/First‐Out.

FILO

See First‐In/Last‐Out.

FOIA

See Freedom of Information Act and Privacy Act of 1974.

FAQ

See Frequently Asked Questions.

FSP

See Full‐Service Processor.

General Services Administration

See GSA.

Global System for Mobile Communication

See GSM.

Graphical User Interface

See GUI

GPRS

See General Packet Radio Service

GPR

See General Purpose Reloadable

GAN

See Global Area Network.

GSC-IS

See Government Smart Card Interoperability Specification.

GDI

See Government‐Designated Issuer.

GDP

See Gross Domestic Product.

Chip Card

See Integrated Circuit Card.

Dedicated Line

See Leased Line.

Direct Link

See Leased Line.

"Bug"

See Marks.

Discount Rate

See Merchant Discount.

Electronic Payments Association

See NACHA

Acquirer Payment Gateway

See Payment Gateway.

Freedom of Information Act (FOIA)

See Privacy Act of 1974.

Contactless Payments

See Proximity Payments.

Consumer Credit Protection Act

See Regulation Z.

Draft

See Sales Receipt.

Draft Number

See Transaction Receipt Number.

Copy

See Transaction Receipt.

Direct Cost Billing

See Unbundled Rates.

Extensible Markup Language

See XML.

Expense Management Solution

See XMS.

Fair Credit Reporting Act (FCRA)

Seeks to achieve fair, timely, and accurate reporting of credit information. Under this act, a consumer has the right to see the credit history maintained by a credit bureau. Signed into law on December 4, 2003, it includes amendments to help consumers protect themselves from identity theft.

Automated Clearing House (ACH)

The paperless funds transfer system maintained by the Federal Reserve and other approved operators that utilizes electronic networks to exchange funds transfer items. Also called automatic check handling.

Health-Care Merchant

A merchant, other than a pharmacy, whose primary business is providing health care services.

Green Book

A U.S. Treasury publication that outlines the procedures for ACH transactions originated on behalf of the federal government.

Account History

The payment history of an account over a specified period, including the number of times the account was past due or over the credit limit.

Funding

The payment to a merchant for his submitted deposits.

Current Account

A cardholder account on which payment is up to date and no amount is overdue.

Surcharge

A charge added to the usual cost

Communications Processor Unit (CPU)

A computer embedded in a

Card Authentification Value (CAV)

A cryptographic value encoded on track 2 of an electronic benefits transfer card and used to validate its content.

Fulfillment

A document image that the acquirer supplies in response to a copy or retrieval request

Credit Card Processor

A financial institution or its agent or third party that processes credit card or debit card transactions.

Bank Card

A financial payment card issued by a financial institution used for purchasing good or services.

Arbitration Filing

A formal case submitted after unsuccessful dispute resolution through the chargeback‐presentment cycle.

CHIPS (Clearing House Interbank Payments System)

A large dollar funds transfer system, a member of the New York Clearing House family of payments.

Credit Scoring

A method for predicting the credit worthiness of a credit card applicant through statistical analysis.

Bank Administration Institute (BAI)

A national banking educational company often consulted for its information reporting standards.

First-In/Last-Out (FILO)

A queuing discipline in which entities in a queue leave the queue in the reverse order from which they arrive.

Call Report

A report completed to document a sales call.

Background Check

A risk management process in which the principals of a company are analyzed for historical behavior. This process typically is part of the acceptance criteria.

ATM Acquirer

An acquirer that provides ATM processing.

DNS

See Domain Name System.

E-Wallet

See Electronic Wallet.

E-Trade

See E‐Commerce.

Creditworthy

Qualified to have credit.

Electronic

Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

Digital

Systems whose information is represented in binary form.

Discount Rate Revenue

The amount of revenue that American Express generates from the discount rate charged a merchant. (Source: American Express)

Dispute

The cardholder or merchant disagreement about a particular charge or bill.

Exchange Rate

The charge for exchanging the currency of one country for the currency of another.

File Transfer

The copying of a file from one computer to another over a computer network.

Cost of Funds

The dollar cost of interest paid or accrued on funds from various sources within a bank or lending institution. (Source: American Express)

Enhanced Authorization Service

A VisaNet service providing issuers with all of the following: automated management of authorization request volumes, automated exception file updates, and enhanced reporting of authorization activity.

Clearing Reversal

A VisaNet transaction that negates a transaction previously sent through BASE II or the single message system.

Classic Card

The original category for a standard Visa card.

Fee Collection

A VisaNet transaction used by a member or Visa to collect financial obligations of a member from a clearing processor.

Electronic Bill Delivery

A bill delivery system that allows banks to send consumers their bills via their personal computers or telephone lines. This system allows consumers to transfer funds from their bank to the billing agent.

Consolidator

A bill service provider that consolidates bills from multiple billers or other bill service providers (BSPs) and delivers them for presentment to the customer service provider (CSP). (Source: Billing.org).

Funds Disbursement

The transaction used to dispense funds to either the clearing processor or the merchant.

Decipher

To decrypt or unencode information.

Card Validation Code (CVC)

A MasterCard tool used to prevent fraud. MasterCard requires that the number be embedded in the magnetic stripe. The data must be valid and verified at the card issuer. This prevents fraud because

CVC—(Card Validation Code)

A MasterCard tool used to prevent fraud. MasterCard requires that the number located on the back of the card and above the magnetic stripe be entered with the transaction to verify that the card is present and authentic

Bill Consolidator

A bill service provider that consolidates bills from other bill service providers or billers and delivers them for presentment to the customer service provider.

Bandwidth (BW)

1. The difference between the limiting frequencies within which performance of a device, in respect to some characteristic, falls within specified limits. 2. The difference between the limiting frequencies of a continuous frequency.

Electronic Purse (ePurse)

A payment card application that replaces cash. The ePurse holds monetary value, either on the card or in a central account on a host system that communicates with the payment card. See also Stored Value Card.

Home Page

1. The document that is configured to be displayed first when a Web browser is opened. 2. The document designed to be the user's point of entry into a Web site, or the page the user sees first when he/she visits a Web site. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Surcharges

downgraded transactions

Supermarket

large self-service retail store selling food and household goods

BOC

see Back office Conversion

The following information must be provided on the merchant application:

- business name (DBA) - physical location address - business telephone number - Tax Identification Number (TIN) - Employer Identification Number (EIN) - Contact information - Cardholder Storage - Copy of the merchant's voided check or bank letter with account name, account number and routing number - A bank contact name and phone

Data Integrity

1. The condition existing when data are unchanged from their source and have not been accidentally or maliciously modified, altered, or destroyed. 2. The condition in which data are identically maintained during any operation, such as transfer, storage, and retrieval. 3. The preservation of data for their intended use. 4. Relative to specified operations, the a priori expectation of data quality. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Hacker

1. A person who breaks into, or attempts to break into, or use a computer network or system without authorization, often at random, for personal amusement or gratification, and not necessarily with malicious intent. 2. An unauthorized user who gains or attempts to gain access to an information system. 3. A technically sophisticated computer expert who intentionally gains unauthorized access to targeted protected resources. 4. Loosely, a computer enthusiast. 5. A person who uses a computer resource in a manner for which it is not intended or that is in conflict with the terms of an acceptable‐use policy, but (unlike the work of a cracker) is not necessarily malicious in intent. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Authentication

1. A security measure designed to establish the validity of a transmission, message, or originator, or a means of verifying an individualʹs authorization to receive specific categories of information or transaction approval (in the case of plastic cards or payment orders). 2. A security measure designed to protect a communications system against acceptance of a fraudulent transmission or simulation by establishing the validity of a transmission, message, or originator. 3. Evidence by proper signature or seal that a document is genuine and official. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms) 4. A cryptographic process performed during a chip‐initiated transaction used to validate the integrity of data provided to identify one or more of the following: issuer, card, chip‐reading device, and message content.

Baud (Bd)

1. A unit of modulation rate. One baud corresponds to a rate of one unit interval per second, where the modulation rate is expressed as the reciprocal of the duration in seconds of the shortest unit interval. 2. A unit of signaling speed equal to the number of discrete signal conditions, variations, or events per second. If the duration of the unit interval is 20 milliseconds, the signaling speed is 50 bauds. The term is sometimes used as a synonym for bit‐per‐second. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Asymmetric Digital Subscriber Line (ADSL)

1. An access technology that allows voice and high‐speed data to be sent simultaneously over local phone lines. 2. A modem technology that provides enhanced and affordable access to the Internet, live video, and a variety of other services.

Cards in Force (CIF)

1. Cards in Force: Number of American Express cards in force by type of card or geographic area. (Source: American Express) 2. Central Information File: In data processing, the centralized database containing a financial institution's client base. (Source: American Express)

Central Processing Date

1. For BASE II, the date (based on Greenwich Mean Time) on which a member inputs interchange data and the data is accepted by a Visa interchange center. 2. For single message system users, the date the transaction is settled.

Concentrator

1. In data transmission, a functional unit that permits a common path to handle more data sources than there are channels currently available within the path. A concentrator usually provides communication capability between many low‐speed, usually asynchronous channels and one or more high‐speed, usually synchronous channels. Usually different speeds, codes, and protocols can be accommodated on the low‐speed side. 2. A device that connects a number of circuits, which are not all used at once, to a smaller group of circuits for economy. (Source: Federal Communications Commission)

Closed System

A payment card system in which one organization both issues cards and acquires merchants. American Express and closed loop gift cards are examples of closed systems.

Domain

1. The independent variable used to express a function. Examples of domains are time, frequency, and space. 2. In distributed networks, all the hardware and software under the control of a specified set of one or more host processors. A unique context (e.g., access control parameters) in which a program is operating; in effect, the set of objects a subject has the privilege to access. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Arbitration

1. The submission of a disputed matter to a private or official person ("arbitrator") for determination. The arbitrator is selected in a manner provided by law or agreement. Arbitration attempts to avoid resorting to the judicial system and its costs. Many contracts call for the resolution of disputes by arbitration rather than by litigation. 2. The process followed by the card companies to determine whether an issuer or an acquirer has ultimate responsibility for a chargeback. The process is initiated by either member after the re‐presentment process has been completed.

Alert

1. Weekly notification to an acquirer when the acquirer's suspect transaction or fraud activity level exceeds a specified risk identification service parameter. 2. A notification to an acquirer when the acquirer's fraud activity‐to-sales ratio exceeds a specified Acquirer Monitoring Program alert threshold.

GUI

: Abbreviation for graphical user interface. A computer environment or program that displays, or facilitates the display of, on‐screen options, usually in the form of icons (pictorial symbols) or menus (lists of alphanumeric characters) by means of which users may enter commands. Pronounced ʺgooey.ʺ (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Diners Club Card/Carte Blanche

: An independent card wholly owned by CitiGroup primarily known as a T&E card. In 1950, the Diners Club Card was the first charge card in the U.S. issued as a cardboard card to Frank McNamara (founder of the company) to be used in restaurants. The Diners Club program also issued the first corporate card in the U.S. in 1975. Diners Club International was acquired by Citicorp in 1981 but many franchises are still independently owned. It also boasts the issuance of the first rewards program in 1984. In the US, Diners Club/Carte Blanche cards are acquired through the same methods as MasterCard's. The messages and rules are very similar to MasterCard. All card numbers begin with a "36". However in the US, they have a MasterCard number starting with a "5."

Electronic Benefits Transfer

: See EBT.

Acquirer's Reference Number (ARN)

A 23‐digit or 24‐digit identification number specified by the Visa and MasterCard rules and submitted with the clearing records by the backend processor. It includes the bank identification number (BIN) and the acquirer's processing date.

Guaranteed Funds

A Business to Business (B2B) term indicating that both buyer and seller know funds are available at the time of payment.

Emergency Cash Service

A MasterCard service that provides cardholders with cash advances in emergency situations.

Emergency Card Replacement Service

A MasterCard service that replaces cardholders' lost and stolen cards.

Encrypting Pin Pad (EPP)

A PIN pad that performs message encryption and decryption, usually DES or 3DES. See also Data Encryption Standard.

Financial Management Service (FMS)

A U.S. Treasury Department bureau that is the government's financial manager and has responsibility for managing the government's payments and collections, including Electronic Benefits Transfer.

Funding Correction

A payment made by the acquirer to a merchant to rectify an error made in clearing a merchantʹs bank card deposit or transmission through the card companies.

Dun & Bradstreet (D&B)

A United States-based for‐profit agency that furnishes subscribers with marketing statistics and the financial standings and credit ratings of businesses. It is used in risk management.

CVV—(Card Verification Value)

A Visa card's unique check value encoded on a magnetic stripe and replicated in a chip to validate card information during the authorization process.

Cardholder Information Security Program (CISP)

A Visa program that establishes data security standards, procedures, and tools for all entities-merchants, service providers, issuers, and merchant banks‐that store Visa cardholder account information. CISP compliance is mandatory. Compliance with CISP means compliance with the PCI Data Security Standard with the required program validation.

High-Risk Chargeback Monitoring Program (HRCMP)

A Visa program that notifies merchant banks when a high‐risk merchant has a chargeback‐to‐transaction rate of over one percent.

Card Verification Service

A Visa service in which Visa validates the card verification value on behalf of the issuer in an authorization request.

Affinity Card

A Visa, MasterCard, Discover or American Express card bearing the trade name or mark of an affinity partner. These cards are issued through marketing alliances, an organization, or a collective group (such as a professional association or special interest group). The affinity partner's name and logo are shown on the card, and the partner then solicits its membership or group for special rewards and promotions. Popular with sporting teams and university alumni groups, affinity cards work like regular credit/debit/prepaid cards and can be used anywhere that the brand is accepted. The card issuer often pays the affinity organization a royalty on charge transactions.

Enhanced Visa Wordmark

A Visa‐owned mark representing the Visa corporate identity, consisting of the Visa logotype centered above the comet design. Visa updated their wordmark and logo in March 2005. The ʹVʹ in Visa was enhanced with a gold color to highlight the Visa wordmark's unique serif. The word ʹVisaʹ is much more prominent. The banners used as borders in the current design were eliminated.

Business Card

A bank card issued to companies for use by company employees. The liability for the abuse of the card typically rests with the company, not with the employee. Also called corporate card.

Check Card

A bank card that enables the user to purchase goods and services and obtain cash disbursements against his or her asset account (generally a checking account). Also called an offline debit card or deposit access card.

Correspondent Bank

A bank that accepts deposits and performs banking services for other banks. Correspondent banking arrangements exist between local banks and banks located throughout the world.

Green Sheet

A biweekly publication and on‐line portal for the financial services industry.

Buyer

A business customer, or payer.

Convenience User

A cardholder who pays an account balance in full on or before each payment due date. These cardholders incur no interest rate charges and are said to be taking advantage of the float of their funds, which could be the maximum of 30 days usage of money, without a charge.

Finance Company

A business that makes consumer loans, usually to individuals who qualify for credit under the criteria of banks and credit unions.

Business Day

A calendar day other than a Saturday, Sunday, or federal holiday.

Cardholder-Initiated Chargeback

A cardholder‐initiated dispute. Reasons for the dispute include: the goods or services were never received; the transaction amount is incorrect; or the transaction is a duplicate. Also called substantive chargeback.

Electronic Billing Invoice Delivery Service (EBIDS)

A pilot using the ACH Network as a bill information delivery and payment remittance option for business‐to‐consumer payments.

Code "10"

A call made by a sales associate to the merchantʹs voice authorization center when the appearance of a card or the actions of a cardholder suggest the possibility of fraud. The term ʺCode 10ʺ is used so calls can be made without arousing suspicion while the cardholder is present. Specially trained operators then provide assistance to point‐of‐sale staff on how to handle the transaction.

Formset

A carbon set of two or more copies used by the merchant as a sales draft when the merchant does not have a receipt printer.

Activation

A card fraud prevention mechanism used by issuers. To activate a bank card received by mail, the cardholder must call a toll‐free telephone number. Operators or automatic prompts verify certain cardholder information, after which the card is activated and may be used by the cardholder.

ATM Card/Debit Card

A card issued by a bank that can be used at an automated teller machine (ATM) for withdrawals, deposits, balance inquiries, and account transfers. The card can also be used at point‐of‐sale devices to make purchases using funds from a customer's checking or savings account. There are two ways that an ATM/debit card can be processed at the point‐of‐sale. Signature‐based or offline debit cards are processed like a credit card and require the cardholder's signature. PIN‐based or online debit cards use acceptance procedures that require the cardholder to enter a personal identification number instead of signing a sales slip.

Authorization Response

A card issuer's, authorizing processor, or stand‐in processor's response to an authorization request or account number verification. The response can be approved, denied, referred to the issuing bank, or coded to pick up the card.

Card Not Present transactions

A card not present transaction (CNP, MO/TO, Mail Order / Telephone Order, MOTOEC) is a payment card transaction made where the cardholder does not or cannot physically present the card for a merchant's visual examination at the time that an order is given and payment effected.

Altered Card

A card on which the original embossed or encoded information has been altered for fraudulent purposes.

EMV Compliant

A card or terminal application that complies with the requirements of the EMV Integrated Circuit Card Specifications for Payment Systems.

Gold Card

A card program offering higher credit lines and expanded services. Qualifications for cardholder applicants are generally more stringent than for a standard or classic card.

Black Card

A card program offering higher credit lines and expanded services. Qualifications for cardholder applicants require charging of more than $500,000 annually.

Corporate Executive Card

A card serving senior executives and VIPs of mid‐to large‐size corporations. It has many enhancements to accommodate their meetings and trips, such as an automated expense report.

Electron Card

A card that bears the electron symbol and is issued as an electronic PIN‐based debit card mark in the international Visa markets.

Corporate Purchasing Card

A card that provides an efficient management system for companies' purchasing processes and includes enhancements such as vehicle rental insurance, medical insurance for travelers, and travel and legal referral services.

Access Device

A card, code, or other means of access to a consumer's account that may be used to initiate an electronic funds transfer. This term does not include the terminal, telephone, or personal computer.

Fictitious Account Number

A cardholder account number that does not exist and has never existed (used for fraudulent purposes).

Cash advances

A cash advance allows you to use your credit card to get a short-term cash loan at a bank or ATM. Unlike a cash withdrawal from a bank account, a cash advance has to be paid back — just like anything else you put on your credit card. Think of it as using your credit card to "buy" cash rather than goods or services.

ECR (Electronic Cash Register)

A cash register connected to a computer or other data processing device, allowing the use of such functions as sales, reporting, check and credit authorization inquiries, and direct transfer of funds from customer bank accounts to merchant accounts.

Rewards Cards

A cashback reward program is an incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder.

Cash Theft

A category of Internet theft in which a criminal breaks into a business's payments account and manually generates a high volume of sales using stolen cards. The criminal then credits the funds to his or her own card, effectively using the merchant's authorization terminal to siphon cash from one set of cards to another. The average cost of the fraud is limited only by the number of cards that the hacker has and the aggregate credit limit on those cards. The average economic impact is more than $10,000. Also called account takeover.

Approval Response/Code

The response code issued by a card‐issuing bank that allows a sale to be charged to the cardholder's account. The approval is a positive response to an authorization request from the acquiring merchant.

General-Purpose Card

A charge or credit card that can be used to make purchases anywhere cards are generally accepted. Some of the most popular cards in the United States are: American Express, Diners Club, Discover, MasterCard, and Visa.

Chargeback Activity

A chargeback is a transaction reversal meant to serve as a form of consumer protection from fraudulent activity committed by both merchants and individuals.

Chargeback

A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargebacks are initiated by the cardholder or the issuing bank. In the event of a chargeback, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

Clearing Account

A checking account set up at a bank that will receive a memberʹs credit or debit for net settlement.

Dedicated Circuit

A circuit designated for exclusive use by specified users. Usually operated between two users only. See Leased Line.

Fat Client

A client‐centric computing model where software must be installed on each client in a network. This approach often requires that each client computer be upgraded to the same level. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Convenience Card

A closed‐loop prepaid card that is used by consumers to replace cash. The most successful of these card programs is the Starbucks card.

Authorization Response Code

A code generated by the chip‐reading device in chip transactions authorized offline. The code is based on the issuer's instructions programmed in the chip. The acquirer must provide the authorization response code in the clearing record.

Authorization Request Cryptogram

A code or cipher used for a chip card process called online card authentication. The cryptogram is generated by the card for transactions requiring online authorization. It is sent to the issuer, who validates the authorization request cryptogram to ensure that the card is authentic and that card data was not copied from another card.

