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North American Bancard Glossary

Glossary

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Term Definition
ABA Routing Number

Also referred to as a Transit Routing Number; directs electronic ACH deposits to the proper bank institution.

Access Card

A plastic card given by a financial institution, used in an automated teller machine (ATM) to complete deposits, cash withdrawals, account transfers, and other related account functions.

Access Fees

Fees associated with using the secure server (such as Authorize.Net) to approve and process transactions. Depending on arrangements with the payment gateway processor, a credit card merchant account may also be charged gateway processing fees as a separate line item or as part of the monthly processing fee.

Account Funding Transaction

A term used by Visa to indicate an electronic commerce purchase transaction for the purpose of adding funds to a Visa prepaid account that is posted to a Visa card and includes the transmission of the Account Funding Transaction Indicator.

Account History

The payment and transaction history of an account over a specified period of time, including the number of times the account was past due or over the credit limit.

ACH

See “Automated Clearing House”

Acquirer

A financial institution that maintains the merchant credit card processing relationship and receives all transactions from the merchant to be distributed to the Cardmember Banks.

Acquirers Association

A regional, independent and nonprofit organization that provides training, education and networking opportunities for professionals working in the acquiring side of the bankcard industry, including financial institutions, ISOs, MLSs, equipment vendors and providers of value-added services.

Acquiring Bank

see “Acquirer”

Address Verification

A service in which the merchant verifies the card member’s address, primarily used by Mail, Telephone and Internet merchants. AVS does not guarantee that a transaction is valid.

Address Verification Service

Optional service that helps protect against fraud by verifying the identity of the person claiming to own the credit card. The system will check the billing address of the credit card provided by the user with the address on file at the credit card company. AVS does not guarantee that a transaction is valid.

Affiliate

A member or licensee of Visa International, Visa U.S.A. or an organization associated with a MasterCard member that contributes under the member’s rule or card plan on either the cardholder or merchant side.

Affinity Card

A Visa, MasterCard, Discover or American Express card bearing the trade name or mark of an affinity partner, issued through marketing alliances, an organization, or a collective group (such as a professional association or special interest group). The affinity partner’s name and logo are shown on the card, and the partner then solicits its membership or group for special rewards and promotions. Popular with sporting teams and university alumni groups, affinity cards work like regular credit/debit/prepaid cards and can be used anywhere that the brand is accepted. The card issuer often pays the affinity organization a royalty on charge transactions.

Affinity Partner

An individual that has a relationship with an issuer for the issuance of affinity cards and that is not eligible for membership with either Visa or MasterCard.

Agents

Individuals who sell bankcard services to merchants on behalf of ISOs, acquirers and processors. Also known as merchant level salespeople (MLSs) and independent sales agents (ISAs), most agents are independent contractors. Others are paid employees of ISOs, acquirers and processors. (The Greens Sheet)

American Bankers Association

A nonprofit organization serving the banking industry since its founding in 1875; members include community, regional, and money center banks and holding companies, as well as savings associations, trust companies, and savings banks.

American Express

Also referred to as AMEX, a diversified worldwide travel, financial, and network Services Company founded in 1850. American Express issues credit, prepaid and charge cards that support a broad base of clients and the needs of both consumers and businesses. All American Express cards begin with “3.”

AMEX

See “American Express”

Arbitration

The procedure an Acquirer may use to resolve a complaint with a Card Issuer on behalf of the establishment.

Assessments

Fees paid to MasterCard and VISA for marketing and administrative costs. This is a percentage of the sales passed through interchange.

Associations

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

ATM

See “Automated Teller Machine”

ATM Debit Card

Cards issued to customers who open a checking or savings account at a financial institution to allow them access to their accounts 24 hours a day, 7 days a week, using the ATM. A true ATM card has no MasterCard or Visa logo on it. An ATM card allows you to withdraw cash from checking and savings accounts, deposit to checking and savings accounts, obtain balance information on accounts, transfer funds from one account to another, and make purchases at retail outlets displaying the same regional, national or point-of-sale network logo(s) that are on the ATM card.

Authorization

Approval by, or on behalf of, the card issuer to validate a transaction for a merchant or another affiliate bank. An authorization indicates only the availability of the card member’s credit limit at the time the authorization is requested.

Authorization Approval Code

A number issued to a participating merchant by the Authorization Center that confirms the approval for a transaction.

