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 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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