Bar Code

A code representing characters by sets of parallel bars of varying thickness and separation that are read optically by transverse scanning. Bar code uses include identifying merchandise, sorting mail, and inventorying supplies.

Applet

A compact program that can be downloaded quickly and used by a remote computing device. Applets are not allowed to access certain resources on the remote device.

Biller

A company or organization that sends a bill or statement to a consumer, usually requesting payment for a product or service.

Client Organization

A company or organization that sponsors a Commercial card program, such as Business, Corporate, Purchasing (including Fleet), and any other program combining the functionality of these cards, in which cards are provided to users for business‐related purchases. Such companies or organizations may be public‐ or private‐sector companies, including sole proprietors and self‐employed individuals.

Sale

for a sale, swipe the customer card or manually enter the credit card number, input sale amount, then press enter. The terminal will then transmit information through the network for approval, and a merchant receipt will be printed.

Credit Bureau

A company that keeps records of credit history for any card or loan. Anyone with authority to approve loans or lines of credit will examine a credit for the individual or company to determine their risk. The most common credit bureau agencies in the United States are Equifax, Experian (TRW), and TransUnion.

Card Registration Company

A company that provides an optional service to cardholders, usually for an annual fee. Cardholders register their credit card account numbers with the company. If a card is lost or stolen, the cardholder makes one call to the card registration company, which then notifies the issuers of all the lost or stolen cards.

Front-End Processor

A company that provides communication and data processing services for authorization of card payments and transfer of data between merchant's point‐of‐sale equipment to the back‐end clearing and settlement processor. Other functions handled by the front‐end processor include merchant terminal support and balancing as well as data capture for submission for clearing and settlement to a back‐end processor.

Access Provider

A company that provides its customers access to the Internet. The user normally connects to the access providerʹs server by a modem using a dial‐up connection or a broadband connection.

Fair Isaac Corporation

A company that supplies creative analytics and predictive modeling solutions to the payment card processors.

Cost of Debt

A company's cost of borrowing funds. If a company uses 100 percent debt to finance receivables, then the cost of funds will be equal to the cost of debt. (Source: American Express)

Cost of Capital

A company's overall cost of funding their business may be made up of a combination of debt and equity costs. (Source: American Express)

Card Number Generator

A computer application that generates a series of account numbers by using preset parameters such as bank identification numbers (BIN) with sequential numbering and a check digit verification number. Complete lists of valid numbers can be produced at one time for issuance over a period of time. These programs are also used in fraudulent or counterfeit schemes to create a mass of cards with valid numbers.

Database

A computer file used to store large quantities of information, such as customer names and addresses.

Firewall

A computer that (a) acts as an interface between two networks (e.g., the Internet and a private network) and (b) regulates traffic between those networks for the purpose of protecting the internal network from electronic attacks originating from the external network. The firewall is capable of handling the following tasks: (a) isolating internal and external traffic (a bridge service); (b) making internal addresses invisible and directly inaccessible from outside and passing through authorized traffic after proper checking (a proxy service); (c) facilitating protected (encrypted) connections to cooperative parties over public networks (a tunneling service); (d) filtering outgoing traffic for security and network usage rules (filtering or monitoring service); (e) filtering incoming traffic for rogue data (viruses, spam, inappropriate data (filtering), or improper actions (port scanning, overload prevention, etc.; (f) blocking forbidden external services or addresses (blocking, ʺnetwork nannyʺ‐functions); (g) providing log‐in services for authorized outside users and simulating the approved outside user as an inside user (proxy, log‐in server); (h) caching network traffic (cache service); (i) converting between different network protocols on different protocol levels (bridge when handling lower level protocols, gateway when handling higher level protocols); (j) traffic diverting (e.g., for cost optimizing, accounting, network planning, monitoring); (k) providing consistent, open entry to the internal network (portal service) and facilitating public network address and connection sharing (proxy service). 2. A system designed to defend against unauthorized access to or from a private network. Firewalls can be implemented in both hardware and software, or a combination of both. Also called front‐end security filters, proxy. (Source: Federal Standard 103C: Telecommunications: Glossary of Telecommunication Terms)

EDI (Electronic Data Interchange)

A computer‐to‐computer exchange of standard business data according to agreed‐upon data formats. Also, an abbreviation for electronic document interchange, a computerized system that allows linked computers to conduct business transactions, such as invoicing and ordering, over a telecommunications network.

Card-Based Stored Value Card

A consumer prepaid payment card with monetary value stored on the card. When the card is used, the terminal deducts the transaction amount from the value on the card at the point‐of‐sale, without connecting to an issuer system. (Source: Smart Card Alliance)

Account-Based Stored Value Card

A consumer prepaid payment card, with monetary value stored in an account that is accessed and its value updated when the consumer uses the payment card. (Source: Smart Card Alliance)

Agent Agreement

A contract with an agent under which the agent and the principal can be obligated. See Agent.

Exclusivity

A contractual term whereby the primary party requires a sole relationship for the services being contracted.

Fleet Card

A corporate credit card used only for the purchase of fuel and vehicle maintenance services. See also Corporate Fleet Card.

Data Encryption Standard (DES)

A cryptographic algorithm for the protection of unclassified computer data and published by the National Institute of Standards and Technology in Federal Information Processing Standard Publication 46‐1. In the Bank card industry the primary method for encrypting and decrypting a Personal Identification Number and securing that these PIN numbers never appear in the clear when transporting from a terminal. All messages are encrypted and decrypted using this format. In the bank card industry, the approved algorithm used by electronic hardware devices for the cryptographic protection of computer data.

Electronic Check Council (ECC)

A council formed by NACHA to govern, oversee, and monitor the pilot programs for electronic check conversion.

Commercial Card

A credit or debit card issued to businesses and corporations for travel and entertainment, fleet, business‐related expenses, and procurement.

Aid for Dependent Children (AFDC)

A federally funded and usually state- or county-administered public assistance program that provides supplemental financial aid to qualifying households that include one or more minor children. An AFDC family may receive benefits and services from other assistance programs, including food stamps, Medicaid, and subsidized child care. Families receive food stamps via an EBT (electronic benefits transfer) card, which works like a debit card. The EBT system reduces fraud, theft, and abuse.

Brand Loyalty

A customer's loyalty to a product for reasons specific to the individual.

Co-Branded Cards

A customized branded card product for a specific retailer or service provider, such as General Motors, that wishes to solicit its customers.

Advice

A daily, weekly, or monthly report that alerts an acquirer that a merchant has experienced above‐average levels of suspect or fraud activity.

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 the ACH systems for settlement services. The back‐end processor receives the data, captures items from the front-end processor, formats and submits the items to the card company for clearing and settlement. The back‐end processor also handles all chargeback and retrieval processing, the production of merchant statements, and the formatting of the merchant deposit for submission to the depository bank or into the ACH.

Batch Processing

A data processing procedure in which similar input items are grouped for processing, as opposed to real‐time processing, which takes place as each transaction occurs. Accumulating the data in advance means that the user cannot influence the processing while it is in progress.

Encryption

A data security technique in which machine‐readable data are scrambled and must be decoded before they can be processed.

Combined Terminated Merchant File (CTMF)

A database maintained by the card companies that lists all merchants terminated for cause.

Authentication Key

A data‐encryption algorithm key used to authenticate data in accordance with specific encryption standards. This key can be used to generate and approve a personal identification number.

Cash Back

A debit transaction that allows a cardholder to authorize more than the cost of goods or services actually purchased and receives the difference in cash from the merchant.

Credit Union

A democratically owned and controlled nonprofit financial cooperative that offers a variety of savings and lending services to members. Typically associated with a corporation or employer, such as the federal credit union used by Postal Service workers.

Full Service Processing (FSP)

A relationship between an acquirer or an issuer and a full service processor is one in which the processor provides a total outsourcing service. The processor performs all system and back‐office functions but does not assume the risk or liability for any credit or fraud losses. The processor is compensated usually by charging fees for the services rendered.

Audio Response Unit (ARU)

A device that provides synthesized voice responses to dual‐tone multifrequency signaling input by processing calls based on the call‐originator input, information received from a host database, and information in the incoming call, such as the time of day. ARU systems are the bank card industry standard for voice backup authorization services and for help desk questions because they reduce staffing and operational expenses. This is also referred to as IVR (interactive voice response) or VRU (voice response unit).

Bulletin Board System (BBS)

A dial‐up electronic message system for reading and posting messages or downloading files.

Highway

A digital serial‐coded bit stream with time slots allotted to each call on a sequential basis. A common path or a set of parallel paths over which signals from more than one channel pass with separation achieved by time division, for example, the Information Highway.

Grievance

A disagreement filed by one EBT participant against another EBT participant that cannot be resolved by direct communication and must be resolved by the Benefit Security Program.

Controlled Disbursement

A disbursement arrangement in which a company is notified early in the day of the dollar amount of the items waiting to clear the account later that day, so they can fund the account with the exact amount to clear the items.

Equity Interests

A relationship structure among some ISOs/MSPs and their sponsors in which the ISO/MSP has negotiated an equity interest in the portfolio. Some of the terms include: right of first refusal to sell the portfolio, division of equity in monthly revenue and sales process, and some form of portfolio valuation.

Cardholder Dispute

A dispute initiated by the cardholder. In the bank card industry, the dispute can be in the form of a chargeback.

American Express (AMEX)

A diversified worldwide travel, financial, and network services company, founded in 1850. American Express issues credit, prepaid and charge Cards that support a broad base of clients and needs for both consumers and businesses. Along with its Card business, the company also provides business credit lines and merchant establishment services. In 1958, it introduced the American Express Card, a "charge card" with the entire bill paid in full each month. Because American Express was both the only issuer and the direct acquirer, it could gather more information on each transaction and was the first company to offer a detailed statement. Still viewed as a prestige business travel and entertainment supplier, American Express now offers an array of charge, prepaid and credit cards. It also has a reseller program, the External Sales Agent (ESA) Program, that provides incentives to ISOs and acquirers to market American Express cards to merchants. All American Express cards begin with "3."

Facsimile (FAX) Access Service/System

A facsimile‐based process that enables low‐volume participants to transmit and fulfill copy requests through the VisaNet Copy Request and Fulfillment Service.

Check & List Payment

A paper‐based processing method in which the biller is sent a single check representing multiple payments accompanied by a list of payments that it represents.

Advanced Encryption Standard (AES)

A federal information processing standard (FIPS) outlined in FISPA Publication 197 that specifies a cryptographic algorithm for use by U.S. government agencies to protect sensitive, unclassified information. AES uses keys that are 128, 196, and 256 bits to encrypt and decrypt information in blocks of 128 bits. It can encrypt data much faster than 3DES (Triple DES), which it replaces.

Check Guarantee

A service that guarantees payment on each check presented, up to a limit defined by the account, provided that the merchant follows correct procedures in accepting the check. The guarantee service collects any returned items, and the merchant typically follows a stringent set of

Charge per Transaction

A fee charged on any authorized transaction to cover costs usually associated with delivery of the authorization.

Annual Fee

A fee paid by a cardholder to the issuer for the privilege of holding a financial transaction card and using it to buy goods and services. Not all cards have annual fees.

GSA Large Transaction Interchange Reimbursement Fee

A fee paid to or received by a member for a GSA large transaction.

Batch fee

A fee that is charged when you settle your daily transactions (also known as the batch) with your credit card processor. If you have no credit card transactions to settle on a particular day, you are not charged this fee.

Agent Reference File

A file maintained by Visa U.S.A. containing information about independent sales organizations, third‐party processors, third-party servicers, and independent contractors.

Depository Financial Institution (DFI)

A financial institution able to receive deposits from another financial institution by completing and depositing checks.

Descriptive Statement

A financial institution account summary or a bank card account summary that contains descriptive information about one or more entries for which a separate item may or not be enclosed.

Financial Agent

A financial institution designated by the U.S. Treasury Department to conduct depository services on behalf of the federal government.

Government-Designated Issuer (GDI)

A financial institution designated by the U.S. Treasury to issue Benefit Security Cards to government benefit recipients on its behalf. The GDI, or its processor, maintains cash accounts and/or food stamp accounts on behalf of the cardholder and provides authorization services.

Bill Payment Service Provider (BPSP)

A financial institution or nonfinancial entity acting as an intermediary between the biller and the consumer for the exchange of electronic bill payment information.

Concentrator

A financial institution or third‐party service provider that a biller retains to handle payment and/or remittance data.

Alphameric or Alphanumeric

A set of letters and numbers. When used in reference to computer input and output, the set usually is expanded to include the uppercase and lowercase alphabetic characters (A‐Z, a‐z), the numeric characters (0‐9), and special characters (such as the symbols $, #, and @, mathematical symbols, and punctuation marks).

Electronic Banking

A form of banking in which funds are transferred through an exchange of electronic signals between financial institutions rather than an exchange of cash, checks, or other negotiable instruments.

Frequency Card

A form of loyalty card program that rewards the cardholder for dollars spent or number of times they shop. Programs differ in the manner of loyalty payments. Examples include points for dollars spent and cash or certificates given when spending thresholds are met. Some private‐label department stores offer certificates for use in the store when certain dollar thresholds are met. Some airline and hotel programs offer points for time spent or miles traveled with the redemption of points to be used for future travel.

Facsimile (FAX)

A form of telegraphy for the transmission of fixed images, with or without halftones, with a view to their reproduction in a permanent form. The process by which fixed graphic images, such as printed text and pictures, are scanned and the information converted into electrical signals that may be transmitted over a telecommunications system and used to create a copy of the original, or an image so produced. Wire photo and telephoto are facsimile via wire circuits. Radio photo is facsimile via radio. Technology exists that permits the transmission and reception of facsimile data to or from a computer without requiring hard copy at either end. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

First Alert

A legacy system designed to provide early warning reports to members by identifying transactions occurring on accounts listed on the authorization file for credit or fraud reasons. First Alert was replaced in 2005 by the Portfolio Analytics component of the Fraud Performance Analyzer Package.

EMV Terminal

has the ability to take cardholder data from a chip embedded within the card and communicate transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's phone line or Inter- net connection.

Compliance Filing

A formal case filing (on a completed regulations/rules violation form) submitted following an unsuccessful good‐faith attempt to resolve the dispute.

DBA (Doing Business As)

A formal name under which an individual, company, or organization conducts business. (Source: American Express)

Customer Relationship Management (CRM)

A formal program for the management of relationships. Also called client relationship management.

Application Program Interface (API)

A formalized set of software calls and routines that can be referenced by a software application program in order to access supporting network services.

Anonymous Proxy Detection

A fraud prevention and risk management tool used in conjunction with Internet processing that rejects a transaction from known anonymous proxies. Anonymous proxies are frequently used by hackers.

Call Center

A functional area within an organization or an outsourced, separate facility that exists solely to answer inbound or place outbound telephone calls. Usually refers to a sophisticated voice operations center that provides a full range of high‐volume inbound or outbound call‐handling services, including customer support, operator services, directory assistance, multilingual customer support, credit services, card services, inbound and outbound telemarketing, interactive voice response, and Web‐based services.

Domain Name System (DNS)

A general‐purpose data query service for looking up host addresses based on host names. Important domains are .com (commercial), .edu (educational), .net (network), .gov (government), .mil (U.S. military), and .org (nonprofit organization).

Encrypt

A generic term encompassing encipher and encode. To convert plain text into unintelligible forms by means of a cryptosystem. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Franchise

An organization that grants a license to a group of merchants to market a companyʹs goods or services in a particular territory.

Cryptographic Algorithm

The formulas and key management processes used to encrypt and decrypt data and messages.

Bank Card Association

A group of institutions formed for the purpose of sponsoring a bank card program, using a common processing and administrative center.

Check Reader

A hardware device that can be integrated to the terminal or stand‐alone device that reads the MICR line on a check for authentication, negative file comparison, or truncation.

CDMA (Code-Division Multiple Access)

A higher‐speed, more efficient packet‐based data network replacing CDPD. CDMA is a cellular technology originally known as IS‐95, and also competes with GSM technology for dominance in the cellular world.

Escrow

A kind of holding pen for money that is released after a specific event has occurred. Some acquirers have ISOs or merchants put money into an escrow account, which is supervised by a neutral third party such as a financial institution. The financial institution (called the "escrow agent") releases the money to the ISO or merchant only after the ISO or merchant has carried out certain agreed‐upon tasks, such as completion of work or performance of a service.

Hologram

A laser‐created photograph that creates a three‐dimensional image; used as an anti-counterfeiting measure on bank cards.

Gross Domestic Product (GDP)

The money value (at market prices) of the goods and services produced by the economy in a period of time, usually a year or a quarter. GDP is distinguished from the Gross National Product by the exclusion of income from abroad.

Direct Mail

A lead generation technique used by issuers, acquirers, and direct sales agents in which pre-approved mailers, postcards, or letters are sent to new businesses or consumers.

Cold Call

A lead‐generation technique in which a salesperson calls on new businesses either physically or by telephone.

Encryption Support Service Provider (ESSP)

Services obtained from an organization, not an acquirer, whose benefit security-related business relationship with an acquirer includes: loading software into a terminal that will accept benefit security cards; loading or injecting encryption keys into terminals or PIN pads; or merchant help desk support that includes reprogramming of terminal software.

Frequently Asked Questions (FAQ)

A list of questions and answers provided by companies relating to software products or on a Web site. A FAQ sheet is usually prepared to assist in marketing and customer service of a product.

Advance-Fee Loan

A loan or line of credit calculated so that all of the fees and finance charges are deducted before the consumer receives the principal.

Folio

A lodging merchantʹs guest file that contains the cardholderʹs transaction information, including check‐in and check‐out dates, rate, intended length of stay at check‐in time, applicable charges, and taxes.

Electronic Terminal

A machine that is connected to card companies and allows for quick card transactions. (Source: American Express)

Automated Accounting Device (ADV)

A machine‐readable, information-only ACH transaction that represents accounting information sent from an ACH operator to a participating depository financial institution for use in automated accounting systems.

Cardholder-Activated Terminal (CAT)

A magnetic‐stripe terminal or chip‐reading device that is not an ATM but is activated or used by a cardholder and not a merchant.

Data Dictionary

A manual that outlines the content and definition of data elements used in building a particular transaction set.

Highly Suspect Merchant

A merchant location where an unusually high number of suspect transactions have occurred in proportion to the merchant's total transaction volume.

Hash

A mathematical calculation that creates a single number from certain critical fields in each transaction entry as a check against inadvertent alteration of data contents due to hardware failure.

Exposure Limit

A maximum total limit established by an originating depository financial institution (ODFI) for each of its originators beyond which the ODFI is unwilling to process additional ACH files. This limit is established as a fraud and error control.

Billback

A means of recovering or reducing interchange fees for transactions clearing differently than planned. The processing company passes through the charges to the merchant.

Split Funding

A merchant may receive a capital advance from a third party and direct the processor to repay the third party with a % of their daily credit/debit card processing deposited into the third party's bank account and the remainder deposited into the merchants bank account.

High-Risk Location

A merchant outlet with abnormally high levels of riskrelated activity.

Electronic Commerce Merchant

A merchant that conducts the sale of goods or services electronically over the Internet and other networks.

Direct-Connect Merchant

A merchant that directly enters authorization requests into Visa's V.I.P. system and MasterCard's BankNet network.

Card Acceptance

A merchant's agreement to accept plastic cards as a form of payment.

Authorization Request

A merchant's or acquirer's request for authorization.

Agent member

A member of Visa or MasterCard that by agreement, participates in another member's card program, usually by turning over its cardholder and merchant applications to the member administering the card program and by acting as a depository for merchants.

Affiliate

A member or licensee of Visa International or Visa U.S.A. or an organization affiliated with a MasterCard member that participates under the member's rule or card plan on either the cardholder or merchant side.

BIN Licensee

A member or nonmember of a card company that has been designated by a member as a processor or issuer and is allocated responsibility for a specific BIN.

Direct Payment

A method of collection used in the ACH Network for certain claims, generally those that are repeated over a period of time, under which the debtor gives the originator a standing authorization to debit his or her account.

(EMV)

Technical specifications developed jointly by Europay International, MasterCard International, and Visa International to provide standards and ensure global interoperability for use of chip technology in the payment industry.

Gross Pay/Pay in Gross

A method of paying merchants that reflects total charge volume submitted without applying a discount rate. American Express merchants can request this option through American Express Customer Service. (Source: American Express)

File Transfer Protocol (FTP)

A method of transferring files from one computer to another over the Internet.