Authorization Fee

A fee that is charged each time whether or not the request is approved by a transaction is sent to the card-issuing bank to be authorized. Note this is not the same as Transaction fee or Per Item Fee.

Authorization Only Transaction

to ensure that a credit card has a limit high enough to allow a transaction, transactions are created to reserve an amount against a credit card's available limit for intended purchases; an authorization only transaction is intended for a merchant's protection, to ensure that the credit card has a limit high enough to allow a transaction.

Auto-representment Chargebacks

(credit not issued, transaction not authorized, etc.) that were automatically resolved on the merchants behalf without their knowledge or intervention

Automated Clearing House (ACH)

electronic payment networks most commonly associated with payroll direct deposit and recurring payments and is the network most commonly used to settle merchant card accounts. ACH is also the most common way North American Bancard makes and collects payment to and from our sales Partners. Those not participating in the ACH option will be paid by check and need to make alternate payment arrangements for funds due to North American Bancard.

Automated Response Unit

An ARU allows the manual keyed entry and subsequent authorization of a credit card over a cellular or land-line telephone. A business typically imprints their customer's card with an imprinter and then processes the transaction instantaneously over the phone.

Automated Teller Machine (ATM)

An unattended computer terminal that performs basic teller functions: dispensing cash, accepting deposits, cashing checks, accepting loan payments, and enabling a bank customer to order transfers among accounts and make account inquiries. Barclay’s Bank in the United Kingdom deployed the first ATM as a cash dispenser in June 1967. Chemical Bank deployed the first U.S. ATM in 1969 at its branch in Rockville Centre, N.Y. Some machines have more functions and also sell products such as postage stamps, while others are limited-function cash dispensers only. Recently ATMs have been used to image checks thereby automating the check deposit process as well as dispensing prepaid/gift cards.

Average Ticket

The average dollar amount of credit card transactions that the merchant brings in.

AVS

see “Address Verification Service”

Back-end Processor

A data processing company that contracts with acquirers to provide communication and processing systems that connect with the interchange systems for clearing and the ACH systems for settlement services. The back-end processor receives the data, captures items from the front-end processor, formats and submits the items to the card company for clearing and settlement. The back-end processor also handles all chargeback and retrieval processing, the production of merchant statements, and the formatting of the merchant deposit for submission to the depository bank or into the ACH.

Backbilling

A pricing structure where the qualified discount rate for the current month is detailed on that month’s statement and downgrades, transaction fees, and monthly fees are billed on the following month’s statement.

Balance Sheet

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

Bank Identification Number (BIN)

A numerical code assigned to each federally insured financial institution for the routing of transactions and other purposes. ISOs and MLSs board merchants using the BINs of their respective acquiring or merchant banks.

Bankcard

A card, issued by a Financial Institution, which cardholders can use to access their financial resources, such as a checking account or a line of credit. The bankcard is issued by a financial institution that is a member of MasterCard International, Incorporated and/or Visa International/Visa USA.

Bankcard Association

A group of institutions that use a common processing and administrative center for the purpose of sponsoring a bankcard program.

Bankcard Service Provider

A third party association, including independent sales organizations and member service providers, that provide merchant and cardholder services for issuers and acquirers.

Basis Point

One one-hundredth of a percent; one basis point is 0.01% or 0.0001; 10 basis points would be 0.10% or 0.0010; 25 basis points would be 0.25% or 0.0025; 100 basis points would be 1.0% or 0.0100.

Batch

Usually a day's worth of transactions, including sales and credits to be processed by the card processor.

Batch Authorization

A process in which the authorization requests are accumulated and sent at one time for authorization. The resulting responses will also be returned in a grouping, or batch. Batch authorization is particularly effective when real-time authorization is not effective or when the order to ship an item is not requested in a real-time situation.

Batch Authorization Transaction System (

A system designed to allow certain merchants, the ability to batch authorizations on their own time schedules.

Batch Close

The process of sending transactions to the processor for clearing and settlement. Also known as end-of-day closing or terminal balancing.

Batch Header Ticket

The identifying form used by the electronic submission merchant to indicate a batch of sales or credit slips (usually one day's transactions).

Batch ID Number

A sequential number assigned to each submitted batch. Each transaction within the batch shares the same reference number, which is used mainly for reconciliation and retrieval.

Batch Processing

A data processing procedure in which similar input items are grouped for processing, as opposed to real-time processing, which takes place as each transaction occurs. Accumulating the data in advance means that the user cannot influence the processing while it is in progress.

