Glossary

A nine-digit identification number assigned to member financial institutions and banks by the American Banker's Association (ABA). The number is used to identify the financial institution or bank associated with a customer's bank account.

The malicious practice by untrustworthy persons or fraudsters to use stolen bank account information to purchase merchandise, or by a legitimate account holder to purchase merchandise with the intention of returning it used or modified for refund. ACH fraud also occurs when account holders falsely dispute transactions they authorized. Chargeback or Return fraud occurs with paper and electronic checks.

A financial institution or Merchant Service Provider (MSP) that facilitates and manages credit card processing on behalf of a merchant customer.

The bank or financial institution that holds the merchant’s bank account that is used for collecting the proceeds for credit card processing.

The credit card processing entity with which an Acquirer partners in order to provide merchants with transaction clearing, settlement, billing and reporting services.

A system established by the credit card processing associations to verify customer billing addresses submitted with e-commerce payment transactions. Though AVS does not verify the legitimacy of a transaction, Card Not Present merchants can use AVS to accept or decline transactions based on the validity of the billing address information provided by the customer.

A national organization that represents American financial institutions, banks and other financial entities. Members are assigned an identification number, or ABA Transit Routing Number.

A computer communication protocol that facilitates the transfer of or access to information between two separate software or computer applications.

A practice or procedure to verify the identity of an individual or organization. There are varying levels of authentication for accepting payments. Examples include checking a customer’s driver’s license when accepting payment at retail or validating a customer login and password at a merchant Web site.

The response from a card issuing bank to a merchant’s transaction authorization request indicating that payment information is valid and funds are available on the customer’s credit card.

The transaction amount that is submitted to the card issuing bank for funds approval. This amount is reserved against the available balance of a customer’s credit card until the transaction is captured, a subsequent Void transaction is submitted, or the 30-day window for the authorization expires.

A credit card transaction request to authorize and capture, or settle, funds for a purchase. The payment gateway submits the request to the card issuing bank for authorization and upon approval, will automatically submit the transaction for settlement.

A code assigned to a credit card transaction by the card issuing bank once the transaction has been approved.

The group of financial institutions and similar entities within the banking industry that work together to facilitate the processing, clearing, delivery and settlement services for electronic check transactions.

The ACH Network is governed by ACH Rules as defined by the National Automated Clearing House Association (NACHA).

Acquirer Processing Fee

The account number assigned by a bank to a checking or savings account holder. This information must be provided to a merchant by a customer in order to make an electronic check payment.

This indicates the type of bank account used for an electronic check transaction. For example: checking, business checking or savings.

A payment card issued to a consumer by a financial institution or bank; a credit or debit card.

A group of financial institutions or banks that have formed an association for issuing bank cards. Usually a bank card association will work together along with other payments entities to provide certain bank card offers.

An identification number assigned by Visa to each of its member financial institutions, banks and processors.

A group of transactions that have been gathered over a certain period of time and are submitted together to the appropriate processing networks for clearing and settlement.

Refers to the electronic infrastructure that provides a high-speed, continuous connection to the Internet.

A credit card transaction request to capture funds that were previously authorized, but NOT via the payment gateway. For this type of transaction, the merchant will submit the authorization code that was previously received from the issuing bank through some other means than a payment gateway request, e.g., by telephone.

Credit card issuing entities such as Visa and MasterCard that govern and oversee the use of credit cards for payment transactions.

A Card Code is a three- or four-digit number that appears on the back of a credit card (on the front for American Express). This code may be used to validate customer information on file with the credit card association.

A hardware device that facilitates the reading and transmission of payment information stored in the magnetic stripe on a credit, debit or stored-value card.

A consumer to which a credit or debit card is issued by the credit card associations or by the consumer’s bank.

The cardholder authentication programs Verified by Visa and MasterCard® SecureCode™ are security programs created by the card associations to provide identity authentication for Visa and MasterCard cardholders, and transaction protection for merchants. By registering for these programs, merchants can minimize the risk of chargebacks and returns while providing optimal security for their Visa and MasterCard customers.