Biller Direct

A model of electronic bill presentment and payment (EBPP). A biller establishes an electronic billing capability on its own web site and provides its consumers with their billing information and the capability to make payments directly from the site. See also Thick Consolidation, Thin Consolidation.

Campus Card

A multipurpose card issued by a university or school. Each student uses this instrument as an ID card, meal ticket, library card, dormitory entry card, classroom attendance card, and general payment card. The card can be a smart card, contactless, magnetic stripe card, or a combination. Also called multi‐card or universal card.

Electronic Check Clearing House Organization (ECCHO)

A national clearinghouse for electronic check presentment.

Better Business Bureau

A national member organization that uses codes of ethics, news alerts, databases and other programs to maintain a high level of trust between businesses and the public.

Chargeback Form (ICA-3)

A standardized form that contains all pertinent

Economies of Scale

Term that describes volume as leverage for pricing, cost efficiencies, and outsourcing decisions. More volume lends to a lower per item charge.

Daylight Overdraft

A negative funds position in an account that occurs after opening of business and is cleared before close of business on the same day.

Global Area Network (GAN)

A network that (a) is composed of different interconnected computer networks and (b) covers an unlimited geographical area. Loosely synonymous with an internet, which designates one specific network (as opposed to the Internet).

Electronic Funds Transfer at the Point of Sale (EFTPOS)

A system that allows the automatic transfer of money from a buyer to a seller of goods or services at the time of sale. This system is more common in the United Kingdom.

Browser

The Web browser, the tool (program) that allows users to surf the World Wide Web. The most popular browsers are Netscape Navigator and Microsoft Internet Explorer.

Electronic Funds Transfer Association (EFTA)

A nonprofit association whose members make up the financial institutions and processors that effectuate electronic transfer of funds.

American Public Transportation Association (APTA)

A nonprofit international association of more than 1,400 public and private member organizations, including transit systems and commuter rail operators; planning, design, construction, and finance firms; product and service providers; academic institutions; transit associations; and state departments of transportation. APTA governs and oversees the public transportation industry, which is involved in setting standards for micropayments and smart card technology.

Credit Risk

A party to a transaction is unable to meet its financial obligations either when due or at any time in the future.

American Bankers Association (ABA)

A nonprofit organization, founded in 1875, that serves the banking industry. Its members include community, regional, and money center banks and holding companies, as well as savings associations, trust companies, and savings banks.

Alternate Payments

A non‐traditional payment method such as instant transactional credit and ACH debit systems such as PayPal or Amazon Payments.

Confirmation Number

A number provided by a hotel, motel or auto rental to verify a cardholderʹs guaranteed reservation or advance resort deposit.

Chargeback Reason Code

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

Food Stamp Coupon

A paper instrument that is printed in various dollar denominations and exchanged for food that meets Food Stamp Program specifications. The coupons are distributed by the states under the authority of the U.S. Food and Nutrition Service.

Check

A paper negotiable instrument payable upon demand to transfer funds from the payer to the payee.

Credit Slip

A paper or electronic representation of credit, issued to a cardholder on a prior credit card sale. Also called a credit voucher.

Facsimile Draft

A paper record that an acquirer may provide as a substitute for the sales draft. Also called a substitute document.

Food Stamps

A paper‐based food assistance program of the U.S. Department of Agriculture to supplement low‐income families. This program is a key automation element of the Welfare Reform Act of 1996 and is being implemented as an EBT program in various states.

Direct Deposit

A payment method used in the ACH system in which funds are automatically transferred from the account that owes the funds to the account of the payee.

Electronic Check

A payment transaction that originated as a paper check but was converted to an ACH transaction at the point of purchase.

Credit Transaction

A payment transaction that pushes funds from the CSP or CPP to the BPP. (Source: Billing.org)

Commercially Reasonable Time Frame

A period of time generally considered acceptable for a process in a given industry, taking into consideration the circumstances of the parties to the transaction. (Source: Billing.org)

Down Time

A period when all or part of a system or network is not available to end users due to failure or maintenance.

Consumer

A person not engaged in commercial transactions.

FedLine

A personal computer software program written by the Federal Reserve Bank that allows access to the FRB's payment services. Many smaller financial institutions use Fedline to originate and receive ACH.

Debit Card

A plastic card linked to a checking or savings account. Offline or signature‐based debit cards work in the merchant environment the same as a credit card transaction and are not required to be "online" to the account balance. Offline signature‐based functionally work like credit cards; an initial transaction is used to hold funds and a second to settle or remove the funds from the card balance. Online debit cards or PIN‐based debit cards ride over the ATM network; they require a PIN and the ability to authorize against the actual balance of the card in a single step transaction. Prepaid cards fall into the debit category.

Counterfeit Card

A plastic card that has been fraudulently printed, embossed, or encoded to appear to be a genuine bank card but has not been authorized by the card companies or issued by a member. A card originally issued by a member but subsequently altered without the issuerʹs knowledge or consent.

Access Card

A plastic card used in an automated teller machine (ATM) to complete deposits, cash withdrawals, account transfers, and other related account functions.

Electronic Draft Capture (EDC) Terminal

A point‐of‐sale device that reads information encoded in the bank card's magnetic stripe, performs authorization functions, stores transaction data, and batches and transmits that data to the acquirer or the acquirer's processing agent for processing. Also called electronic data capture terminal.

Electronic Point of Sale

A point‐of‐sale merchant with electronic equipment for pricing and recording transactions, but not necessarily incorporating functions for electronic funds transfer.

Authorization Only (Auth Only)

A point‐of‐sale process in which a merchant requests to check a cardholder's account validity via this message to the issuer. This type of transaction is rarely used. Also see Status Check Procedure.

Authorization Terminal

A point‐of‐sale terminal permitting electronic authorization. Authorization terminals do not necessarily capture transaction data into a payment system. See EDC Terminal.

Account-Number-Verifying Terminal

A point‐of‐transaction terminal that may be required by Visa at specified high‐risk locations. This terminal reads the account number encoded on the magnetic stripe or embedded in the chip (smart card), compares the last four digits of the encoded account number to the keyentered last four digits of the embossed account number, and transmits the full, unaltered contents of the magnetic stripe or chip in the authorization message.

Delimiter

A predetermined code that indicates the beginning and end of a data segment.

General Purpose Reloadable Prepaid Card (GPR)

A prepaid card that is loaded and reloaded with cash at the point‐of‐sale and is targeted to the "unbanked" population.

Gift Card

A prepaid card that is loaded with an amount usable for later purchases. There are three kinds of gift cards; open‐loop which carries a card company logo and can be used anywhere the brand is accepted; closed‐loop which is used exclusively at the store of which it is labeled; and private label which is used in a select group of merchants but utilizes the open‐loop transaction method.

Bank Value

A positive or negative ACH balance adjustment resulting from a corrected transaction that restates the previous balance.

Flat-Fee Option

A pricing program in which merchants pay $5 per month for American Express Card acceptance. To qualify, the merchant's American Express charge volume must remain below $5,000 in any consecutive 12‐month period. (Source: American Express)

American National Standards Institute (ANSI)

A private, nonprofit organization that administers and coordinates the U.S. voluntary standardization and conformity assessment system in many areas, including computers and communications. ANSI's mission is to enhance both the global competitiveness of U.S. business and the nation's quality of life by promoting and facilitating voluntary consensus standards and conformity assessment systems and safeguarding their integrity.

Chargeback

A procedure whereby a cardholder or the cardholder's bank disputes transactions to payment cards. A disputed payment card transaction is returned to the acquirer/ISO/MSP for reimbursement to the cardholder's account. Chargebacks can be procedural (see Issuer‐Initiated Chargebacks) or substantive (see Cardholder‐Initiated Chargebacks).

Auto-Close

A process associated with host‐based terminals in which the system automatically initiates and operates an end‐of‐day process for capturing and submitting items for clearing and settlement. This process forces the daily submission of items. In some cases, the merchant must make an adjustment in order to balance the items before submission.

Enveloping

A process by which documents of the same type or purpose are grouped together, bound, and sent to the same destination in an electronic envelope. Enveloping is accomplished with an electronic data interchange management software function.

Compliance

A process for resolving disputes between card companies arising from violations of the operating regulations and verification by the member that a financial loss has occurred.

Bill Notification

A process in which a customer is notified that an electronic bill is available for review and payment.

Footprint

The amount of counter space a point‐of‐sale terminal takes up at a merchant store.

Data Authentication

A process used to verify data integrity e.g., verification that data received are identical to data sent, or verification that a program is not infected by a virus. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Batch Authorization

A process, usually in a mail order or catalogue order, in which the authorization requests are accumulated and sent at one time for authorization. The resulting responses will also be returned in a grouping, or batch. Batch authorization is particularly effective when real‐time authorization is not effective or when the order to ship an item is not requested in a real‐time situation.

Authorization Processor

A processor that provides authorization services for merchants or issuing members. These services may include a voice backup or ARU capability.

Acquirer Monitoring Program

A program that monitors an acquirer's fraud activity level and provides reports to the acquirer when its level exceeds established thresholds. Advices and/or Alerts are sent at predefined volumes of fraudulent activity, when the fraud amount exceeds a set dollar amount per month, or when the acquirer's fraud activity to sales ratio exceeds a calculated average.

Card brand dues and assessments

In addition to Interchange, each card brand includes additional fees based on the transaction amount and per transaction. These fees are called dues and assessments and typically range from 0.105% - 0.45% on the transaction amount [ $0.0025 - $0.04.] Like interchange, assessments are exactly the same for all credit card processors and no processor can give you a lower rate or a better deal on assessments.

Guaranty

A promise by one party to honor the duties or pay the debts of another.

"Do Not Call Registry"

A provision of the federal Telemarketing Sales Rule announced in June 2003 that created a national registry to make it easier and more efficient for U.S. consumers to stop receiving telemarketing calls.

First-In/First-Out (FIFO)

A queuing discipline in which entities in a queue leave the queue in the same order in which they arrive.

ASP Hosted Systems

A third‐party application service provider that provides front‐end, data center, or transaction processing capabilities for either a buyer or a seller.

Electronic Transaction Receipt

A receipt for which the terminal generates the required data.

Cardholder MSP

A registered entity of MasterCard under the member Service Provider (MSP) Program that supports a member's issuing program, usually by soliciting cardholders and providing customer service.

Call-Me

A response to an acquirer's authorization request, generated by the issuer or through stand‐in processing, that requires the merchant to contact the issuer directly.

Customer Identification Program (CIP)

A rule as a result of the USA Patriot Act of 2001 that requires financial institutions to implement procedures to collect identifying information on new accounts, verify customer identity, maintain identification records, and determine if the customer appears on any list of suspected terrorists or terrorist organizations.

Application Service Provider (ASP)

A third‐party provider that supplies ancillary computing services. For example, a vendor can hire an ASP to handle the presentment of his electronic invoices.

Age Verification

A security authentication, which can be POS terminal-based, that is used by certain age‐sensitive market segments such as liquor and tobacco outlets, bars, and casinos. The merchant can verify the consumer's age and deny transactions to an underage consumer.

Consumer-Operated Terminal (COT)

A self‐service, usually a freestanding device such as an ATM or kiosk where the consumer initiates and consummates a transaction without the aid of a clerk. See also Cardholder‐ Activated Terminal.

Batch ID Number

A sequential number assigned to each submitted batch. Each transaction within the batch shares the same reference number, which is used mainly for reconciliation and retrieval.

Chain

A series of merchant locations managed and owned by the same entity.

FastTrack Exhibits

A series of specific questionnaire‐style exhibits, available upon request, designed for each chargeback category to facilitate the exchange of information in the dispute resolution process. A FastTrack Exhibit is required when documentation is sent to the opposing member and may be used for nonfraud‐related disputes when a cardholder or merchant letter is unavailable.

Aggregators

A service bureau that provides bill presentment and/or payment consolidation services. Issuing: Aggregators enable a bank to enroll and aggregate information from multiple bank and brokerage accounts so that it can be presented in one place to the consumer. Merchants: Merchants such as PayPal and Amazon—which act as electronic Internet malls—can process under one merchant number but with multiple sub‐merchant numbers for their individual accounts.

Buyers' Guide Service

A service of MasterCard, included in some card programs, that offers the cardholder discounts on special catalogue merchandise.

Help Desk

A service provided to the merchant by an acquirer, sometimes outsourced to a third‐party processor. The help desk responds to terminal problems, provides repair or replacement, and assists the merchant with questions about the point‐of‐sale equipment. This area also manages the initial downline loading of an application to the terminal.

Commercial Card Enhanced Data Transport

A service that enables issuers to provide their Visa Commercial card customers with optional enhanced reporting of transaction information provided by merchants and acquirers.

EDIFACT

A set of standards approved by the United Nations for international electronic data interchange.

Demand Draft

A single payment check without a scannable remittance document attached. This draft may be drawn on the customer's account or the consumer payment provider's (CPP) account. Generally, it is created by the payee with authorization from the payor and may not have a signature. (Source: Billing.org)

Delayed Delivery Transaction

A single transaction in which a cardholder completes two separate transaction receipts. The first transaction receipt functions as the deposit for goods or services (such as a down payment); the second is to pay the balance due the merchant.

Account Receivable Entry (ARC)

A single-entry debit initiated by an automated clearinghouse (ACH) originator to a consumer account of an ACH receiver pursuant to a source document provided by the receiver via postal mail, or at a drop box location or via electronic means. When a paper check payment is converted to an ACH electronic payment and with ARC, the check is destroyed after conversion; in POP, the check is returned to the check writer at the time of payment. These transactions flow through the ACH Network. (Source www.NACHA.org)

Assent

In the Automated Clearing House (ACH) process, a consumer's consent that his bank account be debited for a specific amount on a specific date or period.

EIPP (Electronic Invoice Presentment and Payment)

In the B2B arena, the presentment of an invoice from a seller to a buyer and the corresponding payment from a buyer to a seller.

Cookie

A small chunk of information stored on a computer by a Web site the user has visited that reminds that site about the user on the next visit. (Source: Federal Communications Commission)

Credit Life Insurance

Insurance that covers accounts with outstanding balances in the case of the death of the cardholder or a serious illness that makes the cardholder unable to pay the bill.

Chip

A small square of thin semiconductor material, such as silicon, that has been chemically processed to have a specific set of electrical characteristics such as circuit storage or logic elements. When used on a plastic card, a chip performs logic, processing, or memory functions. See also Integrated Circuit.

Contact Smart Card

A smart card that connects to the reading device through direct physical contact between the smart card chip and the smart card reader. See ISO/IEC 7816. (Source: Smart Card Alliance)

Contactless Smart Card

A smart card whose chip communicates with the reader using RF (Radio Frequency) and does not require physical contact with the card reader. (Source: Smart Card Alliance)

Cycle Period

A specific period during which both debit and credit transactions are accumulated from billing.

Ethernet

A standard protocol for using various transmission media, such as coaxial cables, unshielded twisted pairs, and optical fibers. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Ethics Statement

A statement outlining a code of ethics and professional conduct. Sponsoring members sometimes require these statements for new sales professionals upon registration.

High-Risk Merchant

A status identified as high profile for fraud and risk activities. Card companies categorize these merchants as being identified by their risk identification service when established parameters for risk and fraud activities have been exceeded. Merchant categories include: telemarketing, adult websites, travel, online pharmacy, gambling, bail bonds, lottery, pawn shops, dating/escort service, MLM and membership clubs.

Collections

A status or process by which borrowers or clients/customers have defaulted on their debts. Many companies hire collection agencies that specialize in recovering all or a portion of these debts for a fee. The fee sometimes includes a portion of the recovered monies.

Algorithm

A step‐by‐step procedure for solving a problem or accomplishing an end, especially by a computer.

Encryption Key

A string of characters or numbers, private to the parties using a particular encryption process that allows the originator of a message to encrypt the message and the receiver to decrypt it.

Exception Report

A summary detailing questionable charges and chargebacks.

Credit Report

A summary of an individual's credit history. This report also includes facts such as age, address, marital status, employment history, and other information used to help a potential creditor evaluate credit worthiness.

Addendum

A supplemental part or section added to a book or contract. Also called an appendix or schedule.

Batch Authorization Transaction System (BATS)

A system designed to allow certain merchants—mail order merchants, for example—to batch-process authorizations on their own time schedules.

Federal Reserve System

A system of 12 regional banks that regulate bank holding companies and subsidiary commercial banks, provide payment services, and, through open‐market operations, control the nation's money supply.

Checks-by-Phone

A system that allows consumers to provide their checking account information to a merchant over the phone. A duplicate check (paper draft or electronic check) is created for payment.

Electronic Services Payables

A system used by American Express to handle payments and reports for service establishments. (Source: American Express)

Closed-Loop

A system using a prepaid card within a boundary or a select group of merchants or at one particular merchant, such as mall cards that can only be used in the issuing shopping mall, major retailers such as Best Buy and Home Depot and campus cards that can only be used on the issuing campus. This type of program uses a proprietary network.

Declined Response

An authorization response indicating that the transaction is declined and the card is not to be honored.

Dial-up Terminal

An authorization terminal that, like a telephone, dials the authorization center for validation of transactions.

Benchmarking

A technique used to compare the performance of others within the same industry or product set.

Asynchronous Transfer Mode (ATM)

A technology for broadband transmission of high‐capacity telecommunications signals.

Bluetooth

A technology that allows an array of devices to communicate over short‐distance wireless connections. This technology applies to PCs on a local area network as well as to cell phones, personal digital assistants, and wristwatches.

Access Point

A telecommunication term referring to a device or point where connections may be made for testing or using particular communications circuits.

Cyberspace

A term coined by the science‐fiction novelist William Gibson in his fantasy novel, Neuromancer that is used to describe the world of computers, especially the Internet. (Source: Federal Communications Commission)

Customer-Initiated Entry (CIE)

An automated consumer transaction that allows consumers to originate an ACH bill payment through their financial institution or a third‐party bill payment service.

C-Store

A term referring to a convenience store, such as 7‐Eleven.

Account Funding Transaction

A term used by Visa to indicate an electronic commerce purchase transaction for the purpose of adding funds to a Visa prepaid account that is posted to a Visa card and includes the transmission of the Account Funding Transaction Indicator.

Death Notification Entry

An automated notice of death sent by a federal agency to a financial institution to notify the financial institution that a recipient of payments from that agency has passed away.

Dial UP Terminal

A terminal that can read the track data on a magnetic stripe and communicate transaction information to the frontend platform and receives authorization instructions via the merchant's phone line usually by dialing a toll free number.

Cardholder Access Device

A terminal, personal computer, or other device that a cardholder uses to initiate an electronic commerce transaction.

Connection Endpoint (CE)

A terminating device at one end of a layer connection within a service access point. Within VisaNet (Visa's network), Visa Access Point (VAP) serves as the connection endpoints. Within BankNet (MasterCard's network), MasterCard Interface Processor (MIP) serves as the connection endpoints.

Level 3 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.

Acquiring Processor

A third party contracted by an acquirer to provide credit card acquiring services, such as clearing, billing, reporting, settlement, and operational services. Some acquirers outsource this processing activity to gain cost‐effectiveness.

Bust-Out Merchants

Merchants who perpetrate bust‐out card fraud.

Available Credit

The amount of credit available to a cardholder. It is the difference between a cardholder's credit limit and the present balance on the account, including outstanding authorizations not yet received through interchange.

Billing Date

The month, day, and year when a monthly statement is produced. The current finance charges, minimum payment due, and new balance are calculated as of the billing date.

Brick and Mortar

A traditional business serving customers in a physical storefront or office, contrasted to an online business.

Direct Marketing

A transaction category for customized services and procedures for merchants that offer merchandise or services via catalogues, telephone, mailings, and/or advertisements.

Deferred Payment Transaction

A transaction completed in a card‐absent environment for which the cardholder is billed once, no more than 90 days after the first shipment of merchandise.

GSA Large Transaction

A transaction completed with a purchasing card that is issued to the federal agencies by an issuer contracted with the General Services Administration.

Electronic Commerce Transaction

A transaction conducted over the Internet or other network using a cardholder access device. An electronic commerce transaction is one of the following: nonsecure transaction, nonauthenticated security transaction, or secure transaction.

Correction

A transaction conducted to correct an error after the customer has left the point‐of‐sale. It results in a credit adjustment entered as an online reversal or, if the error is discovered after cutover, as an offline adjustment.