Batch Settlement

An electronic procedure in which the front-end processor consolidates the transactions within a group or batch and forwards the batch to the back-end processor for submission to the card company for clearing and later settlement or payment of funds to the acquirer. The acquirer then funds the merchant’s account for payment.

Bill Detail

Information from a biller that provides line-level information to a customer, including specific billing event information such as credit card charges, telephone calls, or kilowatts used. Also called invoice detail.

Bill Summary

Summary information from a biller that is essential to a consumer to understand what is owed. Typical information may include: amount owed, date due, biller, biller’s account number, summary record, summary, and invoice summary.

Billback

A means of recovering or reducing interchange fees for transactions clearing differently than planned. The processing company passes through the charges to the merchant.

BIN

See “Bank Identification Number”

Bundled Rate

A discount rate is offered to the merchant that includes both the qualified discount rate and the transaction fee. A separate transaction fee is not billed to the merchant. Surcharges are added to the bundled qualified rate as normal.

Buy Rate

The fee associated with the acquiring bank that is equal to interchange (which is paid to the issuing bank) plus the acquiring bank's markup. (The Green Sheet)

Card Issuer

Financial organizations authorized by a regulatory organization to issue credit cards to individual cardholders. Also see Cardmember Bank.

Card Laundering

When a merchant processes sales through his or her merchant account on behalf of another merchant. Laundering violates the terms of merchant agreements, also known as draft laundering or factoring.

Card Member agreement

The card member agreement provides the terms and conditions of a credit card account. Federal law as a consumer disclosure requires this agreement. It also represents a binding agreement between card issuers and their customers. It must include the annual percentage rate, the monthly minimum payment formula, annual fees and dispute resolution processes. Changes in the cardholder agreement can be made, with written advance notice, at any time by the issuer. Cardholders have the right to cancel their cards if they do not accept such changes in terms, and pay off existing balances under the previous account terms in such instances.

Card Present Transactions

Transaction that are made when a credit card is physically present. Merchants are charged different levels of fees by the card transaction processors (such as Visa, MasterCard), depending on the level of fraud risk involved during a transaction. Card present transactions, because the card is available for inspection, are considered less risky and therefore carry lower fees than online or phone transactions.

Card Type

Refers to the brand of card – Visa, MasterCard, Discover, American Express and what type of card – consumer credit, business, check card, rewards, etc.

Card Verification Value (CVV)

The three- or four-digit number typically following the account number, located on the signature panel on the back side of most credit and debit cards, However, CVV numbers on American Express cards appear on the face of the card above the card number.

Card Verification Value 2 (CVV2)

The Card Verification Value 2 is a three or four digit number physically imprinted on the back of the card. CVV2 is used as a security feature, and often is mandatory for card-not-present (MOTO/Internet) transactions. CVV2 data is not embedded in the magnetic stripe.

Card-Not-Present

Card transactions (Internet or MO/TO purchases, for example) for which the customer's card is not physically present and therefore not handled by the merchant. Interchange is set higher on these transactions because there is a greater likelihood of fraud involved during the transaction process.

Cardholder

Also referred to as cardmember. The authorized user to whom a credit card has been issued.

Cardholder Access Device

A terminal, personal computer, or other device that a cardholder uses to initiate an electronic commerce purchase transaction.

Cardholder Bank

The bank that has issued a bank card to an individual, often used to identify the card-issuing bank in an interchange arrangement.

Cardholder Dispute

A dispute initiated by the cardholder which can be in the form of a chargeback.

Cardholder-Initiated Chargeback

A cardholder-initiated dispute in which can be in the form of a chargeback. Reasons for the dispute include: the goods or services were never received; the transaction amount is incorrect; or the transaction is a duplicate. Also called substantive chargeback.

Cardmember Bank

The bank that issued a bankcard to an individual. The term is frequently used in conjunction with interchange arrangements to identify the card-issuing bank.

Cash Advance

The ability to obtain cash from a cash dispenser, or a financial institution in advance, in which the advance will be paid back at a future date. The issuer pays interchange on these transactions to the acquirer for the float on funds disbursed. Cardholders pay high charges for these transactions.

Cash Back

In the credit card industry, cash back refers to a rewards program that returns a percentage of the total amount spent on the credit card over a specific period of time to the cardholder, usually monthly or quarterly.

Cash Card

A cash card is a card loaded with a preset value, which is not linked to an individual’s bank account that can be used to withdraw money from ATMs. Depending on the issuer, a cash card can also be used to make purchases.