A claim made by a cardholder that an unauthorized purchase or transaction was performed on their credit card.

A chargeback is a type of return that occurs when an account holder claims they did not authorize a transaction, when the account holder and the customer are not the same person (i.e., identity theft), when the authorization was not properly obtained from your customer or when your customer does not recognize a transaction.

A risk management process that verifies the trustworthiness of an electronic check transaction against an extensive high risk or bad check database.

The account number assigned by a credit card association or card issuing bank to a cardholder. This information must be provided to a merchant by a customer in order to make a credit card payment.

A unique identification value assigned to a customer by a merchant, which may be associated with the invoicing or billing for a transaction.

Indicates the Internet Protocol (IP) address of a customer’s Web browser, or the IP address from which a transaction is submitted to the payment gateway.

Transactions that are not approved by the card issuing bank are marked as declined. No further action may be taken for declined transactions.

An electronic file containing unique information that is used to verify the trustworthiness of an organization or individual. Digital Certificates are issued by a Certificate Authority, and are used with the Secure Sockets Layer (SSL) protocol.

Describes a check or bank account payment that is submitted and/or processed electronically.

The date on which the validity of a credit card expires. Transactions will only be approved for credit cards that are not yet expired.

The malicious practice by untrustworthy and dishonest persons to use stolen personal information, credit card information, and/or compromised bank account information for personal gain; not limited to the purchase of merchandise, the submission of fraudulent transactions, or the abuse of a merchant’s purchase policies or e-commerce Web site to check the validity of stolen payment information.

An organization that sells business products or services to merchants and/or acquires merchants on behalf of various types of merchant service providers.

The process by which all parties involved in a credit card transaction (i.e., processors, acquirers, issuers, etc.) manage the processing, clearing and settlement of credit card transactions, including the assessment, and collection and/or distribution of fees between parties.

An organization or business that provides Internet services and resource management to businesses and consumers.

A unique identification value assigned to a transaction by a merchant, which may be associated with order fulfillment and billing for a transaction.

A financial institution that issues credit cards to consumers on behalf of the card associations.

A security program created by MasterCard® to provide identity authentication for cardholders and transaction protection for merchants. By registering for MasterCard® SecureCode™, merchants can minimize transaction risks while providing additional security for their MasterCard customers.

A program created by MasterCard® stating its technology and sensitive data security requirements for merchants and merchant service providers. Compliance is required of its member institutions.

The person or business entity that sells goods or services to a customer.

A financial institution or bank account that is used by a merchant specifically for the purpose of collecting proceeds consumer bank account or credit card payment transactions. A Card Present (CP) merchant account is used by merchants that receive payments in a physical location where payment is physically presented to the merchant by the customer at the time of the transaction. A Card Not Present (CNP) merchant account is used by merchants that receive payments electronically or in situations where payment is not physically presented to the merchant by the consumer at the time of the transaction.

A financial institution, or bank, that provides a financial account to a merchant for the purpose of collecting proceeds from consumer bank account or credit card payment transactions.

An identification number assigned to each member merchant of an acquiring organization, such as a financial institution, Independent Sales Organization (ISO), Merchant Service Provider (MSP) or processor.

A flat monthly service fee charged by Authorize.Net in the event that a merchant’s transaction processing fees for the month do not exceed the flat monthly fee amount. For example, if the merchant's Minimum Monthly Fee is $20.00, and the merchant’s transaction processing fees (i.e., per-transaction fees and discount fees) for the month total $17.50, the payment gateway will charge the merchant a Minimum Monthly Fee of $2.50 to make up the difference. If the merchant's transaction processing fees for the month exceed $20.00, the fee is not charged.

Network Access and Brand Usage Fee

A system of technologies and processes that allow merchants to electronically submit payment transactions to the payment processing networks (i.e., the Credit Card Interchange and the ACH Network). Payment gateways also provide merchants with transaction management, reporting, and billing services.