Balance Inquiry

A transaction in which the cardholder obtains his/her account balance at an ATM for traditional debit cards or at the point‐of‐sale for prepaid/gift cards.

Domestic Transaction

A transaction in which the issuer and the acquirer of the card used are located in the same transaction country.

Fraud Activity

A transaction or occurrence in which the cardholder certifies that he/she did not authorize or participate in the transaction or misrepresented his/her identity or financial status to the issuer to obtain any type of plastic card. Merchant fraud activity involves the submission of transactions by a merchant on known fraudulent cards or account numbers.

Deferred Clearing Transaction

A transaction that is cleared and settled without authorization or a transaction that is authorized with one system and cleared though another.

Funding Load

A transaction that results in the addition of funds to the prepaid account. Funding load sources can include cash, checks, debit cards, credit cards, ACH transfers, or other electronic funds transfers.

Adjustment

A transaction used to correct an incorrect or out‐of‐balance situation. An adjustment can be made either at the time a terminal is balancing or during the reconciliation of the settlement data after a transaction has been cleared.

Confirmed Fraud Transaction

A transaction, reported by an issuer to the card companies, involving a card that was lost, stolen, never received, issued on a fraudulent application, counterfeit, or used fraudulently.

Fiber-Optic Cable

A transmission medium composed of small strands of glass providing a path for light rays that act as a carrier.

Enhanced Merchant-Level Data

Merchant‐related data provided through a card company to an issuer in connection with a commercial, purchasing, fleet or business card program. Such data may include: merchant street address, telephone number, incorporation status, owner's name, minority‐ and woman owned business status, and taxpayer identification number.

Credit Schemes

A type of fraud that occurs when merchants or collusive employees deposit what appear to be legitimate transactions and then issue one or more credits to their personal Visa or MasterCard accounts. The credits zero out the sales, making such scams more difficult to detect.

Clear Text

Messages and data that are not encrypted but appear in readable format. Data that can be compromised or used for fraudulent activity should never appear "in the clear."

ECC (Elliptic Curve Cryptography)

A type of security encryption used in the development of smart cards. (Source: Smart Card Alliance)

Discover Network

Network, credit and signature debit card issuing, acquiring, prepaid card issuing and merchant services arm of Discover Financial Services.

Angel Investor

A wealthy individual who invests his/her private money in what he/she believes to be promising opportunities, such as startup companies. Sometimes two or more "angels" will jointly invest in opportunities to spread the risk. (Source: ventureline.com)

Financial Intelligence Unit (FIU)

New organization unit for risk management and payment fraud investigation, such as with money laundering.

Card Validation Code 2 (CVC2)

A unique 3‐digit check value generated using a secure cryptographic process that is indent‐printed on the back of a MasterCard card or provided to a virtual account holder.

Card Verification Value 2 (CVV2)

A unique 3‐digit check value generated using a secure cryptographic process that is indent‐printed on the back of a Visa card or provided to a virtual account holder.

Card Identification Number (CID)

A unique 4‐digit check value generated using a secure cryptographic process that is thermal‐printed on the front of an American Express card or provided to a virtual account holder.

Card Verification Value (CVV)

A unique check value encoded on the magnetic stripe and replicated in the chip of a card or the magnetic stripe of a Visa Card to validate card information during the authorization process. The card verification value is calculated from the data encoded on the magnetic stripe or chip using a secure cryptographic process. MasterCard's is called CVC.

Business Identification (BID)

A unique number used by Visa to identify an acquirer or processor.

Card Verification Value 3 (CVV3)

A unique value generated for each transaction using a secure cryptographic process that is used exclusively for Visa contactless cards.

Cardholder Authentication Verification Value (CAVV)

A value transmitted by an issuer in response to a three‐domain (3‐D) secure authentication request.

Gateway

In a communications network, a network node equipped for interfacing with another network that uses different protocols. A protocol translation/mapping gateway interconnects networks with different network protocol technologies by performing the required protocol conversions. An interface that provides compatibility between networks by converting transmission speeds, protocols, codes, or security measures. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Funds Transfer System

A wire transfer network, ACH, or other communication system or clearinghouse or association of banks through which a payment order by a bank may be transmitted. The funds transfer system includes: SWIFT, CHIPS, Fedwire, and the National Association of Clearing House Associations, MasterCard and Visa.

Fed Wire™

A wire transfer service operated by the Federal Reserve Bank to move funds electronically with instantaneous settlement.

CTX (Corporate Trade Exchange)

ACH entry format for corporate payments that include ANSI X12 or UN/EDIFACT payment‐related records.

Cross-Border Payments

ACH payments made between accounts in different countries, from the payment system of the country of origin through a gateway operator to the payment system of the country of receipt.

FTP

Abbreviation for File Transfer Protocol. The transmission control protocol/Internet protocol (TCP/IP) that is a standard high‐level protocol for transferring files from one computer to another. FTP usually is implemented as an application‐level program and uses the Telnet and TCP protocols. In conjunction with the proper local software, FTP allows computers connected to the Internet to exchange files, regardless of the computer platform. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

HCS

Abbreviation for Host Capture System. See Host‐Based Terminal.

CD-ROM

Abbreviation for compact disc read‐only memory. A high‐capacity optical digital storage device that can be read from but not written to. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Merchant information changes

another area to monitor is when merchants change checking accounts, contact information, or websites. It is important to understand why the changes are being made, how often, who is authorizing the changes, and what impact the changes might have on the business.

Chat

Abbreviation for conversational hypertext access technology. A form of interactive online typewritten communication that allows participants (ʺmembersʺ) to engage in text‐message conferencing via real‐time computer networking over designated communications facilities (ʺchat roomsʺ), without storing the messages. Participantsʹ messages are instantaneously relayed to all other participants logged into the chat room. Their replies are instantaneously relayed to the originator and all other participants. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

E-Cash

Abbreviation for electronic cash, or data representing money. The data can be transferred by computer network and traded as token exchangeable for real money. Also called digicash, digital cash.

E-Commerce

Abbreviation for electronic commerce. A way of doing real‐time business transactions via telecommunications networks when the customer and the merchant are in different geographical places. Electronic commerce is a broad concept that includes virtual browsing of goods for sale, selection of goods to buy, and payment methods. Electronic commerce functions on a bona fide basis, without prior arrangements between customers and merchants. It operates via the Internet using any combination of technologies designed to exchange data (such as EDI or e‐mail), access data (such as shared databases or electronic bulletin boards), and capture data (through bar coding and magnetic or optical character readers). (Source: Federal Standard 1037C, Telecommunications: Telecommunications: Glossary of Telecommunication Terms)

E-Mail

Abbreviation for electronic mail. An electronic means of communication in which (a) text is transmitted (and sometimes also graphics and/or audio information); (b) operations include sending, storing, processing, and receiving information; (c) users are allowed to communicate under specified conditions; and (d) messages are held in storage until called for by the addressee. Some email software permits the attachment of separate electronic files, e.g., word processing, graphics, and audio files. (Source: Federal Standard 1037C, Telecommunications: Telecommunications: Glossary of Telecommunication Terms)

EOM

Abbreviation for end‐of‐month.

EBCDIC

Acronym for the standard IBM mainframe computer character set.

FSA (Flexible Spending Account)

One of a number of tax‐advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States. An FSA allows an employee to set aside a portion of his or her earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses; a prepaid card program.

Global Merchant Audit Program Report (GMAP)

Alerts acquirers to a potentially fraudulent merchant. This report does not specifically imply that a merchant is or will be responsible for fraudulent or counterfeit transactions.

Anti-Money Laundering Policy (AML Policy)

All companies (including merchants) that deal with cash loads onto prepaid cards must have an AML policy and employees must be trained and knowledgeable on that policy. This includes filing of certain government reports pertaining to over‐the‐limit cash loads and suspicious transactions.

Diversity

All human and organizational differences.

Enhanced Data

Also called Level 2 and Level 3 data. Data provided through the card companies to the issuer in connection with a commercial, purchasing, fleet or business card program. Such data may include both or either merchant level or transaction‐level data.

Cancellation Code

Also called cancellation number. The code that a lodging or car rental merchant gives to a cardholder. The cancellation code proves that the cardholder did, in fact, cancel a reservation. It is used in the dispute process.

Certification Authority (CA)

Also called certificate authority. 1. In cryptography, a center trusted by one or more agencies or individuals to create and assign certificates and, optionally, to create users' keys. 2. In secure communications, a trusted person or entity that issues certificates (also called public‐key certificates) for encryption purposes. 3. An independent party identifying and certifying payers and payees for real‐time credit card transactions in electronic commerce. 4. The third level of the Public Key Infrastructure (PKI) Certification Management Authority responsible for issuing and revoking user certificates and exacting compliance to the PKI policy. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Factoring

Also called laundering. One merchant's depositing drafts to its account that have originated from the sales of another merchant, generally one that cannot obtain a merchant account in its own name. Can also be the coercion or bribery of a legitimate merchant to process other merchants' transactions that are typically fraudulent.

Clean Door/Clean Window Policy

American Express policy that dictates that an establishment cannot place any point‐of‐purchase (POP) on or around the establishment or on doors, windows, cash registers, etc. (Source: American Express)

Card Carrier

An 8 ½" x 11" piece of paper to which the card is affixed. The carrier is included inside a #10 envelop and mailed to the cardholder. The carrier is often customized for the card program and includes details of the program.

Automated Enrollment Entry (ENR)

An ACH credit or debit enrollment entry initiated by a participating depository financial institution (DFI) to a federal government agency on behalf of an account holder.

Automated Notification of Change (COR)

An ACH notification of change transaction automatically derived from the original erroneous item. The acronym COR is an abbreviation for correction.

EMS Order System

An American Express database that is used to order electronic merchant services products, e.g., terminals and payment links. (Source American Express)

CTO (Corporate Travel Online)

An American Express travel reservation tool that allows users to book air, hotel, and car reservations online, 24 hours a day, 7 days a week. (Source: American Express)

Dual Interface Card

An ID card that has a single smart card chip with two interfaces—contact and contactless—using shared memory and chip resources. (Source: Smart Card Alliance)

Cash Reserves

An account holding funds that are accessible in the case of fraudulent activity or excessive chargebacks. This account is a standard practice for doing business with a newly formed company as a risk mitigation practice.

Checking Account

An account set up by a consumer at a bank or licensed depository institution. The account is accessible by checks, a debit card, or the Automated Clearing House (ACH). The working account set up by merchants for depository activity for debiting and crediting bank card processing items. Also called demand deposit account (DDA).

Deposit Account

An account used by a customer to make deposits and withdrawals at a financial institution. Deposit accounts include checking, savings, and NOW (negotiable order of withdrawal) accounts.

EBITDA

An accounting term referring to "earnings before interest, taxes, depreciation, and amortization" but after all product/service, sales, and overhead costs are accounted for. Sometimes referred to as operational cash flow, EBITDA is a measure of a company's cash flow that can be compared to the enterprise value (the total value of a firm's assets calculated by adding debt to market capitalization and subtracting cash). Some analysts consider the ratio of enterprise value to EBITDA as more useful than the price‐to‐earnings ratio.

merchant

any business that accepts credit or debit cards for payment in exchange for goods or services. Examples include Amazon, Target and Best Buy.

Contactless reader

any pocket-sized card with embedded integrated circuits that can process and store data and communicate with a terminal via radio waves.

Bill Payment Provider (BPP)

An agent of the biller (usually a financial institution) that originates and accepts payments on behalf of the biller.

Customer Payment Provider (CPP)

An agent of the customer that originates payments on behalf of the customer.

Customer Service Provider (CSP)

An agent of the customer that provides an interface directly to customers, businesses, or others for bill presentment. Among the CSP's functions are enrolling customers, enabling presentment, and providing customer care. (Source: Billing.org)

Commercial Relationship

An agreement between parties to do business together for the purpose of EBPP/EIPP. It may or may not include a contract.

Average ticket of the merchant

if the application shows a $30 average ticket and you see an average ticket of $400, you should investigate to ensure they are selling what the application stated. Alternately, it could be a fraudulent cardholder transaction.

Fraud Indicator

An alert system that would indicate, either objectively or subjectively, but within preset parameters that a merchant might have fraudulent intent or is prey to fraudulent schemes.

Electronic Bill Payment (E-Pay)

An alternative to paper checks for paying bills. Consumers can use PCs, telephones, screen phones, or ATMs to send electronic instructions to their banks or bill payment providers to withdraw funds from their accounts and pay merchants. Payments may be made either electronically or by a paper check issued by the bill payment provider.

Average Daily Balance

An amount calculated by dividing the balance outstanding at the close of each day during the billing cycle, by the number of days in that cycle. The average daily balance is used to calculate the interest due on the outstanding account balance.

Automatic Bill Payment

An arrangement between a merchant or service provider and a customer that allows the customer's credit or debit account or credit/debit/prepaid card to be charged automatically for goods or services.

Good Faith

An attempt by a member to resolve a dispute with another member in writing. A good‐faith attempt at resolution must be made before filing a compliance case.

Cash Account

An authorization file for the cash benefit account within a prescribed EBT program.

Client Reference Number

An eight‐digit number supplied by the establishment for electronic draft capture, electronic cash register, or direct solutions transactions.

Banking Day

Any day on which a depository financial institution is open to the public.

Entry

An electronic item representing the transfer of funds in the ACH Network.

Digital Signature

An electronic means of authentication that uniquely identifies the sender of a message or payment through special encryption techniques.

Cancellation

An electronic message sent by the merchant, the acquirer, or the processor to nullify a previously transmitted transaction request or response.

Batch Settlement

An electronic procedure in which the front‐end processor consolidates the transactions within a group or batch and forwards the batch to the back‐end processor for submission to the card company for clearing and later settlement or payment of funds to the acquirer. The acquirer then funds the merchant's account for payment.

Addenda Record

An electronic record attached to an ACH payment entry, used for the purpose of transmitting payment‐related information.

Electronic Signature

An electronic sound, symbol, or process attached to an agreement, authorization, or written statement executed with the intent to sign the record See also Digital Signature.

Electronic Funds Transfer System (EFTS)

An electronically based system that eliminates the need for paper (such as checks) in the movement of funds, e.g., an ATM withdrawal or a pay‐by‐phone transaction.

Authorization Preferred

An embossed Visa Prepaid card that is issued with a Service Code in the magnetic stripe that requests authorization when the magnetic stripe is read by a POS terminal that recognizes and processes Service Codes, but in all other ways operates like a standard Visa card.

Card Capture

The capability of an ATM device to capture cards when they have been coded as lost or stolen or when the cardholder makes more than a prescribed number of PIN attempts.

Card Approved Vendor

An entity certified by card companies to produce payment plastic cards with logos/brands/flags imprinted on the card within the card companies' specified guidelines.

Affinity Partner

An entity that is not eligible for membership in either Visa or MasterCard and has a relationship with an issuer for the issuance of affinity cards.

Debit

An entry to the record of an account to represent the transfer or removal of funds from the account.

Face-to-Face Environment

An environment in which a transaction is completed under all of the following conditions: card is present, cardholder is present, and an individual representing the merchant or acquirer completes the transaction. Transactions in this environment include: retail transactions and manual cash disbursements. Transactions in this environment exclude: installment billing transactions, mail/phone order transactions, recurring transactions, and cardholder‐activated terminal transactions.

Card-Absent Environment

An environment in which a transaction is completed under both of the following conditions: the cardholder is not present and the card is not present. Transactions in this environment include deferred payments, electronic commerce, mail order and phone order, and recurring transactions. They do not include face‐to‐face transactions where the card is present.

Card-Present Environment

An environment that describes the conditions of either the face‐to‐ face or cardholder‐activated terminal environment.

Feet on the Street

An expression meaning salesperson or merchant‐level salesperson.

Employer Identification Number (EIN)

An identification number that the Internal Revenue Service assigns to employers that serves as the tax identification number.

Clearing Processor/member

The card company member, or its designated processor, that provides clearing and settlement services for merchants or other members. This is a typical function of a back‐end processor.

Exception Item

Any entry that requires special attention or processing, A list of lost, stolen, counterfeit, fraudulent, or otherwise invalid account numbers kept by individual merchants or their third‐party processors. The exception file should be checked as part of the authorization process, particularly for transactions that are below a merchantʹs floor limit. including retrieval requests and chargeback processing.

Direct Federal Program

Any federal benefit program that is prefunded into the cardholder's cash account.

Application (APP)

Any form completed by an applicant. Typically, an application will request name, address, and other similar contact information that can be used for credit and risk assessment purposes. Examples are the profile form filled out by the cardholder requesting a card or a merchant applying to accept bank cards as a payment medium.

Electronic Commerce Indicator (ECI)

An indicator required by Visa in the clearing record of all Internet transactions.

Customer

An individual or entity that receives goods or services subject to bills, invoices, or statements.

Credit Record

An individual's credit history.

Expert System

An information‐processing technology that stores a large amount of data on a specific area and then performs a series of logic on responses to simple questions with the aim of solving problems. Sometimes these systems are called knowledge based systems. They are popular in technical and customer support systems, where many people need quick training and an archive of solutions.

Frame Relay

An interface protocol for statistically multiplexed packetswitched data communications in which variable‐sized packets (frames) are used that completely enclose the user packets they transport. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Extranet

An intranet that has been extended to include access to or from selected external organizations such as customers or suppliers, but not the general public. Connections may be via leased lines, dial‐up connections, or network interconnections. The overall network may be, but is not necessarily, a virtual private network. This term also refers to a Web site that links businesses to consumers, suppliers, and other parties for electronic commerce. These sites usually provide more consumer‐specific information than public sites and may have security devices such as passwords for a user to gain access to more sensitive information. See also Intranet. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Hash Total

The result obtained by subjecting a set of data to an algorithm for purposes of checking the data at the time the algorithm is applied or for use at a later time, such as after transmission or retrieval from storage. A value computed on data to detect error or manipulation. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Chargeback Reference Number

An issuer‐assigned number that identifies the source of an outgoing chargeback.

Credit Draft Transaction

An offline manual food stamp transaction used to credit the cardholder's account for the refund of a food stamp purchase.

Check Verification

An online authorization service that allows merchants to query a database to determine if customers have a history of returned checks. Merchants may also add checks that have been returned for nonsufficient funds (NSF). For large national retailers, the service provider may load a check list into the merchant's system. Check verification service can be combined with a check guarantee service. See also Check Guarantee.

Fraud Monitoring

An operational process, usually done in the risk management area that involves setting alert parameters for review at the time that each transaction is presented to the system. Examples of these parameters include: excessive credits, excessive chargebacks, duplicate transaction amounts, and excessive sales amounts. Visa and MasterCard also monitor transactions and give warnings and alerts to acquirers that have suspicious transactions. Fines or monetary losses can occur if these procedures are not in place.

Association

An organization owned by bank members that services and obtains processing services for members and functions as a principal/proprietary member of Visa or MasterCard.

Automated Teller Machine (ATM)

An unattended computer terminal that performs basic teller functions: dispensing cash, accepting deposits, cashing checks, accepting loan payments, and enabling a bank customer to order transfers among accounts and make account inquiries. The first ATM was deployed as a cash dispenser by Barclay's Bank in the United Kingdom in June 1967. The first U.S. ATM was deployed in 1969 by Chemical Bank at its branch in Rockville Centre, N.Y. Some machines have more functions and also sell products such as postage stamps, while others are limited‐function cash dispensers only. Recently ATMs have been used to image checks thereby automating the check deposit process as well as dispensing prepaid/gift cards.

Hold-Back

An underwriting program in which a percentage of the merchant deposit is held back and set aside in a separate account to offset potential chargebacks or fraud. Also called a reserve.

Cash Benefit

Annuity and public assistance benefits that are in the form of cash. These benefits are generally disbursed through direct deposit, warranty, state check, U.S. Treasury check, or EBT.

Automatic Check Handling (ACH)

Another term for the automated clearing house functions.

Financial Institution (FI)

Any bank, savings and loan, credit union, or other institution organized under either national or state banking laws capable of accepting deposits and/or extending credit.

Basis Point (BP)

One one‐hundredth (0.01) of 1 percent, a measurement usually used in interest rates or discount rates. For example, a change from 1.43 percent to 1.50 percent is a change of seven basis points.

Field

One or more consecutive character positions within a file.

Client-Server

Any hardware‐software combination that generally adheres to client‐server architecture, regardless of the type of application.