Charge Type

The individual kind of card within each card type, also providing a pattern for downgrades. Some card type/charge types are only available for certain MCC/SIC code (certain merchant industry types).

Chargeback

A returned transaction resulting from the lack of adherence to the conditions of the Sales Agreement, Association regulations or Operating Procedures and the resultant debiting of the merchant account.

Chargeback Period

The number of calendar days from the central processing date of a transaction receipt during which the issuer may exercise a chargeback right. The number of days varies from 45 to 180 days, according to the type of transaction.

Check 21

Check 21 is referred to as Remote Deposit Capture because an image of a check is captured and used in place of the original document.

Check Cards

A card tied to a cardholder's DDA bearing the logo of Visa, MasterCard, or Discover. A PIN is not entered at the point of sale and the transaction is assessed through the Visa, MasterCard or Discover Interchange. The transaction does require a cardholder signature, similar to a credit card transaction.

Check Conversion

The process of converting a paper check into the form of an electronic debit.

Check Guarantee

A service that guarantees payment on each check presented, up to a limit defined by the account, provided that the merchant follows correct procedures in accepting the check. The guarantee service collects any returned items, in which the merchant typically follows a stringent set of procedures. See also Check Verification.

Check Imager

A counter-top device used to scan images of checks, according to legal specifications, for electronic clearing and settlement.

Check Imaging

The conversion of a paper check to digitized images at various points along the collection process, eliminating the need for unsecured paper hand-offs.

Check Reader

A hardware device that can be integrated to a terminal or point of sale device that reads the MICR line on a check for authentication, negative file comparison, or truncation.

Check scanner

See “Check Imager”

Check Verification

An authorization service that allows merchants to look into a database to determine if customers have a history of returned checks. Merchants may also add checks that have been returned for nonsufficient funds (NSF).

Cleaning Bank

The bank designated by the member to receive the member's daily net settlement advisement. The clearing bank conducts funds transfer activities with the net settlement bank and maintains the member's clearing account.

Clearing

Exchange of transaction information.

Clearing Account

A checking account set up at a financial institution that will receive a member's credit or debit for net settlement.

Clearing Balance

The balance in an account maintained by a financial institution at a Federal Reserve or correspondent bank.

Client Reference Number

An eight digit number supplied with a credit card transaction. This number is given to the Acquirer along with a retrieval request.

Close Batch

The end-of-day or end-of-shift process in which the merchant balances and submits transactions for clearing and settlement. This process occurs on a terminal-based capture system. On a host-based capture system, the host automatically generates the process at a predetermined time of day.

Code 10

Code 10 calls are made when merchants are suspicious about accepting a credit card. The phrase "Code 10 authorization" is used to avoid alerting the customer to the fact that the merchant is suspicious of their card. The operator then asks the merchant a series of YES or NO questions to find out whether the merchant is suspicious of the card or the cardholder. The merchant may be asked to retain the card if it is safe to do so.

Commercial Cards

Commercial cards are credit cards utilized by corporations/businesses.

Compliance

Compliance to the Visa and MasterCard rules and regulations.

Convenience Card

A prepaid card that replaces cash that is used by consumers purchase a product or service.

Convenience Check

Checks issued by credit or prepaid card companies used is situations that do not take physical credits to allow the cardholder additional access to their line of credit or prepaid card balance.

Corporate Cards

Corporate cards are credit cards utilized by corporations/businesses. See “Commercial Cards”.

Credit

A refund or price adjustment given for a previous purchase transaction.

Credit Bureau

A company that records and sells information regarding payment behavior of consumers and issues credit reports. Also called a credit-reporting agency.

Credit Cards

Can be issued by banks and nonbanks and are associated with such brand names as American Express, Discover Financial Services, MasterCard, JCB International Co. Ltd. and Visa. (The Green Sheet)

Credit Draft

A document evidencing the return of merchandise by a cardmember to a merchant, or other refund made by the merchant to the cardmember.

CVV

See “Card Verification Value”.

CVV2

See “Card Verification Value 2”.

Daily Discount

For a merchant who does not have previous processing, their qualified discount rate is deducted from their batch sales total before their batch deposit is made. At the end of the month, the transaction fees and monthly fees are deducted from the merchant's DDA.

Data Capture

Input of data, not as a direct result of data entry, but instead as a result of performing a different but related activity.

