Glossary
- Acquiring Bank
- The financial institution that conducts business with merchants who
accept credit cards. The bank buys the merchant's sales slips and credits
the monetary value to the merchant account.
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- Batch
- A collection of credit card transactions saved for submitting at one
time. For merchant account processing, transactions are stored up during
working hours and sent to the credit card processor in a batch to be
executed at the end-of-day (or other time period).
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- Capture
- The submission of a credit card transaction for processing and settlement.
Thruogh this, customers' credit card purchases are debited and the merchant
is credited. Once a transaction is sent by the merchant to their credit
card processor, transaction details are forwarded to the customer's
credit card company and then the credit card company's bank before the
transaction is "captured," and payment is initiated.
Card Absent/ Manual Entry- Credit card information that is manually keyed-in through a computer
or terminal key pad as opposed to being swiped though a terminal.
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- Card Present/ Swiped Card
- Credit card information that is entered electronically by swiping
the card through the terminal.
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- Certificate authority
- A certificate authority is a private company that issues digital certificates.
Certificate Authorities conduct a thorough background check on the validity
and credit of a business, as well as vouch for a business' right to
use their company name and Web address.
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- Chargeback
- A reversal against a sale that was credited to the merchant's account.
Chargebacks are usually the result of an error made by the card holder's
bank, a misunderstanding by the customer, or fraud. The merchant must
provide proof that the goods and services in question were provided
to the customer.
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- Credit card identifiers
- Credit card identifiers include the credit card number and the expiration
date of the card. For some transactions (in particular, Internet transactions),
identifiers may also include all or part of the customer's address.
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- Digital certificate
- A digital certificate is provided to a business by a certificate authority
after undergoing a thorough background investigation. A digital certificate
provides a business with a protected Server ID that can be used in conjunction
with encryption technology to guarantee the security of a transaction.
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- Discount rate
- A small percentage fee of the total credit card sales volume per month
(usually ranges from 1.5% to 3.5%). Rates are often lower the higher
the monthly sales volume. Rates may be higher if you have bad credit
or your industry is high risk. Usually, point-of-sale terminal transactions
offer the lowest Discount Rate.
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- EFT (electronic funds transfer)
- Transfer of money initiated through electronic terminal, automated
teller machine, computer, telephone, or magnetic tape. In the late 1990s,
this increasingly includes transfer initiated via the Web. The term
also applies to credit card and automated bill payments.
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- Encryption
- Credit card information is encoded into an unreadable format and sent
across the Internet in the form of data packets. It can only be decrypted
by the intended server. This means that when a customer provides their
credit card identifiers to a secured Web site, that information cannot
be intercepted or decrypted by anyone other than the intended server.
128-bit SSL encryption has never been broken, though it requires Netscape
V3.0 (or Internet Explorer 3.02) or higher; 40-bit SSL is slightly less
secure, but can be accessed by older browsers.
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- ISO
- An Independent Sales Organization (ISO) is registered through Visa
and MasterCard to set up credit card merchant accounts. ISOs represent
banks or third party processors.
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- Issuing bank
- This is the bank that maintains a consumer's credit card account and
will pay out to a merchant's account when the consumer makes a credit
card purchase. At the end of the month the issuing bank will bill the
customer for the debt.
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- Leased Line
- A permanent telephone connection between two points that is always
active (as opposed to a private dial connection). The fee for such a
connection is usually a fixed monthly rate). Real-time verification
requires a leased line.
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- Merchant
- A business that has a merchant account to accept credit cards.
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- Merchant Identification Number (MID)
- A number provided by a merchant bank to identify the merchant in a
credit card transaction.
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- Merchant Account Provider
- A merchant account provider may be a third party processor, ISO, MSP,
bank, association or financial service provider (e.g. American Express,
Discover). Each merchant account provider represents a bank and offers
a variety of products and services that enable you to accept credit
cards as payment from customers.
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- MOTO
- Stands for mail order/telephone order. Typically, businesses that
conduct credit card transactions over the phone or by mail are considered
to be riskier than retail businesses that swipe credit cards.
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- MSP
- A Merchant Service Provider (MSP) is essentially a credit card broker.
See ISO.
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- Per transaction fee
- A fee that is charged to process each transaction (usually $0.20 to
$0.60).
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- Point-of-sale terminal
- Point-of-Sale terminals allow a customer to slide their credit card
through a reading device to verify transactions in real-time. Costs
for point-of-sale terminals begin at about $350, but can cost up to
$1,500 for high-end models.
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- Real-time
- The term "real-time" means to incur immediately. For credit
card processing, this means that the validity of a customer's credit
card, as well as their available credit limit can be checked immediately
before processing is accepted. This is extremely important for card-present
and Internet transactions, in which it is difficult and costly to get
back in touch with the customer.
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- Retrieval Request
- A request from a cardholder's bank for information about a charge
which is being disputed. Retrieval requests usually precede a chargeback.
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- Secured server
- A secured server uses security protocols, like SSL, to protect against
outside tampering. Both Internet and non-Internet processing can be
secured and protected. See also digital certificate, encryption and
firewall.
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- Secured Sockets Layer (SSL)
- SSL is used to encrypt and protect data usually on an order from
an online merchants web site. Since the intended client machine can
be identified, only that machine is able to decrypt the transmission.
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- Shopping Cart
- On an e-commerce enabled web site, a method of collecting the items
chosen by a consumer for purchase from an on-line catalog.
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- Third party provider
- A third party provider does not issue a merchant account themselves;
they represent a merchant account provider or series of providers. However,
third-party processors do handle the transaction process, providing
secured service to a point-of-sale terminal, computer, or e-commerce
site, as well as providing a monthly reporting service. Many banks choose
to outsource credit card processing to third party processors instead
of handling it in-house.
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- Touch Tone Authorization Fee
- Usually refers to point-of-sale transactions in which the merchant
must use the phone to verify a customer's credit card (because there
is a processing problem or a problem with the customer's credit card).
Watch for steep fees. Some providers allow a set number of free voice
authorization calls per month.
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