Client-Server Architecture

Any network ‐based software system that uses client software to request a specific service, and the corresponding server software to provide the service from another computer on the network

Authorization Certificate

Any of several types of certificates containing information used in the authorization process. Note: Authorization information may also be contained in a public key certificate, which also serves as an authorization certification.

Future Services

Any sale in which the complete product or service is not delivered at the time of the sale transaction. The term may apply to either face‐to-face transactions or mail/phone orders.

Biometrics

Any specific and uniquely identifiable physical human characteristic that may be used to validate the identity of an individual. Examples include characteristics of the retina, iris, acoustic spectrum of the voice (voiceprint), fingerprints, handwriting, and pattern of finger lengths. Biometric identification provides a highly secure means of identification, for purposes of security involving, for example, Internet communications and cryptosystems. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Card

Any valid plastic card issued by a card company or other card‐issuing organization that is presented as payment for goods and services or to obtain cash advances.

Batching

Authorized transactions are stored in batches, either in the terminal or on the processor's host, which are sent to the acquiring clearing processor on a predetermined schedule, also know as "auto batch". If a transaction is not submitted in the batch, the authorization will stay valid for a period of time, determined by the issuer, after which the held amount will be returned to the cardholder's available credit (see authorization hold). Some transactions may be submitted in the batch without prior authorizations; these are typically seen where the authorization was unsuccessful but the merchant still attempts to force the transaction through. (Such may be the case when the cardholder is not present but owes the merchant additional money, such as a hotel stay extension or car rental.)

ACH

Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches.

Average Ticket

Average ticket is a metric that provides details on the average amount of sales by a given customer. It is used by a range of businesses when analyzing business performance and sales activity.

Acquisition

One organization's purchase of another or the merger of two or more organizations. Acquisition has different consequences under corporate and tax law depending on whether it involves the assets or the capital stock of the target company.

Batches

Batch credit card processing is the practice of a merchant processing all of its authorized credit card transactions for the day after the close of business or at a time determined by the credit card processor.

Billback

Billback or bill back is an accounting service and/or suite of software that is used for cost recovery.

Automated Fuel Dispenser (AFD)

Both Visa and MasterCard have an interchange rate category for petroleum merchants using pay‐at‐the‐pump unattended terminals. The merchant category code must be oil and gas, petroleum (5542). Only one electronic authorization per transaction is allowed, and the magnetic stripe components must be transmitted. For Visa, the transaction must be sent for processing within 24 hours of the authorization and for MasterCard within 2 days. MasterCard and Visa allow a $50 "pre‐auth" as the transaction authorization. The merchant's name and location must be provided in the authorization record. This category includes all rate structures and card types. Visa calls their program CPS/AFD and MasterCard has three interchange rate programs for gas stations and convenience stores: Petroleum, Petroleum‐Service Station and Petroleum‐CAT/AFD.

Application Processing

Both issuers and acquirers process applications, typically by reviewing the application through an operational department and running risk management procedures, such as credit and background checks. The application is approved based on preset criteria. If approved, it is key-entered into the database that generates the cardholder or merchant production and set‐up. If the application is given pending status, it is returned to the sales area or directly to the customer for more information. If it is denied, the applicant receives a letter explaining the reasons for the denial. Most acquirers have automated this and process the majority of applications electronically. Pending applications are also reviewed electronically.

Credit Card Protection Service

Card registration and protection services offered through an agent that records the names, numbers, and issuers of the cards that the cardholder wishes to register and protect. When a card is lost or stolen, the issuer calls the service, and the service in turn notifies the card issuers.

Excessive Chargeback Activity

Chargeback activity that exceeds Visa/MasterCard‐specified parameters. See also Chargeback Ratio.

Auto Re-presentment

Chargebacks (credit not issued, transaction not authorized, etc.) that are automatically resolved by the processor on the merchant's behalf without the merchant's knowledge or intervention.

Check conversion

Check conversion is a reformatting service offered by banking merchants. Check conversion allows banks to convert paper checks into electronic ones and then send them to the appropriate receiving bank. The electronic check is forwarded on via the automated clearing house (ACH).

Convenience Check

Checks issued by credit or prepaid card companies to allow the cardholder an additional access to their line of credit or prepaid card balance, mostly for use in situations that do not take physical credit cards. In the case of a prepaid convenience check, the consumer would call the issuer for a confirmation number to be placed on the check. The check is now valid at retailers for cash.

CIRRUS®

Cirrus is MasterCardʹs ATM‐only brand, and offers cardholders secure access to cash and other banking services. Cirrus can stand alone or sit with MasterCardʹs point‐of‐sale brands, giving them ATM access. It can also be used by competing brands such as Diners Club, and private label credit cards, to provide ATM access for those cards. The Cirrus logo appears on over 920 million cards, with issuance particularly strong in North America. Cards bearing the Cirrus logo can be used at over 900,000 Cirrus ATMs worldwide.

Bust-Out Card Fraud

Collusive merchants, ISOs or agents, and cardholders who perpetrate fraud against credit cards. The merchant is usually an existing business and works with an ISO or agent to procure terminals and a merchant account. The merchant establishes a number of new businesses and obtains more terminals and merchant numbers from the ISO or agent. Cardholders charge various amounts, exhausting the credit limit, but with different merchant numbers. The cardholder pays the balance in full and then redoes the process of charging to the limit. The check bounces within two days, and the group has two cycles of credit line charges that the issuing bank cannot collect.

Accountholder Authentication Value (AAV)

One type of security used in the smart card industry to describe a value on the chip that is used to authenticate the accountholder. (Source: Smart Card Alliance)

Credit Counseling

Companies with professional counselors that give advice about using credit responsibly and consolidating debt.

Electronic Data

Data describing a transaction receipt.

Hard Copy

Data in paper form. In computer graphics and telecommunications, a permanent reproduction, on any media suitable for direct use by a person, of displayed or transmitted data. Examples of hard copy include teletypewriter pages, continuous printed tapes, facsimile pages, computer printouts, and radiophoto prints. Magnetic tapes, diskettes, and nonprinted punched paper tapes are not hard copy. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Cipher Text

Data or messages that have been encrypted. The utilization of various formats such as DES actually messages the data or the entire message so that the data integrity remains intact.

Additional Commercial Card Data

Data required as part of a bank card transaction in addition to the normal data such as cardholder's name and billing address. Additional data—also called enhanced data or level 2 data—can include information relating to sales tax, accounting code, and fuel consumption for fleet cards as required by the card companies on business, corporate, purchasing, and fleet cards.

Bad Debt

Debt that has been written off and sent to a collection agency for payment.

Accounts Payable (A/P)

Debts a business owes its creditors.

Accounts Receivable (A/R)

Debts owed to a business.

Congestion

Density of traffic when the load exceeds the capacity of a data communication path. (Source: Federal Communications Commission)

Fed Funds

Deposits made by a commercial bank in its local Federal Reserve Bank. These funds include cash balances in excess of the reserve requirement, which may be loaned to other banks overnight.

Corporate Fleet Card

Designed especially for shipping companies, the Fleet Card is a payment system for fuel and maintenance expenses. Every major trucking company issues a fleet card. Any driver can use it, but it can be limited for use only on particular vehicles.

Goods and Services Dispute

Disputes resulting from the cardholder's problem with the quality of goods or services, if the cardholder has tried in good faith to correct the problem and the purchase was made in the cardholder's home state or within 100 miles of his/her current address and the purchase price was more than $50. (Source: American Express)

Dispute Management

EIPP (electronic invoice presentment and payment) functions that allow buyers to notify the seller of problems or adjustments to an invoice.

Buyer Direct

EIPP (electronic invoice presentment and payment) model connecting one buyer to many sellers. Sellers post their invoice data to the buyer's site.

Account Mask Information

Editing criteria used to verify the accuracy of a seller's account number in certain electronic payment transactions.

Financial EDI

Electronic exchange of payments, payment information, or financially related documents in standard formats between business partners.

BAI

See Bank Administrative Institute.

Clayton Antitrust Act

Enacted in 1914 to protect from discrimination in prices, services, or facilities.

Fair & Accurate Credit Transaction Act

Enacted on December 4, 2003, this law gives regulators the green light to enact certain protections in regulating companies, such as financial institutions or payment processors that have access to an individual's confidential financial information.

ERR Rates

Enhanced Rate Recovery Pricing. As a merchant business with an ERR rate of 1.69% for your merchant account, you will be charged 1.69% for any transaction that qualifies on The Interchange Table at 1.69% or below.

Broadband

Evolving digital technologies that provide consumers a signal-switched facility offering integrated access to voice, high‐speed data service, video‐demand services, and interactive delivery services. (Source: Federal Communications Commission)

BIN

See Bank Identification Number.

Default

Failure, inability or unwillingness to pay a debt, or bankruptcy.

Automatic Fare Collection System (AFC)

Fare collection systems installed by transit merchants, such as subways, buses, and taxis, for use with contactless, prepaid or smart cards.

Statement or reporting fees

Fees that are charged for receiving statements or reports.

Electronic Financial Services (EFS)

Financial services provided via electronic delivery channels (e.g., personal computers, telephones, screen phones, and ATMs). These services may be transaction‐ and/or information oriented and may be provided by bank and nonbank providers.

Data Transport Network

In MasterCard, the part of the BankNet system through which information is exchanged between members and the central processing site in St. Louis, Missouri.

Cardmember

For American Express, consumers who have American Express Cards.

Central Affiliated Property (CAP)

For American Express, the term used to designate the hierarchy of an account in relationship to multiple locations. (Source: American Express)

Gateway Services Switch

For Internet merchants, services that provide the connection to front‐end processors; encryption and decryption of messages; connection to a third‐party verification and authentication service such as Verified by Visa; and protocol and message conversion. These services also include connections to the back‐end processor for submission of transactions to the card companies for clearing and settlement.

Account Maintenance

For both the card issuer and the card acquirer, the operation involving nondollar changes to the database, such as name, address, and checking account changes, product profiles, billing information, and rate changes.

Card Verification Value Procedure

For each transaction authorization the message will include one of the following with regards to the CVV2: CVV2 is intentionally not provided; CVV2 is present; CVV2 is present but illegible; cardholder states that there is no CVV2 on card. Responses are: CVV2 match; CVV2 no match; not processed; merchant indicates no CVV2 on card; card issuer cannot certify. CVV2 is recommended for all internet transactions. It is a risk the merchant would take to not require the CVV2 as a security measure.

Exchanges

Forums or clearinghouses that enable buyers, sellers, and commodities to partner to provide economies of scale and reduced development expenses.

Electronic Transactions Association (ETA)

Founded in 1990, under the name Bankcard Services Association (BSA), the renamed ETA is a not‐for‐profit organization representing entities that provide transaction services between merchants and settlement banks and others involved in the electronic transactions industry.

BSP

See Bankcard Service Provider, Bill Service Provider.

BATS

See Batch Transaction Authorization System.

BBS

See Bulletin Board System.

Excessive Fraud Activity

Fraud activity that exceeds Visa/MasterCard specified parameters. See also Fraud Ratio.

E-Fraud

Fraudulent activity conducted via the Internet. Types of e‐fraud include unauthorized credit card use, some online auction dealings, and false investment. See Web Theft.

Available Funds

Funds available to the account holder for immediate use.

Collected Funds

Funds for which final payment has been received.

GSA

General Services Administration, the federal agency responsible for government agency procurement.

Card Company

Generic term used to describe the network brand: Visa, MasterCard, Discover, American Express.

GLBA

Gramm‐Leach‐Bliley Act, which governs privacy. Also see Gramm‐ Leach‐Bliley Act.

EMV Chip Card

If a consumer presents a chip card and the merchant is not able to accept the card AND the consumer claims fraud, the liability is now held by the merchant. This is a new risk not previously faced by card present merchants. The details of this shift are below.

BEA

See Bureau of Economic Analysis.

Cash Management

In banking, the process of depositing cash and checks as well as the investment of the funds deposited.

Gateway Operator

In cross‐border payments, the entity that receives and performs the currency conversion.

Derived Unique Key Per Transaction (DUKPT)

In cryptography, a key-management technique that uses a unique key for each separate transaction to prevent the disclosure of any past key used by the transaction‐originating tamper‐resistant security mode (TRSM). The unique transaction keys are derived from a base derivation key using only nonsecret data transmitted as part of each transaction.

Encryption Algorithm

In cryptography, a set of mathematically expressed rules for rendering data eligible by executing a series of conversions controlled by a key. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Certificate

In cryptography, the public key and the identity of an entity, with other information, rendered unforgeable by digitally signing the entire information with the private key of the issuing certification authority. Also called digital certificate. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Beneficiary

In electronic benefits transfer, the person who has the right to receive federal benefits payable by law through programs such as the Food Stamp Program, Aid to Families with Dependent Children (AFDC), and Women, Infants, and Children (WIC).

Corporate Card

See Business Card.

BID

See Business Identification.

BPM

See Business Process Management.

Code-Division Multiple Access

See CDMA

Digital Subscriber Line (DSL)

In integrated services digital networks (ISDN), equipment that provides full‐duplex service on a single twisted metallic pair at a rate sufficient to support ISDN basic access and additional framing, timing recovery, and operational functions. The physical termination of the DSL at the network end is the line termination; the physical termination at the customer end is the network termination.

Chargeback and representment fees

In short, a chargeback is a reversal of funds transferred.

Cellular Digital Packet Data

See CDPD.

Central Information File

See CIF (2).

Adjudication

In the health care field, the administrative procedure used to process a claim for service according to the covered benefits. The POS industry has implemented some programs to work directly with insurance companies and HMOs to process claims electronically and manage the co‐payment process.

Access Control System Format

In the smart card industry, a term referring to the bit pattern that the reader transmits to the control panel. The format specifies how many bits make up the data stream and what these bits represent. For example, the first few bits might transmit the facility code, the next few the unique ID number, the next few parity, and so on. (Source: Smart Card Alliance).

CPS

See CPS Transaction.

Bill Detail

Information from a biller that provides line‐level information to a customer, including specific billing event information such as credit card charges, telephone calls, or kilowatts used. Also called invoice detail.

Analog

Information presented in the form of a continuously varying signal.

Audit

Inspection and verification of financial accounts, records, and accounting procedures.

Enterprise Resource Program (ERP)

Integrated, corporate‐wide applications such as accounts receivable, accounts payable, purchasing, customer relationship management, and treasury.

Interchange Plus

Interchange Plus pricing gets its name based on the fact that the rate charged for the transaction comes straight from the Interchange table "plus" a surcharge amount.

Domestic Interchange

Interchange of a transaction within the country of issuance and acquisition.

GSM (Global System for Mobile Communication)

International chipbased standard for digital or cellular use.

Business Card

Introduced in 1985 to meet the needs of the small business market in the United States, the MasterCard Business Card program offers the ability to extend payments and separate business expenses from personal expenses. All card companies offer business card programs.

Corporate Travel Online

See CTO.

Corporate Trade Exchange

See CTX.

CAV

See Card Authentication Value.

CAS

See Card Authorization System.

Executive Business Card

Issued by MasterCard Issuers only in the United States. It includes a higher credit limit (currently $10,000 per account) to provide select small businesses with additional buying power.

Activity File Parameters

Issuer‐established maximum limits on the number and value of transactions that the Association may authorize on the issuer's behalf.

Agent Bank

Issuing: Agent banks contract with larger issuing (or sponsoring) banks to issue cards that are branded with the agent bank's name. Cardholders are solicited through the agent. Shared revenue or fixed compensation may be negotiated, but the liability rests with the sponsoring bank, not the agent. Acquiring: Similar relationships exist in which the agent sells and services the merchants on behalf of the principal bank.

Account Number

Issuing: An issuer‐assigned number that identifies a cardholder's account, the issuer, and the type of financial transaction card (e.g., commercial card or debit card). Acquiring: An acquirer‐assigned number that identifies a particular merchant or group of merchants. Note: The first six digits of each number identify the issuing and acquiring institutions. See BIN.

Delinquency

Late payment of a bill or debt.

Computer-Based Training (CBT)

Lessons or classes designed for self-study from computer programs.

Level 1 Data

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

Level 2 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.

Gift and/or Loyalty cards

Loyalty programs are structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.

NABU, APF and FANF

MasterCard implemented a new fee, the Network Access and Brand Usage fee (NABU). And following right on the heels of the MasterCard announcement, on July 1, 2009 Visa implemented their U.S. Acquirer Processing Fee (APF).

e-P3

MasterCard purchasing card program that integrates payment processing with remittance processing.

Chargeback Ratio

Measured by total sales chargebacks to total sales transactions. The maximum usually is .018 percent without incurring warnings and fines.

Fraudulent Merchants

Merchants who intentionally perpetrate fraud schemes, such as white plastic fraud or laundering, factoring, or third‐party laundering. Chargebacks are a true indicator of fraudulent activity or services. Both MasterCard and Visa have chargeback monitoring programs aimed at decreasing chargeback activity.

Discover

Morgan Stanley spun off Discover Financial Services in 2007. Discover Financial Services (NYSE: DFS) is comprised of Discover Network (network, credit and signature debit card issuing, acquiring, merchant services and prepaid issuing), Pulse, Goldfish (UK subsidiary), Discover Bank and Discover Card.

Chained Transaction

Multiple transactions that occur in a customer-operated device such as an ATM without the reentry of the card or PIN.

CEBP

NACHA's Council for Electronic Billing and Payment.

CNP

See Card Not Present.

Credit Card Fraud

See Cardholder Fraud and Merchant Fraud.

CISP

See Cardholder Information Security Program.

CIF

See Cards in Force

Card Not Present (CNP)

See Card‐Absent Environment.

CCD

See Cash Concentration/Disbursement

CMIA

See Cash Management Improvement Act.

Account Takeover

See Cash Theft.

CAP

See Central Affiliated Property.

Digital Certificate

See Certificate.

CA

See Certification Authority.

CV

See Charge Volume. (Source: American Express)

Debit Memo

See Chargeback.

Check 21

See Check Truncation Act for the 21st Century.

CFR

See Code of Federal Regulations.

CTMF

See Combined Terminated Merchant File.

Central Processing Unit

See Communication Processing Unit (CPU).

CBT

See Computer‐Based Training.

Bill Service Provider (BSP)

See Consolidator.

COT

See Consumer‐Operated Terminal.

CPC

See Corporate Purchasing Card.

COGS

See Cost of Goods Sold.

Deposit Credit

See Credit Deposit.

Credit Voucher

See Credit Slip.

CIP

See Customer Identification Program.

CPP

See Customer Payment Provider.

CRM

See Customer Relationship Management.

CSP

See Customer Service Provider.

Customer Support

See Customer Service.

CIE

See Customer‐Initiated Entry.

DEK

See Data Encryption Key.

DES

See Data Encryption Standard.

DSE

See Data Storage Entities.

DSO

See Days Outstanding.

Blocks

See Debit Block.

Debit Filters

See Debit Block.

DDA

See Demand Deposit Account

DOJ

See Department of Justice.

DFI

See Depository Financial Institution.

DUKPT

See Derived Unique Key per Transaction.

DSA

See Digital Signature Algorithm.

DSL

See Digital Subscriber Line.

DLL

See Downline Load.

Dual Interface Chip

See Dual Interface Card.

Assessments

See Dues and Assessments.

DCC

See Dynamic Currency Conversion.

Electronic Mail

See E-Mail.

ECC (Electronic Check Conversion)

See ECA

Electronic Check Acceptance

See ECA

Electronic Check Conversion

See ECC

Elliptic Curve Cryptography

See ECC.

Authorization Code

Number assigned by the authorizing processor, card issuer, or stand‐in processor to a cardholder's transaction which has received specific approval. The code is proof that the transaction has been properly authorized. The code is returned in the authorization response message and is always recorded on the transaction receipt and stored within the point‐of‐sale system.

Click Rate

On a Web page menu item, especially an advertisement, the ratio of the number of times it is selected (ʺclickedʺ) to the number of times it is viewed.

Credit Balance

On a revolving line of credit, the amount that the cardholder currently owes.

Funding

Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totaling the funds in the batch in total or less the discount fees charged.

Electronic Check Presentment

See ECP

Electronic Cash Register

See ECR

Electronic Data Capture

See EDC.

Electronic Funds Transfer

See EFT

EIP (Electronic Invoicing and Payment)

See EIPP

Electronic Transfer Accounts

See ETA (2).

