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Glossary
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WHY the Smiley? Lots of people ask us “What in the heck does a SMILEY FACE have to do with Credit Card Processing and why does everything TMC does, have a Smiley attached to it?”- we love the question and here is the simple answer. MOST business owners do not find JOY in working with their credit card processor- in fact, quite the opposite! So when we decided to take care of businesses and their processing needs, we knew we had to be different. The SMILEY FACE sends a certain message: We are glad to see you, hear you, work with you and to be of service. We CARE about you and we will do everything we can to put a smile on your face. Credit card processing is one of the products we provide but Taking Care of People and delivering a SMILE WORTHY experience is who we are and WHY we do what we do.
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Glossary

Table of Contents

A

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

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

A financial institution that is a member of Visa and/or MasterCard and maintains the merchant credit card processing relationship. The acquirer receives all transactions from the merchant to be distributed to the issuing banks.

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

Advanced Programming Interface – APIs allow users to program to a pre-constructed interface, instead of individually programming a device or piece of software.

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

MasterCard International, Visa U.S.A. or Visa International, which are licensing regulatory agencies for bankcard activities.

Automated Teller Machine – an unattended computer terminal that performs basic teller functions when a cardholder inserts a card into the ATM and enters the correct PIN. Typical functions include dispensing cash, accepting deposits and loan payments, and accepting account transfers and inquiries. Also used by credit cardholders for receiving cash advances.

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

The process by which a transaction is approved by the issuer or by Visa/MasterCard/Discover on behalf of the issuer. Permission is given to (or denied) the merchant, via the acquirer, to accept a specific transaction from the cardholder account. An authorization indicates only that the card is valid and that sufficient funds are available on the cardholder’s credit limit at the time the request is made.

The numerical code designated by the issuer, assigned to a sales transaction as verification that the sale is authorized.

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

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

The average dollar amount of sale for credit card transactions.

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

B

Business to Business – refers to one business communicating with or selling to another.

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

A financial statement that lists assets, liabilities and net worth as of a specific date.

A group of approved credit card transactions, usually accumulated during one business day.

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

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

The speed at which a PC or terminal modem transmits data through the telephone line.

Bank Identification Number – a unique series of numbers assigned by Visa/MasterCard to a member institution, which identifies that institution in transaction processing. The BIN comprises the first six digits of a standard credit card number.

C

An authorization request response displayed on the credit card terminal screen, generated by the issuer or through stand-in processing. The merchant must then call for a voice authorization. If an approval is given, the user must enter the approval code manually into the POS device as a “forced transaction” or “post-authorization.”

Receiving and storing transaction data at the processor’s host computer, to be submitted later for processing and payment.

A type of card transaction in which the card is not present at the point of sale for the magnetic stripe to be read. These are considered higher risk transactions.

Input device on a card terminal that translates the information stored on the magnetic stripe on the back of a card.

The person to whom a payment card is issued, or an additional person authorized by the original cardholder to use the card.

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

A chargeback that results when a cardholder contacts the card issuer and refuses to accept a charge appearing on a monthly billing statement. A cardholder has 90 days to initiate a chargeback.

A transaction in which a cardholder obtains cash in person at the branch of a member financial institution or ATM. This is the only method of receiving cash from a credit card that is approved by the bankcard associations.

A challenge to a transaction initiated by the issuer or cardholder that is returned to the acquirer for resolution.

The amount assessed by the acquirer for processing chargebacks.

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

A bankcard that can be used with a PIN at an ATM or without a PIN at the point of sale, also known as an offline debit card. When used at the point of sale, the transaction is processed through interchange as a credit card transaction with the funds debited from the cardholder’s checking account.

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

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

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

Card Identification Number/Card Identifier – An American Express and Discover verification process that utilizes a non-embossed three- or four-digit number printed when authorizing credit card transactions where the physical card is not present. On American Express cards, the CID is a four-digit code printed on the front of the card. On Discover cards, the CID is a three-digit code printed next to the card number in the signature panel.

If the POS device reads “Lost or Stolen Card,” or “Pick Up Card” or a similar message, the merchant should call the authorization center for a Code 10 Authorization. The operator will ask questions to determine if the transaction is valid.