Data Encryption

A security technique in which information is scrambled to protect the data during transmission. Only the intended users can read and understand encrypted information.

DBA

“Doing Business As”

DDA

See “Demand Deposit Account”

Debit

An entry on the record of an account to represent the transfer or removal of funds from an account.

Debit Card

not credit cards or charge cards. When a debit card is issued, the amount is deducted directly from the cardholder’s bank account. There are three types of debit cards: 1-Debit ATM card, 2-On-line Debit Card, 3-offline-debit cards.

Debit Network

Debit Networks transmit transaction data between the Merchant Bank and debit card Issuer. There are a variety of Debit Networks and each network supported by a debit card will have its logo printed on the debit card. Some examples are STAR, NYCE and MAESTRO.

Debit Transaction

A transaction involving a pin based debit card.

Demand Deposit Account

The individual bank account that is credited or debited for deposits, fees, and adjustments.

Dial-Up Terminal

A terminal that, like a telephone, dials the authorization center for validation of transactions.

Direct Marketing

Marketing via a promotion delivered directly to the individual prospective customer.

Discount Rate

The amount a merchant processor charges a merchant to give credit for depositing and handling merchants’ daily credit card transactions.

Discover Card

The Discover Card began as a reward-based card issued by Sears. Since its founding, Discover has grown to over 5 million merchants accepting the card. In 2007, Discover went to an indirect acquiring model by allowing acquiring processors to acquire and sell Discover as part of the MasterCard/Visa package. All Discover Cards begin with a “6.”

Doing Business As (DBA)

Doing Business As; The name under which a business is operating. The DBA name may or may not be the same as the corporate name.

Downgrades

When a transaction does not meet the qualifications for a particular level and it is assessed with an additional fee. For example, if a transaction that would normally be swiped is keyed, that transaction will downgrade and will be assessed accordingly.

Draft Laundering

“Card Laundering”.

DUKPT

Derived Unique Key Per Transaction (DUKPT) is a key management scheme in which for every transaction, a unique key is used which is derived from a fixed key. Therefore, if a derived key is compromised, future and past transaction data are still protected since the next or prior keys cannot be determined easily. EBT- See “Electronic Benefits Transfer”.

E-Check

Type of electronic transactions that debit a checking account.

Early Termination Fee (ETF)

A fee charged for the termination of the merchant account prior to the contract end date.

EFT

See “Electronic Funds Transferring”.

Electronic Benefits Transfer (EBT)

The delivery of annuity and public assistance benefits through the application of plastic card technology.

Electronic Data Interchange (EDI)

A computerized system that allows linked computers to conduct business transactions through a computer-to-computer exchange of standard business data according to agreed-upon data formats.

Electroning Funds Transfering (EFT)

A way of performing financial transactions electronically. The Pulse and Star networks are examples of EFT systems.

Encryption

A security technique in which machine-readable data can be scrambled and must be decoded before it can be processed.

Entitlements

Also known as card types. The credit card processing services provided to an establishment.

ESN (electronic serial number)

a permanent identification number used to recognize mobile devices.

Ethernet Processing

to process over an IP based system.

Exceeded Timeliness

Transaction was deposited late. The authorization date, compared to the processing date, exceeded the time frame allowed for the interchange level for which the merchant is priced.

Expiration Date

The date embossed on the credit card beyond which the card is not acceptable by the establishment at the point-of-sale.

Factoring

See “Card Laundering”.

Federal Reserve

The central banking system of the U.S., comprised of the Federal Reserve Board, the 12 Federal Reserve Banks, the Federal Open Market Committee, and the national and state member banks.

Finance Charge

Fee assessed by the issuer on a cardholder’s ongoing balance, providing the financial institution with income.

Fleet Cards

Private label credit cards designed mainly for repairs, maintenance and fueling of business vehicles.

Floor Limit

An amount of payment at which credit and debit card transactions must be authorized; this amount is specified in each merchant's processing agreement.

Four Tier Pricing

a pricing structure offering four distinct tiers - one qualified rate for credit cards, one qualified rate for check cards, a mid-qualified surcharge, and a non-qualified surcharge.

Fraud Investigation

The process of identifying suspicious merchant and/or cardholder activity.

Front-End

The front-end is responsible for collecting card information in various forms (terminal, gateway, software) and processing it to conform to a specification the back-end can use. The front-end is a kind of interface between the user and the back-end, which allows merchant to request authorization for transactions. Example: Global Payments utilizes the front end Global East, Global Central, and Vital front-end. First Data utilizes the Omaha, North, Nashville, Memphis/Stratus, and Atlanta/Buypass front-end.