Counterfeit Paper

Paper originating from the use of counterfeit cards for transactions.

Financial strength of the business

Periodically checking the financial health of your merchant and watching trends in processing volume can help protect against unexpected financial loss. If the merchant is struggling to cover their costs of goods it is possible owed fees may be returned as NSF (non-sufficient funds).

Hardware

Physical equipment as opposed to programs, procedures, rules, and associated documentation. The generic term dealing with physical items as distinguished from its capability or function such as equipment, tools, implements, instruments, devices, sets, fittings, trimmings, assemblies, subassemblies, components, and parts. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Edit Package Software

See Edit Package

Check-Electronification

See Electronic Check Conversion.

ECI

See Electronic Commerce Indicator.

EC

See Electronic Commerce.

EFTPS

See Electronic Federal Tax Payment System.

Charge Cards

Plastic cards in which payments are set against a special-purpose account. The entire bill must be paid at the end of the billing period, and typically, there is no interest.

Credit Card

Plastic cards that allow payments to be offset against a special-purpose account associated with a revolving line of credit and requiring some form of installment‐based payment.

Data Capture-Only Capability

Point‐of‐transaction capability in which the transaction receipt data are electronically captured for deposit purposes but does not have the capability to go online for authorizations.

Card Reissue

Preparing, packaging, and sending new cards to cardholders prior to the current card's expiration date.

Collateral Material

Printed, broadcast, or other communications regarding marketing, including solicitations, promotional materials, advertisements, statements, statement inserts, direct mail solicitations, brochures, and telemarketing operator scripts.

Error Resolution Process

Procedures required under Regulation E for resolving a consumer's allegation that entries were improperly charged to his/her account.

Home Banking

Products offered by banks that are initiated by telephone or personal computer, such as bill paying, account inquiry, and funds transfer.

EFTA

See Electronic Funds Transfer Association.

EFTS

See Electronic Funds Transfer System.

EFTPOS

See Electronic Funds Transfer at the Point of Sale.

EIRF

See Electronic Interchange Reimbursement Fee

EBIDS

See Electronic Invoice Delivery Service.

EMS

See Electronic Merchant Services.

Card Skimming

Reading the magnetic stripe on a card and copying the information for use in the creation of a duplicate card that can be used for fraudulent transactions.

ePurse

See Electronic Purse.

ETA (1)

See Electronic Transactions Association.

EPP

See Encrypting PIN Pad.

Cryptographic

See Encryption

Data Encryption

See Encryption

ESSP

See Encryption Support Service Provider.

ERP

See Enterprise Resource Program.

Code of Ethics

See Ethics Statement.

Data

Representation of facts, concepts, or instructions in a formalized manner suitable for communication, interpretation, or processing by humans or by automatic means. Any representations such as characters or analog quantities to which meaning is or might be assigned. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Cash Management Improvement Act (CMIA)

Requires the federal Financial Management Service (FMS) to issue regulations to ensure greater efficiency, effectiveness, and equity in federal/state funds transfer.

Gross Margin

Sales minus cost of sales (cost of goods sold).

Commission-Only Sales

Sales personnel who are not employed by a company but receive commissions instead of a salary when they effect a sale. These personnel are also considered "1099" personnel because they are issued IRS Form 1099 as proof of wages and for tax filing purposes.

EPS

See Express Payment Service.

Electronic Commerce (EC)

See E‐Commerce

Federal Communications Commission

See FCC.

Federal Deposit Insurance Corporation

See FDIC.

FAX

See Facsimile.

FIPS

See Federal Information Processing Standard.

Collateral

Savings, bonds, insurance policies, jewelry, property, or other items that are pledged to pay off a loan or other debt if payments are not made according to agreed upon terms. Synonym: Security.

Account-to-Account

See A2A

ADC

See Account Data Compromises.

AAV

See Accountholder Authentication Value.

A/P

See Accounts Payable.

ARC

See Accounts Receivable Entry.

A/R

See Accounts Receivable.

Acquirer Fraud Activity Level

See Acquirer Monitoring Program.

ARN

See Acquirer's Reference Number.

Edit Package Run Data

See Acquirer's Run Date

AVS

See Address Verification Service.

AES

See Advanced Encryption Standard.

Account Aggregation

See Aggregators

AFDC

See Aid for Dependent Children.

ABA

See American Bankers Association.

AMEX

See American Express.

ANSI

See American National Standards Institute.

APTA

See American Public Transportation Association.

ASCII

See American Standard Code for Information Interchange.

ADA

See Americans with Disabilities Act.

APR

See Annual Percentage Rate.

AML Policy

See Anti‐Money Laundering Policy

API

See Application Program Interface.

ASP

See Application Service Provider.

APP

See Application.

ADSL

See Asymmetric Digital Subscriber Line.

AF

See Audio Frequency.

ARU

See Audio Response Unit.

Auth Only

See Authorization Only.

Auth

See Authorization.

ADV

See Automated Accounting Device.

ACH

See Automated Clearing House

COR

See Automated Notification of Change.

ATM

See Automated Teller Machine.

AFC

See Automatic Fare Collection System.

Business-to-Business

See B2B

Business-to-Consumer

See B2C.

Commercial Credit

Short‐term credit that a seller gives to a buyer to pay for a service or product.

Electronic Payment Gateway

Software and hardware interfacing merchants and credit/debit card authorization networks.

Electronic Wallet (E-Wallet)

Software residing as a plug‐in in the Web browser that enables a cardholder to conduct online transactions, manage payment receipts, and store digital certificates. Like a physical wallet, the digital wallet stores credit card information, payment information, and shipping details. The wallet typically initiates the data encryption in an SET transaction.

Greenwich Mean Time (GMT)

Solar time in Greenwich, England, which is at meridian 0. Also called Greenwich Time, it is used as the basis for standard time throughout the world, as well as the base time at which Visa and MasterCard perform their settlement processes.

Card Mailer

Special packaging used to mail new or reissued cards to the cardholder. The mailer may contain special information, disclosures, and/or instructions to the cardholder about the account.

Capture

Stage three of the seven stages of processing, which involves converting the authorization amount into a billable transaction record within a batch. A transaction cannot be captured unless it has been authorized. Rules also state that the merchant should not send the transaction to be cleared until goods or services have been shipped or provided to the consumer. The front‐end processor aggregates the merchant batches by BIN, matches authorization data to settlement data, and sends the transaction to the back‐end processor for clearing and settlement. The front‐end processor may also send the independent card company transactions (AMEX, Discover, Diners, and JCB) directly to the card companies depending on the relationship with the acquirer.

ANSI X9.17

Standards for authentication and message encryption key management. These standards are maintained by the American National Standards Institute and can be found at the Computer Security Resource Center (www.csrc.nist.gov).

ANSI X9.52

Standards for data encryption and decryption. These standards are maintained by the American National Standards Institute and can be found at the Computer Security Resource Center (www.csrc.nist.gov).

ANSI X12

Standards that regulate electronic data interchange (EDI) as governed by the American National Standards Institute Accelerated Standards Committee.

Bill Summary

Summary information from a biller that is essential to a consumer to understand what is owed. Typical information may include: amount owed, date due, biller, biller's account number, summary record, summary, and invoice summary.

Audio Frequency (AF)

The band of frequencies that, when transmitted as acoustic waves, can be heard by the normal human ear.

"Digital Dozen"

The 12 requirements of the Visa Cardholder Information Security Program (CISP)

Billing Cycle

The 28‐ to 31‐day timeframe between production of the cardholderʹs current and next statements.

ACH Regional Associations

The 36 regional governing bodies of the Automated Clearing House Network rules and regulations.

Cash Concentration/Disbursement (CCD)

The ACH format for corporate payments, which can include one option addenda record.

Address Verification Service (AVS)

The Address Verification System (AVS) is a system used to verify the address of a person claiming to own a credit card.

Card Authorization System (CAS)

The American Express Card Authorization System, a computer system that performs the credit analysis of Cardmember charges. Its primary purpose is to protect the service establishment from fraud loss and credit abuse. (Source: American Express)

ESA (External Sales Agent)

The American Express program that allows an independent sales organization to sell the acceptance of American Express cards to merchants. American Express pays the agent an agreed‐upon fixed fee for each approved application and allows the sales entity to retain amounts over the set discount rate as an inducement to sell and to reimburse the agent for the cost of sales.

Document Express

The American Express system that stores all card acceptance agreements (SE contracts). (Source: American Express)

Americans with Disabilities Act (ADA)

The American with Disabilities Act of 1990 (effective July 26, 1992) prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment. The ADA mandates the accessible design of buildings, machines, and public vehicles. The impact to automated teller machines was significant, as the law required accessibility for the physically impaired as well as the sight‐ and hearing‐impaired.

ACH Network

The Automated Clearing House (ACH) Network facilitates commerce, electronically, by serving as an efficient, reliable and secure payments system. NACHA, led by member depository financial institutions and payments associations, fulfills this purpose by managing the development, administration, and governance of the ACH Network, and by providing superior services and value to its members as the industry association responsible for ACH payments. The ACH Network connects the originating depository financial institutions with the receiving depository financial institutions.

Bank Secrecy Act (BSA)

The BSA includes OFAC (Office of Foreign Asset Control) Program and AML (anti‐money laundering) for a company as well as other federal requirements. Companies also have to comply with the US Department of Treasury regulation 31 CFR 103, and the Office of Thrift Supervision regulation 12 CFR 563.177.

Clearing House

The Clearing House.

DES Algorithm

The Data Encryption Standard algorithm that is a publicly available mathematical calculation used in conjunction with confidential encryption keys to scramble data securely.

Discover Card

The Discover Card began as a reward‐based card issued by Sears in the mid‐1980s. Discover/Sears issued all of the cards and had a reseller program for the sales to merchants. Since then Discover has grown to over 5 million merchants accepting the card. In 2007, Discover went to an indirect acquiring model by allowing acquiring processors to acquire and sell Discover as part of the MasterCard/Visa package. All Discover Cards begin with a "6."

Clearing Bank

The bank designated by the member to receive the memberʹs daily net settlement advisement. The clearing bank conducts funds transfer activities with the net settlement bank and maintains the memberʹs clearing account. This bank may be the member itself.

Check Truncation Act for the 21st Century (Check 21)

The Federal Reserve Bank law, effective in 2004, that allows banks to transmit electronic images of checks instead of actual paper checks, if desired.

Gramm-Leach-Bliley Act

The Financial Modernization Act of 1999, also known as the ʺGramm‐Leach‐Bliley Actʺ or GLB Act, includes provisions to protect consumers' personal financial information held by financial institutions. There are three principal parts to the privacy requirements: the Financial Privacy Rule, Safeguards Rule and pretexting provisions.

Government Smart Card Interoperability Specification (GSC-IS)

The GSC‐IS was defined to provide the ability to develop secure identification smart cards that can operate across multiple government agencies or among federal, state, and local governments and provides solutions to a number of interoperability issues associated with contact smart card technology implementation. An upcoming GSC‐IS revision will include interoperability definitions for contactless smart card technologies. (Source: Smart Card Alliance)

Credit or Return

The return of a purchased item that results in the adding of the amount back to the cardholder's line of credit. In a debit card environment, the credit or return transaction is a deposit to the debit cardholder's access account. The merchant is debited the amount of return or credit.

PCI Compliance

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that ALL companies that accept, process, store or transmit credit card information maintain a secure environment.

Excite Field

The RF (radio frequency) field or electromagnetic field that is transmitted constantly by the contactless door reader. When a contactless card is within range of the excite field, the internal antenna on the card converts the field energy into electricity that powers the chip. The chip then uses the antenna to transmit data to the reader. (Source: Smart Card Alliance)

Department of Justice (DOJ)

The U.S. Cabinet department created in 1870 to enforce the law and defend the interests of the United States according to the law and to ensure fair and impartial administration of justice for all Americans. The DOJ is administered by the Attorney General. Some of its many divisions include Antitrust, U.S. Attorneys, and the Federal Bureau of Investigation. The DOJ investigates unfair practices by businesses as reported by other contracted businesses or by consumers.

Bureau of Economic Analysis (BEA)

The U.S. Department of Commerce bureau that analyzes and produces reports on the Gross Domestic Product and

FCC (Federal Communications Commission)

The U.S. government board of five presidential appointees that has the authority to regulate all nonfederal interstate telecommunications (including radio and television broadcasting) as well as all international communications that originate or terminate in the United States. Similar authority for regulation of federal telecommunications is vested in the National Telecommunications and Information Administration (NTIA). (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Generic Identifier Card

The Visa term for a card where a generic identifier is on the card instead of the cardholder's name. Used in a temporary or instant issue card.

BASE I (Bankcard System Experiment I)

The VisaNet data processing system and operations used to provide authorization and authorization‐related services between Visa issuers and acquirers.

BASE II (Bankcard System Experiment II)

The VisaNet data processing system and operations used to provide clearing and settlement and other interchange‐related services between Visa issuers and acquirers.

Cohabitation

The ability of multiple technologies to reside on the same card and not interfere with each other. An example is a magnetic stripe card with a chip embedded.

Cash Advance

The ability to obtain cash from a cash dispenser, or a bank teller. Interchange on these transactions is paid by the issuer to the acquirer for the float on funds disbursed. Cardholders pay high charges for these

Head-In System

The access control server, software, and database(s) used in a physical control system. (Source: Smart Card Alliance)

Control Panel

The access control system component that connects to all door readers, door locks, and the access control server. The control panel validates the reader and accepts data. Depending on the overall system design, the control panel may next send the data to the access control server or may have enough local intelligence to determine the user's rights and make the final access authorization. Also called the controller or panel. (Source: Smart Card Alliance)

Delinquent Account

The account status occurring when the cardholder does not meet the payment conditions of the cardholder agreement, i.e., one or more payments are past due.

Batch

The accumulation of transactions from a point‐of‐sale terminal gathered, reconciled, and transmitted for clearing and settlement. Also, the transmission or processing of a group of payment orders as a set at discrete intervals of time (as opposed to real time).

Clearing and Settlement

The acquirer sends the batch transactions through the card brand, which debits/credits (if charge- backs and returns exceed sales for the day) the issuer for payment and credits/debits the acquirer. Essentially, the issuer pays the acquirer for the transaction.

Confirmation

The acquirer's electronic acknowledgment of the retrieval request.

Currency Conversion

The act of converting the dollar amount of the currency of the cardholder's issuing country to the merchant's acquiring country's currency at the time of purchase. See Dynamic Currency Conversion.

Class B Certification

The act of message authentication to the processor and the most widely used certification by value‐added resellers (VARS). In this type of certification, the processor does not certify how the terminal application performs but only that the application can communicate in the format needed for transaction processing.

Acquiring Bank

The bank that contracts with a merchant, as required by card association rules enabling the merchant to accept the association‐branded bank cards. These cards may be consumer and/or corporate and credit and/or debit or prepaid. The merchant has an account with this bank and each day deposits the value of the dayʹs credit card sales. Acquirers buy (acquire) the merchantʹs sales slips and credit the ticketsʹ value to the merchantʹs account. See Merchant Bank.

Cardholder Bank

The bank that has issued a bank card to an individual. Frequently used to identify the card‐issuing bank in an interchange arrangement.

Check Truncation

The actual paper instrument is held at the first point of presentation, whether at a point of purchase (POP) or at the deposited financial institution. Information from the checks is transmitted electronically from the truncation point to the depositor's financial institution.

Force/Offline Transaction

The after‐the‐fact entry of a purchase resulting from a referral message ("call Authorization Center") or a downtime interruption of service from a network that enables the merchant to enter (as a force/post authorization) the transaction and the approval code into the EDC batch.

Digital Signature Algorithm (DSA)

The algorithm used to generate a digital signature.

Credit Loss

The amount lost (charged off) as a result of the cardholder's failure to repay the amount owed on the account.

Break-Even

The amount of additional revenue needed to cover expenses.

Authorization Fees

The amount of money that is charged directly to an individual merchant account each time communication is made between credit card processing software (when the sale transaction is processed online, etc.) or point of sale (POS) terminal (when the sale transaction is processed physically in person) and the authorizing network.

Data Element

The basic unit of information in EDI transaction sets, containing a set of values that represent a piece of information.

Access Time

The amount of time needed to obtain information from, or place information into, computer storage.

Control Totals

The amounts—usually representing the number of items, their total or other key information—used to help verify that received files are unchanged from the original transmitted files.

Annual Percentage Rate (APR)

The annual cost of financial charges levied on consumer credit as required by the Truth in Lending Act (Regulation Z) of 1969. The lender's administrative costs, profit margin, and interest charges on the loan are typically added to a charge payable throughout the term of the contract and expressed as a percentage of the value of the transaction. The APR is often calculated as the monthly rate times 12.

Daily Periodic Rate

The annual percentage rate (APR) expressed on a daily basis. It equals 1/365th of the APR and is typically used to calculate a loan payout.

A2A (Account-to-Account)

The automatic transfer of funds from one account to another. An example is the Fedwire or wire transfer transaction.

Average Ticket

The average sale amount per merchant location.

Clearing Balance

The balance in an account maintained by a financial institution at a Federal Reserve or correspondent bank.

Federal Reserve Bank (FRB)

The branch or district office of the Federal Reserve System that acts as the central bank of the United States.

Cash Letter

The bundle of checks and/or items sent to or from one financial institution to another for deposit or collection on the items within.

Decision Maker

The business owner or manager who is authorized to make decisions for the business. (Source: American Express)

Authorization

The cardholder presents the card as payment to the merchant; merchant submits the transaction to the acquirer (acquiring bank) through the payment processor. The acquirer verifies the credit card number, the transaction type and the amount with the issuer (card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant by use of an authoriza- tion code. An authorization will generate an approval code, which follows the life of the transaction through the processing systems.

ACH Operator

The central clearing facility, operated by a Federal Reserve Bank or a private‐sector organization on behalf of depository financial institutions, in which participating financial institutions transmit or receive ACH entries.

Central Processing Site

The central computer processor used in transaction processing.

Address Verification Service (AVS)

Visa and MasterCard service through which a merchant can verify a cardholder's billing address before completing a transaction. This service is typically used in "card‐not‐present" transactions such as mail order/telephone order (MOTO) and Internet transactions. AVS helps verify the legitimacy of the cardholder but does not guarantee that the transaction is valid. Responses to the AVS request are:

Edit Package

The clearing and settlement audit software that both Visa and MasterCard deliver to processors to validate interchange qualification, process interchange data, and process incoming transactions.

Data Capture

The collection, formatting, and storage of information in computer memory. Some point‐of sale terminals perform data capture functions. See EDC Terminal

Consumer Fraud

The commission of fraudulent acts by a consumer against a merchant. Some examples include writing bad checks, closing an account or having no account for checks, or intentional chargebacks.

Code of Federal Regulations (CFR)

The compiled administrative procedures by which federal agencies administer the laws passed by the U.S. Congress.

Electronic Data Interchange (EDI)

The computer‐to‐computer exchange and use of information in a standardized message format.

Custom Payment Services (CPS)

Visa interchange rate structure that began in 2000 as PaymentService, designed to meet the special card acceptance and operating procedures of different types of merchants and cards.

Check Authorization

The confirmation that the check presenter has not been linked to excessive returns of previously written checks.

Dynamic Currency Conversion (DCC)

The consumer's ability to transact the price of a transaction in local currency in real time at the point of sale. This expedites the transaction for the consumer, who then does not have to wait for receipt of the credit card statement before the conversion amounts are known. It is a value‐added activity for both merchant and consumer. Some T&E merchants offer to convert the transaction into the cardholder's home currency. This means the merchant—and not the card company—is converting the currency. If the merchant supports DCC, the card companies require that the consumer is provided a meaningful choice at the point of sale and have the right to buy the purchase in the local currency or home currency. The card companies also require merchants offering this service to inform the consumer of the exchange rate including any applicable commission being charged.

ExpressPay

The contactless American Express card for transit, tolls, and other proximity payments. (Source: American Express)

Data Management

The control of data‐handling operations, such as acquisition, analysis, translation, coding, storage, retrieval, and distribution of data, but not necessarily the generation and use of data.