Formal name for the following three types of cards:

  • Corporate Card: usually issued to the employees of a large corporation where the corporation assumes all liability for the card’s usage.
  • Purchasing Card: issued to corporations. It allows the corporation numerous parameters to control daily and monthly spending limits, total credit limits and where the card may be used. Many employees may be issued the same card number.
  • Business Card: similar to the Corporate Card, but issued to a business with fewer employees. Each employee is responsible for his or her purchases.

Compliance to the Visa and MasterCard regulatory bylaws. Also, a method of resolving a dispute between members if no chargeback reason code applies. The challenging member must prove financial loss due to a violation of MasterCard or Visa rules by the other member.

A plastic card which has been fraudulently printed, embossed or encoded to appear to be a genuine bankcard, but which has not been issued by a Visa or MasterCard member. It could also be a card which was originally issued by a member, but was subsequently altered without the issuer’s knowledge or consent.

A plastic card with a credit limit used to purchase goods and services and to obtain cash advances on credit. The cardholder is then billed by the issuer for repayment of the credit extended.

Commerce Service Provider – an organization that hosts commerce software applications on its own servers within its own facilities.

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

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

 

D

The scrambling of data so only the intended users can read and understand the encrypted information.

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

Demand Deposit Account – a checking account.

A bankcard used to purchase goods and services and to obtain cash, which debits the cardholder’s personal checking account. During online debit transactions, the cardholder must enter a PIN.

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

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

The fees charged by the card acquirer to the merchant for processing payment card transactions.

Derived Unique Key Per Transaction – a method of PIN pad encryption.

 

E

Electronic Commerce – the sale and purchase of goods or services over the Internet.

Electronic Benefits Transfer – the automation of government benefits through electronic authorization, data capture and settlement processes. Plastic cards with magnetic stripes are used, eliminating paper benefits and coupon distribution.

Electronic Cash Register – a cash register that also emulates a point-of-sale terminal for processing credit card transactions.

Electronic Draft Capture – the use of a point-of-sale device to authorize and settle credit card transactions.

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

Method of scrambling data to protect sensitive information.

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

 

F

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

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

A security tool that prevents file access through the Internet. It ensures the safety of cardholder information.

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

A number assigned by a lodging merchant for tracking a guest’s charges.

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

The process of identifying suspicious merchant or cardholder activity.

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

G

Manages the electronic connection between consumers and their financial institutions and transmits data.

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

 

H

A declined authorization attempt resulting from a lost or stolen card, pick-up card, etc. A Code 10 call should be made by the merchant to the authorization center.

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

A laser-created photograph that uses a three-dimensional image that is difficult to duplicate. Used as an anti-counterfeiting measure on many payment cards.

 

I

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

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

The exchange of transaction data between acquiring and issuing institutions.

Fees paid by the acquirer to the issuer to compensate for transaction-related costs. MasterCard and Visa establish interchange fee rates.

Internet Protocol – the method by which a computer or terminal identifies itself on the internet. IP-based terminals such as the Omni 3700 series use a unique IP address to authorize transactions via a broadband internet connection rather than a dialup phone line.

Internet Service Provider – an organization that provides access to the Internet.

The financial institution and member of Visa or MasterCard that holds contractual agreements with, and issues cards to, the cardholder.

L

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

Level III 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.

A service that processes payments by check and credits the appropriate business.

M

A panel located on the back of a payment card containing magnetically encoded cardholder account information.

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

An order system that allows you to receive credit card payments without the cardholder’s signature. This is a card- not-present account in which the merchant and cardholder do not have to be in the same location. Examples include a catalog company or the order of flowers by phone. Both of these would have a MOTO account allowing them to accept orders by mail, telephone, or fax.

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

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

The documentation of monetary transactions (i.e., sales drafts, credit slips, computer printouts, etc.).

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

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

Store owner or seller of products.

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

Magnetic Ink Character Recognition – the bank routing and transit, checking account number and check number encoded at the bottom of a check that can be used to authorize the check.

Merchant Identification Number – The identification number assigned to a merchant by the acquirer.