Gateway

In payment processing, any network that connects merchant POS terminals with transaction processing and settlement networks, such as the MasterCard and Visa settlement networks. Gateways can also provide related services, including transaction management and reporting. Gateways more commonly refer to an Internet Gateway, such as Authorize.Net, which allow merchants to set up shopping carts or accept transactions when the card is not present.

Gift Card

Type of stored-value card used for payment of products or services commonly issued by retailers and banks. Gift cards are preloaded with a set value.

Guarantor

One who guarantees an obligation and has a legal duty to fulfill it.

High Ticket

Dollar amount of a merchant’s largest sale/transaction.

Hold back

See “Reserve”.

Host Capture

Where cardholder data is stored by the Service Provider.

IC Verify

Now called First Data® Payment Software. ICVERIFY software is a fully integrated PC-based credit, debit, and purchasing card authorization and settlement system. The ICVERIFY system communicates directly with the First Data Merchant Services (FDMS) platforms to authorize payment transactions, then stores them for end-of-day settlement.

Imprinter

A device that enables the stamped characters on a bank card to be imprinted on a sales slip for the use of processing.

Independent Sales Agent (ISA)

See “Agent”.

Independent Sales Organization (ISO)

Also referred to as a Merchant Member Service Provider, a type of Member Service Provider (MSP) that supports a member’s acquiring program by soliciting merchants and presenting the member merchant agreement.

Integrated Point of Sale (IPOS)

This acronym refers to conventional terminals that are "smarter" and more sophisticated in that they may be set-up to communicate with like terminals owned by the same merchant even if they are located at different locations and with different merchant numbers.

Interchange

Term used to refer to the clearing and settlement system as a whole.

Interchange Fee

Acquirer pays interchange fees to the issuer. They reimburse the issuer for the risk of loss (fraud and credit losses) and the cost of processing the transaction.

Interchange Plus Pricing

A pricing structure in which the interchange and dues/assessments are passed directly through to the merchant. Basis points are added for profit and a charge per transaction for authorization is added to cover the cost and secure profit. This structure is sometimes also referred to as cost-plus pricing. This type of pricing is usually used for larger volume merchants.

Internet Protocol

Refers to the connection type of a merchant’s point of sale set-up. Examples of IP connections are high-speed Internet connections, T1 lines, cable modems, DSL, etc. In order to be considered an IP merchant, the merchant must only use an IP connection. If an IP merchant’s terminal needs to be reprogrammed, the download must be performed on a dedicated analog phone line, not an IP line.

IP

“Internet Protocol”

ISA

Abbreviation for Independent Sale Agent. See “Agent”.

ISO

See “Independent Sales Organization”.

Issuing Bank

Cardmember's bank, or the bank which has issued a MasterCard or Visa card to a cardholder.

Level II Corporate Cards

Business, corporate or government GSA purchasing cards (known as p-cards or purchase cards) that require certain data to qualify a certain interchange levels. To have transactions qualify for level 2 pricing, you must use a certified product that collects and submits the data properly to Visa/MC must be used. Required data to qualify for Level 2: 1. Standard Info - credit card number & expiration date, billing address, zip code & invoice number. 2. Customer Code - no longer required, but encouraged if they have it. 3. Sales Tax - an amount must be submitted separately from the total transaction amount.

Level III Corporate Cards

business, corporate or government GSA purchasing cards (known as p-cards or purchase cards that require certain data to clear at certain interchange levels. To have transactions qualify for Level 3 pricing, a certified product that collects and submits the data properly to Visa/MasterCard must be used. Required Data to Qualify for Level 3: 1. Standard Info - credit card number & expiration date, billing address, zip code & invoice number. 2. Customer Code - no longer required, but encouraged if they have it. 3. Sales Tax - an amount must be submitted separately from the total transaction amount. 4. Freight Amount - If unavailable, enter $0.00 5. Duty Amount - If unavailable, enter $0.00 6. Line Item Details: o Product / Service ID (item ID) o Product / Service Description o Quantity o Item Amount (like $100) o Unit of Measure

Magnetic Ink Character Reader (MICR)

A countertop device used to scan and recognize magnetic ink character lines. A MICR line is a series of digits at the bottom of a check that provides details about the bank and account on which the check is drawn and supports authorization and clearing routines.