Domain Name

The conventional Internet name for a network or computer system, which consists of a sequence of two or more groups of characters separated by periods; e.g., the ʺgovinst.comʺ groups of characters in the host name ʺwww.govinst.com,ʺ where the ʺ.comʺ is the first‐level domain name (or top‐level domain name), and the ʺgovinstʺ characters represent the second level. In the United States, nonprofit organizations are identified (with exceptions) by the suffix ʺ.org,ʺ government entities by ʺ.gov,ʺ educational institutions by ʺ.edu,ʺ commercial organizations by ʺ.com,ʺ and military bodies by ʺ.mil.ʺ Outside of the United States, domain names contain an ISO‐standard country code suffix to indicate the computer or network's country of origin. (Source: Federal Standard 1037C, Telecommunications: Telecommunications: Glossary of Telecommunication Terms)

Data security

With the increase in merchants using point of sale systems (not just a terminal) comes an increase in the likeli- hood that you will experience a data breach at a retail merchant. Diligence should be used in ensuring software and hardware in use is PCI compliant and that your merchant follows proper procedures and guidelines for protecting cardholder data.

Check Imaging

The conversion of the paper check to digitized images at various points along the collection stream, eliminating the need for paper -hand-offs.

Finance Charge

The cost of consumer credit expressed as a dollar amount.

Cost of Goods Sold (COGS)

The cost of direct materials, direct labor, and overhead attached to the units sold. The amount of money required to produce and distribute products or goods, including the cost of sales personnel to solicit and consummate a contract with a merchant.

Decline

The denial of a transaction either online or during stand‐in or a telephone authorization.

Contactless Chip with dCVV/CVC3

The dCVV (Visa) and CVC3 (MasterCard) technology is a unique transaction identifier that is generated based upon public key/private key technology in combination with use of a contactless chip (discussed in the Contactless Chip Payments section). This transaction code is transmitted to the issuer for decryption and comparison to authenticate that the transaction being generated came from a valid card.

Expiration Date

The date embossed on a bank card or imbedded in a chip card beyond which the card becomes invalid.

Effective Date

The date on which a card is activated or new terms or programs take effect.

Capture Date

The date on which an acquirer processor processes a transaction for settlement and clearing.

Deposit Date

The date on which an acquirer receives the transmission receipt from the merchant. Also, the date when the merchant receives his funds.

Effective Entry Date

The date on which the originator requests that ACH transactions be posted to the originator's and receiver's accounts.

Acquirer's Processing Date

The date upon which the transactions are submitted into interchange for clearing and settlement.

Due Date

The day a payment is due to the creditor.

Entitlement Date

The day that benefits are issued to recipients.

Fraud

The deliberate act of misrepresentation of facts in order to obtain funds or goods illegally. Also, programs or schemes used to extort funds from consumers or banks.

EBT (Electronic Benefits Transfer)

The delivery of annuity and public assistance benefits via the application of plastic card technology.

Cardholder Profile

The demographics of a cardholder's portfolio.

Door Reader

The device on a door that communicates with an ID card or credential and sends data from the card to the control panel for decision on access rights. An example is a card used in a university environment. (Source: Smart Card Alliance)

Controller

The device that captures and consolidates transactions from a group of terminals to be transmitted to another node or entity. For example, the POS devices in all lanes of one store are first transmitted to one store controller and then transmitted to an acquirer.

Cash Flow

The difference between incoming cash and outgoing cash.

Discount Rate (Credit/Debit)

The discount rate is the fee paid by merchants to credit card processors as a fee associated with accepting general-use credit cards (such as Visa, MasterCard, American Express and Discover). Typically this fee runs between 1 percent and 3 percent, depending on the nature of the transaction.

Effective rate

The effective rate of a credit card processing statement is the total processing fees divided by total sales volume.

EDC (Electronic Data Capture)

The electronic collection, formatting, and storage of data such as customer name, account number, and amount of purchase.

E-Check

The electronic equivalent of a paper check.

Data Transmission

The electronic exchange of information between two data processing points.

Door Strike

The electronic lock on each door that is connected to the control panel. (Source: Smart Card Alliance)

Electronic Bill Presentment and Payment (EBPP)

The electronic presentation of statements, bills, invoices, and related information sent by a company to its customers and the corresponding payment for goods and services.

ECP (Electronic Check Presentment)

The electronic transmission of the contents of the MICR (magnetic information character recognition) line of each check, with the physical items to follow.

Close Batch

The end‐of‐day or end‐of‐shift process in which the merchant balances and submits transactions for clearing and settlement. This process occurs on a terminal‐based capture system. On a host‐based capture system the host automatically generates the process at a predetermined time of day.

B2C (Business to Consumer)

The exchange of goods and services between a business and a consumer.

B2B (Business to Business)

The exchange of goods or services between one business and another business.

Benefit Security Account

The food stamp account or the cash account offered through the federal Benefit Security Program.

Fault Tolerance

The extent to which a functional unit continues to operate at a defined performance level even though one or more of its components are malfunctioning. (Source: Federal Standard 1037C, Telecommunications: Glossary of Telecommunication Terms)

Federal Trade Commission (FTC)

The federal agency responsible for enforcing the Truth in Lending Act (Regulation Z), of which the Consumer Leasing Act is a part, among leasing companies, finance companies, and lessors not regulated by other federal agencies. The Federal Trade Commission also performs other functions related to its role of ensuring that the nation's markets function competitively, enforcing other statutes affecting consumer financial services, and enforcing the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices.

Federal Program Agency (FPA)

The federal agency that implements congressional legislation and effects policy decisions of the Executive Branch.

Equal Credit Opportunity Act (ECOA)

The federal law enacted in 1974 that requires that all U.S. financial institutions make credit available equally to all creditworthy customers regardless of age, marital status, race, color, religion, or national origin. Also called Regulation B.

Federal Register

The federal publication in which all public‐record government regulatory actions and procedures are published, including requests for comment and final regulations and actions. The date of publication in the Federal Register is often considered the effective date of many regulatory actions.

FDIC (Federal Deposit Insurance Corporation)

The federal regulatory agency that, among other things, insures funds on deposit at member banks.

Federal Information Processing Standard (FIPS)

The federal standard for processing information, including encryption and security features.

AVS and switch fees

The fee is charged when your business utilizes the Address Verification Service to check that the address provided by a cardholder matches the address on file with the credit card company.

Acquirer

The financial institutions that directly or indirectly enter into contractual relationships with merchants for the acceptance of plastic cards as a form of payment and for maintaining and servicing such relationships.

Authorization (AUTH)

The first of seven stages in processing a bank card transaction. In this stage, the merchant issues a request to charge the amount to the cardholder's card. The card issuer or an authorized agent, such as an authorizing processor or a stand‐in processor, references the cardholder's account status and credit limit and approves or denies the transaction.

Credential

The general identification device (both the physical device and the data it holds), commonly referred to as the ID token in physical access control systems. (Source: Smart Card Alliance)

Entitlement

The government program benefits given to qualified members of a specific group.

Cycle

The grouping of cardholder accounts to provide for a distribution of workload and easier account identification.

Confidentiality

The guarantee that a message will be legible to no one other than the intended recipient.

Guest Folio

The guest file of a lodging or cruise line merchant.

Batch Header Ticket

The identifying form used by the electronic submission merchant to indicate a batch of sales or credit slips (usually one dayʹs transactions).

Deposit:

The submission of a transaction receipt by a merchant to an acquirer, resulting in a credit or debit to the merchant's Visa account.

Charge Volume

The sum of dollars transacted on American Express Cards, usually either within a particular sales establishment or group of sales establishments. This information is available by month and by type of card. (Source: American Express)

Co-Signer

The individual who has shared in the responsibility for the credit debt.

Disclosure

The information required by federal or state law (see Regulation Z) to be relayed to the cardholder concerning terms of the credit agreement or fees and conditions associated with any kind of payment card. Disclosure must be made by the issuer before the first use of the card by the cardholder and must be included on all monthly statements and other documentation mentioning finance charges and/or fees. The same principle applies to contracts with a merchant. All fees and charges must be fully disclosed before charges are made and agreed upon by both parties contractually. Some items to be disclosed include: interest rates (annual and periodic); amount, types, and timeline of fees; method of calculating finance charges; credit line; and any terms affecting billing.

Downgrade

The interchange downgrades that occur when a transaction does not meet all of the criteria set forth by the card companies to qualify for the best possible interchange rate. Visa and MasterCard examine each transaction as submitted and qualify or downgrade it based on the set of criteria established and presented.

EMV

The international smart card standards group made up of Europay International, MasterCard International, and Visa International.

Cardholder Master File

The issuer's record of all cardholder accounts. The file contains information on each account, such as name, credit line, and account status.

Check Digit

The last digit of an account number or transit routing number on a check that may be calculated using an algorithm, usually MOD 10, and may be used to test the validity of a card, check, or instrument.

Credit Cap

The limit on the dollar amount of credit transactions that a company can originate from an account or entity.

Debit Cap

The limit on the dollar amount of debit transactions for an account or entity.

Barium Ferrite

The magnetic technology that uses this chemical in the composition of the ID credential to store data and make data available to the reading device. (Source: Smart Card Alliance)

Headquarters/Head Office

The main operating office of a national retail chain through which all communication, supply orders, and funding are managed.

Eyeballs

The marketing measurement indicating the number of people who have looked at an ad or magazine to determine circulation. Also, a term that describes usage of a Web site for projection of possible shoppers.

Decryption

The mathematical process of unencoding encrypted information so the original message or information can be used.

Hexadecimal

The mathematical term that refers to a Base 16 numbering scheme.

Credit Limit

The maximum amount the cardholder may owe to the issuer on the card account at any time.

Floor Limit

The maximum dollar amount for a single bank card transaction that may be conducted without authorization at specified merchant categories. Visa and MasterCard have eliminated most floor limits in the US.

Activity Limits

The maximum dollar amount, maximum transaction count, or both that can be authorized against a card.

Credit Rating/Grade

The measurement of a consumer's or business's credit worthiness. Normal grades are A through E.

Acquiring Member

The member of MasterCard or Visa that holds the liability for merchant relationships and in return receives all bank card transactions from the merchant. This term can also be used to describe the disburser of funds in a cash disbursement.

Card-Issuing Bank

The member of Visa and/or MasterCard and/or Discover, licensed under the rules and guidelines of the respective card companies to solicit, contract with, issue, and manage cardholder programs for the express purpose of extending credit, or facilitating debit access instruments through a depository account. With regards to prepaid, the card issuing bank does not extend credit but provides an account whereby funds must be loaded prior to performing transactions. Also called card issuer.

Demand Deposit Account (DDA)

The merchant bank account that the acquirer/processor credits or debits for deposits, fees, and adjustments. Also used by consumers for funds access. Funds can be accessed by check, debit card, or the Automated Clearing House (ACH). Also called a checking account.

Capture Method

The method by which transactions are captured at the point‐of‐sale. The options are terminal or host capture.

Back Office Conversion

The method of converting checks in the back‐officecinto electronic means for clearing. BOC will allow retailers and billers that accept checks at the point‐of‐sale or at manned bill payment locations to convert eligible checks to ACH debits in the back‐office. BOC became available to the market on March 16, 2007. Rules regarding BOC maintain proper consumer notification, provide the consumer with proper customer service information and allow the consumer to opt‐out. Checks with values over $25,000 and checks with auxiliary on‐us fields are ineligible.

Brand

The name, logo, symbol, slogan, jingle, or character that is intended to identify a product or service. Brands can provide a guarantee of product safety and quality and offer predictability and consistency over time and space. MasterCard calls their logo on the plastic payment card their "brand."

Authorization System

The network and system used to effect an authorization of the payment instrument for a purchase. The system has parameters and criteria set up by the issuer of the instrument that, when met, will approve or deny the transaction.

DUNS

The number issued by Dun & Bradstreet to identify various companies, originally for credit reporting and information purposes.

Chargeback Period

The number of calendar days from the central processing date of a transaction receipt during which the issuer may exercise a chargeback right. The number of days varies from 45 to 180 days, according to the type of transaction.

Days Outstanding (DSO)

The number of days between the time a transaction occurs and the time that funds are collected. (Source: American Express)

Bank Routing Number

The number uniquely identifying a bank for payment processing. This number consists of the first nine digits that appear across the bottom of a personal check. Also called the transit routing number and the ABA transit routing number.

Eighty-Twenty (80:20) Rule

The observation that 80 percent of sales come from 20 percent of customers. Sometimes called the Parento Principle after the 19th‐century economist who showed that income is unevenly distributed in society.

BankNet

The online financial network service by which MasterCard delivers authorization, clearing, and settlement services to its members and their agents. BankNet separates communications processing from financial applications processing, allowing an unlimited variety of financial applications to transmit messages over a single network.

Customer Service

The operational department that services the cardholder and the merchant. The customer can write, call, or go online with questions about billing, payments, processing, and disputes. This department services or supports the client on processing issues and typically is separated from the help desk, which is a technical support group.

EFT (Electronic Funds Transfer)

The order, instruction, or authorization of any transfer of funds initiated through an electronic terminal, telephone, computer, or any other electronic means.

Grace Period

The period from the statement date of the last bill to the due date of the current bill, during which a recipient does not have to incur a late charge or interest charge; primarily for those without a revolving balance.

Cardholder

The person or entity that has been issued a credit, prepaid or debit card and is responsible for compliance with the rules of engagement as contracted with the card‐issuing body. This information is provided in the card's terms and conditions.

Entrepreneur

The person who assumes the financial risk of the initiation, operation, and management of a business or undertaking. He/she is primarily a financial and/or professional risk taker.

Claim

The personal injury, property losses, damages (including indirect, consequential, special, or incidental damages) losses, suits, claims, expenses, costs (including attorney's fees), or any other liability, under any theory whatsoever, including without limitation, tort, or contract.

Bank Ledger Day

The point at which a bank closes out the current day's transactions and begins the next business day.

Card Base

The population of cardholders, especially in the context of a singlecard family.

Monthly volume

applications typically request the average monthly volume and a peak season volume. Sales beyond these volumes may indicate risk problems or may warrant adjustments in account set up to off set merchant growth. Larger than expected volumes in the first month may be an indicator that the merchant has past sales they are trying to process, a bust-out scheme, or that the application was erroneous or false. The volume should also be balanced against similar merchants. Larger volumes than similar merchants may be an indicator of risk and should be investigated.

Header

The portion of a message or batch of transactions that contains information used to guide the message to the correct destination. In the case of batch processing, the header is the summary record indicating the number of items and the total amounts. Used for reference and reconciliation.

Dual Dating

The practice of embossing cards with valid from and expiration dates as a fraud‐deterrent measure.

Cycle Billing

The preparation of monthly cardholder statements by group (cycle) for the purpose of evenly distributing the workload and receipt of cardholder payments.

Buy Rate

The price at which an ISO can buy services. A sponsor quotes a buy rate to an ISO, which then can mark up the price and sell the service or product at its own rate. The difference between the buy rate and the sales price quoted by the ISO is income to the ISO.

Bundled Fees

The pricing scenario that includes all transaction processing fees as well as interchange reimbursement fees. Typically referred to as the discount rate, it can be expressed as a percentage plus a per‐item fee. Also called bundled pricing and bundled fees.

Combined Warning Bulletin

The printed list of blocked numbers published jointly by Visa U.S.A. and MasterCard International. This list was discontinued in April 1994.

Enrollment

The process by which a customer establishes a relationship with a provider of bill, gift card, biometrics programs, or any program in which the consumer must initiate the exchange of payment and personal information in order to participate.

Aging

The process by which account receivables are classified by the amount of time that has passed since the date of the invoice. It is used for the purpose of determining delinquency, ranging from current to charge‐off status.

Electronic Check Imaging

The process by which the merchant or financial institution can scan, capture, and store a duplicate image of a check. The check then can be cleared using the ACH format and process.

Automated Bill Payment

The process for crediting funds from a consumerʹs bank account to a creditor's account for the payment of a consumerʹs bill or obligation.

Credit Authorization

The process of accessing a network and a database to verify that the customer's credit card is valid and that the credit balance is sufficient to cover the purchase.

Data Mining

The process of analyzing data to determine data relationships undiscovered by previous analyses.

Business Process Management (BPM)

The process of automating payment disputes and investigations.

Check Conversion

The process of converting a paper check to an electronic debit.

Downline Load (DLL)

The process of downloading a software application onto a terminal.

E-Invoice

The process of electronic invoice payment and presentment.

ECA (Electronic Check Acceptance)

The process of electronically submitting and processing a paper check.

Card Production

The process of encoding and embossing cards and rendering them to the customer. The generation of card mailers; merging and mailing of the cards, and insertion of terms and conditions are also handled in this process. To produce a Visa, MasterCard, Discover, American Express, or any regional debit card, the vendor must have an extensive security check and meet compliance regulations for the actual facility. See Card Approved Vendor

Fraud Detection

The process of identifying aberrant transaction characteristics.

Bankruptcy

The process of obtaining relief from debt by filing a claim with a U.S. court. Chapter 7 bankruptcy allows the individual to claim a total lack of assets; this type usually does not allow the collection of any debt from the creditor. Chapter 13 bankruptcy involves the reorganization of the filer's personal finances; some creditors will be paid. Chapter 11 bankruptcy involves the reorganization and alignment of a corporation's debt.

EBPP (Electronic Bill Presentment & Payment)

The process of paying a bill online, e.g. with electronic banking products.

Embossing

The process of placing raised data, such as account numbers, cardholder names, and expiration dates, on an access card for automatic or manual reading.

Boarding

The process of processing and adding new accounts to the system. Traditionally when adding new merchant relationships, paperwork includes individual information for each type of service being utilized, such as American Express, Discover and Check services. The data entry required adding each service to the data base individually, then mailing or faxing the application directly to the service, such as American Express, for them to add to their database. This process could take up to three weeks to set up thus holding up progress on setting up a merchant. New "Boarding" systems have been developed that allow a single point of data entry and then transmission of the relevant data to the appropriate party, e.g. American Express information to American Express. This service is also called "single point of entry." Note that for the new Discover acquiring method, Discover merchants would be added with MasterCard and Visa and would not require this additional paperwork.

Digital Wallet

The software that provides the equivalent of a wallet for electronic commerce. Also called an e‐wallet, it holds digital money that is purchased similar to travelers' checks. A wallet may also hold credit card information or checking account information along with the associated digital certificate that authenticates the cardholder.

Demographics

The specific geographic attributes of a business, market segment, or product usage area.

Encoding

The process of recording magnetized data on an access card's magnetic stripe. The available ABA tracks on which to encode data are Track 1 (read only-alphanumeric; includes card number information, expiration date, and name); Track 2 (read only-numeric; includes card number, expiration date, security information such as PIN offset, and service codes for usage parameters); and Track 3 (numeric read and write capability; used in early offline ATMs and no longer widely used; has limited ability to store balances and velocity in simple arithmetic formats).

Fraud Prevention

The process of screening and implementing risk management procedures to mitigate fraud losses.

Batch Close

The process of sending transactions to the processor for clearing and settlement. Also, end‐of‐day closing or terminal balancing.

Gross Deposit

The process of submitting bank card sales and credits at the face amount. The acquirer later deducts the discount rate, also called a window discount. The acquirer takes the risk of prefunding but typically charges for the cost of funds.

Clearing

The process of submitting transactions to the respective card company (Visa, Discover, AMEX or MasterCard) for interchange processing, the fourth in the seven stages of processing. This presentment of the transactions is also a request for payment in the settlement process. The back‐end processor has received the captured transactions from the front‐end processor. The back‐end processor performs edit checks and risk management procedures on the transactions to look for possible rejects. The back‐end processor then formats the merchant deposit and sends the transactions to the card companies for actual interchange among the members.

Escheatment

The process of turning over unclaimed or abandoned funds or property to a state authority.

Debit Block

The process used to restrict debits to a demand deposit account, generally limited to business accounts.

Sales Volume

The quantity or number of goods sold or services sold in the normal operations of a company in a specified period.

Burn Rate

The rate at which a company—typically a start‐up company— consumes its capital. Also called run rate.

Draft Storage

The storage of sales drafts after processing for possible future reference or retrieval. The drafts can be stored at the processor, the acquirer, or the merchant.

Archiving

The storing of files, records, and other data for reference and backup.

Fraud-sales-ratio

The ratio of total fraudulent sales volume to total interchange sales volume, expressed as a percentage.

Fraud Ratio

The ratio of total fraudulent transactions to total sales transactions, expressed as a percentage.

PIN debit transactions

The regulations for PIN debit and the PIN debit network rules allow for cardholder disputes in certain instances. You should be aware of these regulations and understand the potential impact on your business.

Authorization Approval

The response by the issuer to an authorization request that approves the transaction.