The rate assigned to a transaction which has met only some of the qualification criteria set forth by the issuer or association. Usually a key entered transaction that has the AVS information entered during the transaction.

 

N

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

Any transaction in which the card is not presented, such as a phone, mail or Internet purchase.

The rate assigned to a transaction which has failed to meet many or all of the qualification criteria set forth by the issuer or association. This is the highest rate category and thus the most costly.

 

O

Debit transaction that occurs when a Visa/MasterCard check card is authorized through the credit card system and the amount is debited from the cardholder’s checking (DDA) account.

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

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

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

 
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P

The Payment Card Industry (PCI) Data Security Standard (DSS) is being utilized worldwide by MasterCard, Visa, Discover and American Express to fight debit and credit card fraud by imposing strict security standards on how cardholder data is handled and kept. Failure to comply with PCI DSS and any subsequent breach of card data within a merchant’s site, may result in substantial fines and potentially, the inability to accept card payments.

An access number that is dialed to reach an outside line.

An issuer’s electronic response to an authorization request, asking that the card be retained by the merchant and returned to the issuer. Also appears as PIC UP.

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

Point Of Sale – the location at which a payment card transaction occurs, usually by way of a device such as a credit card terminal or cash register.

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

A card issued by a merchant that can only be used in the issuing merchant’s business. An example would be a department store credit card.

The fees associated with the processing of credit card transactions.

A company responsible for processing interchange transactions – operated by an acquirer or acting on the acquirer’s behalf.

A payment card used by companies to replace paper invoices.

 

Q

The transaction fee rate assigned to a transaction which has met all the criteria for a “perfect” transaction; i.e., a qualified transaction gives a merchant the best possible rate. Transactions that do not meet all of the criteria can be downgraded to a “mid-qual” or even a “non-qual” rate.

 

R

Random Access Memory – short-term memory for a computer or payment card terminal.

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

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

The message received from an issuing bank when an attempt for authorization requires a call to the Voice Authorization Center.

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

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

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

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

 

S

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

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

Standard Industrial Code – A universal four-digit code that designates a merchant’s industry type. Similar to an MCC code.

A payment card with a built-in microprocessor (chip) that stores information. Smart cards can be used for stored-value cards, credit cards, loyalty programs and security access.

A declined authorization attempt that does not necessarily mean the card is bad (i.e., call referral, issuer unavailable or cardholder over limit). These transactions may be resubmitted a day or two later in an attempt to obtain a valid authorization.

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

Secure Sockets Layer – An established security standard that is used to encrypt data in order to protect the safety, privacy, and reliability of payment data transmitted over the channel between shopper and merchant. SSL encrypts the channel between browser and Web server so only the intended parties can read certain data, such as payment or customer information.

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

T

Cards that are developed for, and used primarily in, travel-related services.

An airline, car rental company or lodging establishment with a primary function of providing travel-related services.

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

Selling goods or services over the phone, for payment by credit card.

Terminal Identification Number – number identifying a merchant to the front-end network.

Track One information, stored on the magnetic stripe on the back of a card, has the cardholder’s name in addition to the account number and expiration date stored in it.

Track Two information, stored on the magnetic stripe on the back of a card, has the account number and expiration date.

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

The actual date on which a transaction occurs.

The amount a merchant pays per transaction for processing.

V

Also known as your Merchant ID Number. This number is unique to your business and is one of the ways we identify your business within our database. Keep this number handy – we will ask you for it should you need to call in for assistance.

The date embossed on a payment card stating when the card may first be used.

Value Added Reseller – A third-party that certifies their software to be used on a processor’s system.

Verified by Visa (VBV), a system used by Visa’s 3D Set technology, and SecureCode,utilized by Mastercard,as additional layer of security for online credit card transactions. This means, that a transaction using Verified by Visa/ SecureCode will initiate a redirect to the website of the card issuing bank to authorize the transaction either using private personal details kept by the bank, a user-chosen password, or, even more securely, a one-time password.

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

Transactions authorized by a voice operator. Voice-approved transactions must be “forced” into a terminal batch for settlement.

When a transaction is cancelled out of a processing system PRIOR to settlement; virtually erasing the transaction.

 

Z

Requires that all transactions receive authorization.

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