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Glossary Terms

• ACH (automated clearinghouse)

  1. A form of electronic payment. ACH is designed to be an "electronic check." It is typically used to process high volumes of relatively small-dollar payments for settlement within one or two business days.
  2. The networks of participating organizations that use the ACH network settle and clear electronic debit transactions through the automated clearinghouse.

• Acquiring Bank (Acquirer)

  All merchant accounts must be sponsored by a bank that is a member of the card associations (Visa & MC).They are responsible for depositing the funds into your checking account.

• Approval Code or Authorization Code

  The 6-digit code returned to the merchant upon approving a transaction.

• Authorization

  An authorization is a request to charge a cardholder. It reduces the cardholder's open-to-buy but does not actually capture the funds.

• Bank Card

  A Visa or MasterCard credit card. It is called a bank card because it is issued by a bank, unlike an American Express or Discover card, which are issued directly.

• Batch

  A collection of credit card transactions saved for submission at one time.

• Batch ID

  Once a batch is settled, it receives a batch ID. Every transaction in the batch shares this ID. If a transaction does not have a batch ID associated with it, the transaction has not been settled.

• Capture

  An action in which an electronic credit card sale transaction is submitted for financial settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive their funds.

• Clearing

  The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position. Clearing and settlement occurs simultaneously.

• CVC2 (card validation code 2) & CVV2 (card verification value 2)

  VISA and MasterCard implemented a security feature known as “CVV2” and “CVC2”. These are the three-digit numbers printed on the back side of the card (signature panel) to the far right. The three-digit code helps validate that the cardholder has the card in his/her possession, and the account is legitimate. You can include the code in your transaction and expect to receive a “match” or “no match” response. If you are using a shopping cart, make sure it is capable of collection these numbers. You are also not allowed to store these numbers. American Express may also have a four-digit security code that should be on the front of the card above the account number. Discover Card also has a three-digit code very similar to Visa/MC in the same location.

• Debit Card

  A financial instrument used by consumers in place of cash. Unlike a credit card, debit card purchases are deducted automatically from the cardholder's account.

• Internet/MOTO Merchant

  A merchant that takes credit cards over the Internet, phone or through the mail.

• In House Credit Underwriting

  This is where the merchant account provider (ISO/MSP) writes the merchant accounts within their own company (in house).

• Issuing Bank

  The bank that maintains the consumer's credit card account and must pay out to the merchant's account in a credit card purchase.

• Merchant Account (MID)

  The MID stands for a number assigned to a merchant to identify the merchant to the ISO, third-party processor and acquirer.

• PIN (personal identification number)

  Personal identification number used by a cardholder to authenticate card ownership for ATM or debit card transactions. The cardholder enters his/her PIN into a PIN pad. The PIN is required to complete an ATM/Debit card transaction.

• Prior Authorized Sale

  A transaction for which authorization was obtained at an earlier time.

• Recurring Transactions

  A transaction in which a cardholder has given a merchant permission to periodically charge the cardholder's account such as your Internet provider.

• Referral

  The message displayed on the POS terminal when an electronic attempt for authorization is denied and must be authorized by calling the Voice Auth. Center.

• Settlement

  The process by which transactions with authorization codes are sent to the processor for payment to the merchant.

• Smart Card

  A plastic card containing a computer chip that can store electronic "money." It's similar in function to a prepaid calling card but is available for all purchases.

• TID (terminal ID)

  The number assigned to a credit card transaction device (such as a POS terminal). It identifies the merchant’s equipment to the processor and bankcard data transport networks. A TID is also used for payment gateways and other software applications.

• Travel and Entertainment Card

  Credit cards that typically require payment in full each month, such as American Express, Discover Card, Dinners, etc.

• Void

  The reversal of an approved transaction, one that has been authorized but not settled. Settled transactions require processing of a credit in order to be reversed. A void does not remove any hold on the customer's open-to-buy.

• Voice Authorization or Voice Auth

  Associated when an issuing bank sends a "Please Call” message to the merchant instead of an authorization number and the merchant must make a phone call.