Credit Policy

The risk management guidelines detailing criteria to be evaluated before the issuance of a card to a cardholder or the approval of a merchant for card acceptance. The policy defines the acceptable level of risk for the portfolio.

Fraud Risk

The risk that a payment transaction will be initiated or altered in an attempt to misdirect or misappropriate funds.

Future delivery

The risk with transactions dependent on the future delivery of goods and services is that the chargeback period may be quite lengthy. Examples include household furniture and/or appliances, membership dues, home renovation/ remodeling, or service contracts. If the merchant goes out of business prior to delivery or completion of services and is not capable of covering the returns/chargebacks, the acquirer will absorb loss.

Clearing and settlement fees

clearing denotes all activities from the time a commitment is made for a transaction until it is settled.

Digital Money

The same as digital cash, but can also involve the use of software‐based secure credit card transactions

Cryptography

The science of ensuring that messages are secure.

Electronic Federal Tax Payment System (EFTPS)

The service formed to expedite and automate tax payments using the ACH Network.

Charge-Off

The situation in which the issuer is faced with a delinquent loan of such severity that it must absorb the amount of debt, at least temporarily, in order to clear the amount from its ledgers. The issuer may still attempt to collect some or the entire amount owed through the recovery process.

Bank Identification Number (BIN)

The six‐digit number assigned by the card company to identify a member (issuer or acquirer processor) for issuing, authorization, clearing, or settlement processing. The issuer assigns the six digits as the first six digits of the card number. The acquirer assigns the six digits as the first six digits of the merchant number.

Element

The smallest item of information in a transaction set.

Hardware Security Module (HSM)

The smart card application used to manage the physical security of hardware.

American Standard Code for Information Interchange (ASCII)

The standard code used for information interchange among data processing systems, data communications systems, and associated equipment in the United States. ASCII code is an alphabet used in computer machine languages and represents the standard PC character set.

Bulk Data

The technical specifications for mainframe‐to‐ mainframe computer transmission of files between a financial institution and the Federal Reserve Bank.

mobile payment solution

consists of a device and software application (typically a smart phone application and card reader) that process transactions with a debit or a credit card via a cellular (wireless) data network. Examples include Payment Jack and Square.

Card Acceptance Agreements

The term used by American Express to mean the merchant contract.

Data Storage Entities (DSE)

The term used by MasterCard to describe all entities that store MasterCard account data on behalf of merchants, such as Web hosting providers and payment gateways.

Account Data Compromises (ADC)

The term used by MasterCard to describe security violations to card and account data.

Disparity

The term used for a form of suppression when a merchant allows placement of competitor POP (point‐of‐purchase) but not American Express POP. (Source: American Express)

Consumer Cards

The term used to identify all personal credit and debit cards.

Funds Availability

The time at which the funds from an electronic funds transfer are made available to the customer or merchant.

Float

The time between a transaction and the actual settlement or posting of funds to cover it. Float is also the cost of not having money available to reinvest in a business. For example, not having access to your money means you may have to find other ways to obtain it, such as borrowing. In addition, the opportunity to invest those funds is lost when access to that money is not available. The longer one waits to receive the money, the more it could cost the business. (Source: American Express) For prepaid card issuers, float is the money held on deposit until spent by the cardholder. There is usually a delay between such time where interest is earned by the bank issuer.

Emerging Markets

countries in the process of rapid growth & industrialization

Activity

The transactions that appear on a cardholder's bill or a merchant's monthly statement.

CDPD (Cellular Digital Packet Data)

The transfer of data via unused bandwidth normally used by mobile phones between 800 and 900 MHZ. Speeds of up to 19.2 kbits/sec are possible.

Assignment

The transfer of rights and obligations to another person or entity.

Class A Certification

The type of certification by an acquirer processor by which an online help desk is used to support the download and support of the POS application. This certification includes the message authentication formats used in Class B certification.

ABA Transit Routing Number

The unique number devised by the American Bankers Association (ABA) in 1910 that identifies the bank issuer of depository accounts. It is a 10‐digit number (nine digits and a verification digit) issued by the Federal Reserve Bank to identify each bank by a bank identification number. This number (also called the ABA number and the routing transit number) has changed over the years to accommodate such things as the Federal Reserve System, the advent of MICR, and the implementation of the Expedited Funds Availability Act (EFAA). It is used both in check processing and in the ACH (Automated Clearing House) routing of electronic checking account debits. The number is usually the first sequence of numbers preceding an account number at the bottom of a check.

Deposit Information

daily account of the month's transaction information

Check Fraud

The use of a paper check or checking account to obtain funds illegally.

Credit Deposit

The value of a merchantʹs credit card purchases that are credited to its bank account after the acquiring bank buys the merchantʹs sales slips; also called deposit credit. The deposit is credited but not funded until the acquiring bank gets the monetary value from the issuer during settlement.

Book Value

The value of an asset as it is written in the accounts of a company, as opposed to the real market value.

Brand Identity

The vision or personality that companies want their products and services to convey.

Authorization fee

The voice authorization fee applies when you use a telephone dial-up service for transaction authorization. A fee is charged for each call that is made. Voice authorization is useful in the event your terminal or software malfunctions or your internet connection isn't working.

Debit Identifier

The word DEBIT displayed on the front of all consumer debit and prepaid cards.

Fair Market Value (FMV)

The worth of a product or company in a marketplace. In leasing terms, the fair market value is used at the end of the lease to calculate remaining debt on the lease.

Direct Billing Costs

These costs include the costs of invoicing (statement creation and issuance), collecting funds (e.g., through a lock box), reconciling balances and handling basic disputes and non collections. (Source: American Express)

Bank Card Service Provider (BSP)

Third parties, including independent sales organizations and member service providers, that provide merchant and cardholder services for issuers and acquirers.

Farm Bill

This federal legislation passed in 1990 required the U.S. Department of Agriculture to issue regulations to establish EBT as a food stamp delivery option.

Equity

Value when business debts are subtracted from the business current market value. For example, if debts amount to $100,000, but the business could sell for $300,000, then the business has $200,000 in equity. The residual value of a business or property beyond any mortgage thereon and liability therein.

Alert Merchants

Those merchants that have more than 8 percent of their sales dollars labeled as fraud transactions in two consecutive months. Acquirers must terminate or assume chargeback liability on all fraud for one year.

Tiered

Tiered pricing gets its name from the fact that there are multiple tiers set up to determine the price associated with the transaction.

Electronic Funds Transfer Act

Title IX of the Consumer Credit Protection Act establishing the basic rights, liabilities, and responsibilities of consumers using electronic money transfer services and of financial institutions offering those services.

Card Activation

To activate a credit card for usage, the cardholder typically calls a number indicated on a sticker on the mailed plastic card and verifies some account information or calls from the home phone number where the activation is automatic. To activate a debit card, the cardholder can also use the card in an ATM before utilizing the card in a POS. A prepaid or gift card typically is activated when the card is purchased at the point‐of‐sale. If the prepaid card is provided in the mail or via an employer, then the card will require a phone call to the issuer for activation.

Dues and Assessments

To be an acquiring or issuing member of Visa and/or MasterCard the financial institution must pay annual membership dues and quarterly assessments. The dues are based on the asset size of the financial institution. The assessments are based on the dollar size of the issuing portfolio or the dollar amount of merchant sales transactions. Dues and assessments fund MasterCard and Visa services and operations, including licensing, patents and copyrights, operating regulations, national and international settlement and authorization systems, the interchange network, product development, advertising and promotion, and risk management services. Discover and American Express have similar assessments.

Enhancement Services

Value‐added services (such as an extended purchase warranty) that increase the bank card program's appeal to the cardholder.

Encode

To convert data using a code, frequently one consisting of binary numbers, in such a manner that reconversion to the original form is possible. To convert plain text to cipher text by means of a code. To append redundant check symbols to a message for the purpose of generating an error detection and correction code. (Source: Federal Standard 1037C, Telecommunications: Telecommunications: Glossary of Telecommunication Terms)

Co-Sign

To sign a credit agreement with someone and share the debt with that person. The co‐signer has liability if the primary or other person defaults. This practice is common for first‐time credit applicants, especially parents for their children.

Download

To transfer a copy of a file residing on a remote computer to a userʹs computer. In the world of electronic processing, this term refers to the passing of programming information and parameters from a terminal driving processor to an electronic data capture terminal. This transfer is typically accomplished by phone from a computer program or by directly connecting a terminal to a computer or to another already programmed terminal.

Exceptions

Transactions that are in some way abnormal. In the case of bank cards, exceptions can be questionable charges and chargebacks.

Enhanced Transaction-Level Data

Transaction‐related data provided through a card company to an issuer in connection with a commercial, purchasing, fleet or business card program. Such data may include: accounting code, sales tax, description of items purchased, cost per unit, number of units, vehicle fleet data (vehicle/driver ID, odometer reading), and detailed itinerary information (airline, origination/destination, class of travel).

Bank Wire Transfer

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

Digital Cash

Two main mechanisms that download "digital coins" to a personal computer from a participating bank that set up a digital money account with a bank. Both encrypted forms of cash can be sent to merchants for payments.

Cardholder Fraud

Types of fraud include fraudulent applications that use fake or misleading information to obtain a credit card illegally; lost and stolen cards that are used to obtain goods or services illegally; counterfeit cards; magnetic‐stripe fraud, which involves the re‐encoding of card information on the magnetic stripe, thus allowing the transaction to not match the embossed information; fraud perpetrated by a cardholder who claims that his/her card is lost when actually it is being used by the cardholder to make purchases.

ETA (2) (Electronic Transfer Accounts)

U.S. Treasury accounts to be used at participating financial institutions for the express purpose of electronic benefits transfer. These accounts have specific regulations and standards.

Agent

Under the law of agency, a person authorized by another (known as the "principal") to act for the principal. Agents can include processors, independent sales organizations, third‐party servicers, independent contractors, and financial institutions engaged by a bank card member to provide services or act on its behalf in connection with payment services. For example, an independent sales organization may have a contractual relationship with a bank card member to sell and service retail merchants, thus becoming an agent of the member.

Excessive Chargeback Program Reporting

Under the revised Excessive Chargeback Program (ECP) Standards, each calendar month an acquirer is responsible for calculating the chargeback‐to‐transaction ratio (CTR) in basis points for each of its merchants.

Activity File

Used by Visa's VisaNet Integrated Payments system (VIP) or MasterCard's BankNet system to track an issuer's stand‐in‐processing approval responses within a four‐day period.

Data Encryption Key (DEK)

Used for the encryption of message text and for the computation of message integrity checks (signatures).

Breakage

Used in prepaid cards and travelers' checks to represent the amount of prepaid funds that the purchaser did not use. These funds are assumed by the issuer, processor or program manager.

Dial-up POS System

Uses a dial-up connection to process payments

ACH Fraud

Utilizing the automated clearinghouse network to access funds illegally. Some ACH fraud categories include: unauthorized transactions; returns/60‐day right of recredit; consumer fraud against merchants; fraudulent use of stolen bank accounts; transaction‐level fraud; and merchant‐level fraud.

Excessive Chargeback Program

Visa and MasterCard programs which monitor and alert acquirers when a merchant approaches or reaches high volumes of chargebacks. Warnings, alerts, and fines may be imposed if thresholds are exceeded.

Card Association

Visa is a member‐based organization formed to manage the rules, regulations, and process of interchanging plastic card transactions. Their membership consists of issuers, which are responsible for the management and issuance of plastic debit, prepaid and credit cards. MasterCard was an Association until 2006 when they changed the company structure and became a public company. Visa plans to combine Visa Canada, Visa International and Visa USA into a single private stock company, Visa Inc. late in 2007. Visa Europe will remain a membership association and will become a licensee of, and own a minority interest in, Visa Inc.

General Packet Radio Service (GPRS)

Wireless technology replacing CDPD for speed and accuracy.

Daily or monthly discount

With monthly discount, your processor deducts fees from your account in one lump sum once a month. With daily discount, your processor charges fees daily throughout the month as well as at the end of the month.

IP Terminal

does the same thing as a dial terminal except that the terminal communicates transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's connection to the internet.

EBT

electronic acceptance of government benefits (e.g., food stamps and/or cash). These cards are generally accepted at grocery stores.

PIN Pads / PIN Entry Devices (PEDs)

electronic devices used in debit or smart card-based transactions to input and encrypt the cardholder's Personal Identification Number (PIN)

Repeat or excessive authorizations

evaluate authorization logs to help determine whether your merchant has software problems that cause repeated authorizations or whether your merchant is being targeted by a fraudster seeking to find good card numbers. Monitoring excessive authorizations is also a way to help your merchant avoid brand fees associated with non-settled transactions.

credit card

allows the cardholder to buy goods and services based on the cardholder's promise to pay for these goods and ser- vices at a later date

Debit

an ATM bankcard, also known as a check card, that allows a merchant to deduct money directly from a consumer's bank account. The use of a true debit card requires the cardholder to enter a PIN to complete the transaction.

Restaurant

an eating establishment where food and drink are being sold to customers

PIN pad

an electronic device used in a debit or smart card-based transaction to input and encrypt the cardholder's PIN (personal identification number). The PIN pad is required so that the customer's card can be accessed and the PIN can be securely entered and encrypted before it is sent to the transaction manager of the switch or the bank.

cardholder

an end user or consumercard issuer is any banking institution that provides credit or debit cards to a consumer. Examples of card issuers include Chase, Capital One, Bank of America and credit unions.

Independent Sales Organization (ISO)

an organization or individual registered with a card brand (Visa or MasterCard), and has a payment card relationship with an acquirer or issuer to perform functions on behalf of the acquirer or issuer (i.e., the ISO soliciting merchant accounts, arranging for terminal purchases or leases, providing customer service, and soliciting cardholders). Examples of ISOs include Total Merchant Services and North American Bankcard.

payments processor

a company (often a third party) appointed by a merchant to handle payment card transactions for acquiring banks. There are two types of processors: front-end and back-end. Front-end processors have connections to various card issuers and supply authorization and capture services to the acquiring banks' merchants. Back-end processors accept settle- ments from front-end processors and, via The Federal Reserve Bank, move the money from the issuing bank to the merchant bank. Examples of payments processors include Global Payments, First Data, Chase Paymentech, TSYS, and Elavon.

service provider, more commonly known as a merchant service provider (MSP)

a company or organization that provides transaction processing solutions to merchants; any sales office that offers payment services to merchants.

wireless terminal

a device that processes transactions with a debit or a credit card via a cellular (wireless) data network, typi- cally powered by battery pack.

Point of Sale (POS) terminal

a device that processes transactions with a debit or a credit card, via a telephone line or Internet connection, typically powered by a power cord.

Gift card/loyalty programs

a magnetic-stripe or smart (chip) card that replaces traditional paper gift certificates. The program is based on gift card usage that generates points in exchange for products and services.

Internet Gateways

a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be provided by a bank to its customers, but can be provided by a specialized financial service provider as a separate service, such as a payment service provider.

Checks

a negotiable paper document drawn against deposited funds exchanged with a merchant for payment of products or services.

card brand

a network of issuing banks and acquiring banks that processes brand-specific payments. The best known card brands are Visa, MasterCard, American Express, Discover, JCB and China UnionPay.

Check reader

a payment automation device that reads the MICR (Magnetic Ink Character Recognition) information on checks.

virtual terminal

a payment gateway service provider allowing merchants to accept credit card and electronic check pay- ments through their website over an IP (Internet Protocol) connection.

Internet solution

a processing method using a secure web server that provides an interface for merchant websites and shopping carts that require real-time transaction processing. Depending on the merchant's software they can connect to a frontend via either an SSL server or payment gateway to get a real-time credit card authorization.

Quick Service Restaurants (QSR)

a specific type of restaurant that serves fast food cuisine and has minimal table service.

Deposit Item Summary

a summary of the month's transactions

Mobile solution

allows a merchant to accept credit cards using a cell phone with or without a card swipe mechanism.

Chargeback monitoring

if your merchant is receiving a lot of chargebacks, you should quickly evaluate the reason codes behind the chargebacks and question the merchant's practices. Increased chargebacks may mean your merchant's business is in financial distress, is experiencing supplier issues, or has gone rogue and is committing fraud, potentially against the consumer. This is especially the case if the chargebacks are for unauthorized charges, services not received, or duplicate transactions.

ECM (Excessive Chargeback Merchant) Merchant

is defined as any distinct merchant location, whether a merchant's physical location or a merchant's Internet site or uniform resource locator (URL) that is uniquely identified by the acquirer in the transaction record. If a merchant location has a CTR (chargeback‐to‐transaction ratio) in excess of 50 basis points and at least 50 chargebacks in a calendar month, then MasterCard considers the merchant a Chargeback‐Monitored Merchant (CMM). If a merchant location has a CTR (chargeback‐to‐transaction ratio) of at least 100 basis points and a minimum of 50 chargebacks in each of two consecutive calendar months (the "trigger months"), then MasterCard considers the merchant an Excessive Chargeback Merchant (ECM).

Header Information

merchant's business information

Large dollar or excessive credits

monitoring credits is a good way to gauge the satisfaction of your merchant's customer with the products and/or services sold. Excessive credits may indicate money problems at your merchant. Large dollar credits may be an indicator of a merchant utilizing the card schemes to layer money amongst their various accounts. It is required that all credits have an offsetting sale. Credits without an offsetting sale may be an indicator of employee theft, merchant system hack, or a fraudulent merchant. Frequent credits for large amounts may be an indicator of money laundering.

Percentage keyed vs. swiped

monitoring the percentage of swiped transactions vs. keyed transactions is a simple way to tell whether your merchant has shifted from retail to MOTO (mail or telephone order) or internet. If you see more keyed transactions than indicated and subsequently approved on the application, you should talk with your merchant to understand why transactions are being keyed. Increased key-entered transactions may also be an indicator of factoring or money laundering where the cards are not present.

debit car

provides the cardholder electronic access to his or her bank account(s) at a financial institution.

Wireless terminal

provides the ideal solution for businesses seeking the most effective way to complete credit card transactions off-site. Most wireless credit card terminals support credit and debit transactions and are equipped with an internal PIN pad. Wireless terminals can be used on the countertop or in a mobile environment.

Maximum ticket

risk systems must monitor the average ticket and a maximum ticket. Transactions above the maximum ticket may be an indicator of misinformation during the application process, a change in the merchant product, cardholder fraud, a bust-out scheme, or perhaps collusion and should be reviewed and possible investigated.

Lodging

sleeping accommodations, furnished rooms to rent for the night

acquiring bank (or acquirer)

the bank or financial institution that processes credit and/or debit card payments for a mer- chant. Examples of acquirers include HSBC and Wells Fargo.

Landline terminal

the card is swiped through a magnetic strip on the terminal, which connects to the processor's computer.

Settlement/Discount

the month's transactions sorted by card type and fees associated

Retail

the selling of goods directly to the customer; face-to-face transaction

Mail Order/Telephone Order (MOTO) or Internet

the selling of goods online; non-face-to-face transaction (ANY Card Not Present environment)

Transaction Counts

the total number of transactions that are processed within a merchant account.

Virtual Terminals

the web version of a physical credit card terminal or Point-of-Sale (POS) machine

Check 21

this is the process of capturing a check at the point of entry (can be point of sale scanner or a picture on a mobile phone). The check image is transmitted to the issuer and paid through the settlement process.

Check Guarantee

this is the process of issuing approval codes for check acceptance for merchants. With Check Guarantee, if a check is returned to a merchant for any reason and they followed the proper acceptance procedures, they are automatically credited for the 'bad' check and collection efforts are pursued directly with the check writer. While this process is better than regular check verification, the cost is higher.

Check Verification

this is the process of issuing verification codes for check acceptance for merchants. With Check Verifica- tion, if a check is returned to a merchant, they are typically not reimbursed by the processor. Collection efforts will be made on behalf of the merchant at an additional cost, however there is no 'guarantee' of payment on uncollected items. Therefore, this service is less expensive than Check Guarantee.

ACH Debit

this is the process whereby the consumer gives a pre-approval to have funds debited from either their checking or savings account. This is not a real-time transaction and can be subject to non-sufficient funds rejection.

Credit / refund

to credit a refund, press the screen button next to refund, swipe the customer card, input return amount, press enter, and print merchant receipt.

Void Last Sale

to void the last sale, press the screen button next to void, choose last, verify transaction information on the display screen, then press enter. The transaction will be voided and a receipt showing the void will be printed.