A unique number that is issued to an individual or organization by a financial organization or related service—or other type of service provider—for the purpose of authenticating user identity and granting secure access to accounts or information.

The flat fee charged to a merchant by the payment gateway for each transaction and batch settlement processed. The transaction types for which the per-transaction fee is charged are: charges, refunds, voids and declines.

A term used in the payments industry that refers to the physical location where a payment transaction takes place. POS is also used to describe credit card payment acceptance systems that are designed for the place of sale, such as card swipe terminals.

A piece of electronic equipment that is used by a merchant to submit credit card payment information to the processing network. Like terminals, these devices are connected to the credit card processing network via dial-up telephone connection or Broadband. POS devices also include Personal Digital Assistants (PDAs), Smartphones, and wireless electronic devices capable of transmitting credit card payment information via wireless Broadband connection.

A POS device, system or software manufacturer or distributor that provides POS products or services to Card Present (retail and mobile) merchants.

An entity in the credit card processing network that handles the posting of transactions for authorization, clearing and settlement to consumer credit card accounts at the card associations, and the settlement of funds to merchant bank accounts. Processors may also provide merchants with billing and reporting services.

The submission of a transaction on a recurring or periodic basis, typically for an ongoing billing or subscription-based payment activities.

An Internet protocol that safeguards electronic communications between two or more computers. When transmissions are sent over an SSL connection, data is encrypted and cannot be modified in transit by other parties on the Internet.

Web sites that use SSL technology are indicated by an “https” in their Web address, and a lock icon at the bottom right of the browser window.

For credit card transactions, settlement occurs at the completion of transaction processing between the involved financial institutions and processing entities, and funds for the credit card transaction have been successfully deposited into the merchant’s bank account.

The transaction amount sent to the credit card processor or the ACH Network for settlement. This is the amount that will be posted as a charge or refund against the specified method of payment, and for credit card transactions, may be less than or equal to the amount originally authorized for the transaction.

An Internet or software company that provides e-commerce tools and payment form solutions for merchant Web sites.

A payment card, similar to a debit card, attached to a limited monetary value, held either in an account by a card issuer, or in an electronic chip embedded within the card. Gift credit cards are a type of stored-value card.

A piece of electronic hardware, or a device, that is used by a merchant to submit credit card payment information to the processing network. Terminals are connected to the credit card processing network via dial-up telephone connection or Broadband.

An identification number assigned to each POS device by a merchant’s processor. This number provides the processor with information about the device’s configuration and capabilities.

The exchange of information, goods or services in which all participating parties benefit. Specifically, the exchange of a consumer’s payment or payment information for merchandise or services provided by an organization or business.

The process of evaluating a service applicant’s financial history and credit trustworthiness to determine whether to grant a service account. In some cases, underwriting may also determine an applicant’s financial obligations, such as services pricing.

An independent or other sales organization that provides merchants with various services and/or solutions for enhancing their business practices or transaction management.

A security program created by Visa to provide identity authentication for cardholders and transaction protection for merchants. By registering for Verified by Visa, merchants can minimize the risk of chargebacks and returns while providing additional security for their Visa customers.

A secure, easy-to-use Authorize.Net solution that allows retail, or “brick and mortar” merchants, to manually submit transactions using a computer with Windows Internet Explorer, and a MagTek USB HID card reader.

A Merchant Interface tool for manually keying in and submitting transactions.

A program created by Visa stating its technology and sensitive data security requirements for merchants and merchant service providers. Compliance is required of its member institutions.

Transactions of this type are used to cancel original charge transactions that have not yet been submitted for batch settlement. For this type of transaction, the merchant must submit the transaction ID of the original charge transaction against which the Void is being submitted. No further action may be taken for Void transactions. To cancel a transaction that has already settled, a refund must be submitted.

An organization or business that provides the technology and infrastructure for hosting business or consumer Web sites and services.