Magnetic Stripe

A stripe of magnetic information that is attached to the back of a plastic credit or debit card. The credit card's magnetic stripe contains three tracks of data. The first and second tracks in the magnetic stripe are encoded with information about the cardholder's account, such as their credit card number, full name, the card's expiration date and the country code. Additional information can be stored in the third track.

Mail Order/Telephone Order (MO/TO)

A type of transaction in which the merchant typically has a card terminal and manually keys in the required card information for transmission to the appropriate authorization network.

Manual Credit Card Transaction

a transaction keyed (as opposed to swiped) into a POS System.

MATCH List

See “TMF”.

Media

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

Media Retrieval Requests

Media retrieval is the process of obtaining paper documents from a centralized location. You can obtain two types of media retrieval requests: 1) requests for sales record from cardholders and 2) requests for documentation in defense of the chargeback from card issuers. You must fulfill media retrieval requests within 12 days of receipt. If you fulfill media retrieval requests after 12 days of receipt, the status is fulfilled late. If you cannot fulfill the media retrieval requests, the status is expired.

Member Service Provider

“Independent Sales Organization”.

Merchant

A person or firm contractually associated with an acquirer for the purpose of accepting payments for goods and services rendered.

Merchant Account

A checking account established by a merchant for the purpose to receive payment for transactions.

Merchant Account Number

A number that numerically identifies each merchant to the merchant processor for accounting and billing purposes.

Merchant Agreement

A merchant agreement is the written agreement between a merchant and a bank that contains their respective rights, duties and warranties, with respect to acceptance of the bank card and matters related to the bank card activity.

Merchant Bank

a bank that sponsors an acquirer into the MasterCard and Visa card systems. NAB's sponsoring banks are HSBC Bank USA and Wells Fargo. Store owner or seller of products.

Merchant Category Code (MCC)

A code assigned by an Acquirer to identify a merchant's type or mode of business and the merchandise sold.

Merchant Collusion

Program that permits a card issuer to file a claim against the acquiring bank associated with an identified fully collusive merchant, and to seek partial recovery (the lesser of [i] one-half of the credit limit in effect at the time that the card issuer closed the cardholder bust-out account, or [ii] one-half of the actual amount of fraud losses) for fraud losses attributable to transactions on cardholder bust-out accounts conducted at a fully collusive merchant.

Merchant Discount

Percentage of the transaction value or a set fee after cost. The merchant discount is how the acquirer is reimbursed for its costs. It covers interchange fees, authorization costs, and costs of sales draft processing.

Merchant Number

See “Merchant Account Number”.

Merchant Service Charge

The discount rate or other fees assessed by the acquirer towards the merchant.

Merchant Service Provider

1) An entity or individual that contracts with a member to provide merchant sales and solicitations. (2) A type of registration for MasterCard under the Member Services Provider (MSP) program. See “Independent Sales Organization”.

Merchant Settlement Amount

The net dollar amount of card transactions processed for each individual business day.

Merchant Statement

A comprised report produced daily, weekly, or monthly to note the transaction deposit volume and billing information of a merchants account for a selected period.

MICR

See “Magnetic Ink Character Reader”.

Mid-Qualified Discount Surcharge

Discount rate and sometimes transaction fee charged in addition to the qualified discount rate for transactions that are key-entered, batched out within 24 hours of the transaction time, have AVS (Address Verification Service), and Order Number and reply to the Mail/Telephone Order prompt with an “Exact match;” sometimes referred to as a mid-qualified bump. The mid-qualified surcharge is not assessed on MOTO/Internet merchants (as mid-qualified is considered the MOTO/Internet qualified discount rate).

MID-Qualified Transactions

A Mid-Qualified Rate (which is sometimes called a partially qualified rate) is the percentage rate that merchants are charged when they accept credit cards that don’t qualify for the smallest rate. It will occur for a few reasons, such as when a the credit card a customer is keyed into a POS as opposed being swiped magnetically, or a business credit card or special rewards is employed.

Monthly Discount

For merchants who can supply at least one month of previous processing statements from the last three months, their full batch sales total (less returns and third party amounts) will be deposited into their DDA. All discount, transaction, and monthly fees will be deducted at the end of the month from the merchant's DDA.

Monthly Minimum

A way to ensure the merchants pay a minimum amount in fees each month and or cover costs from the provider to maintain the account and to create minimal profits. If a merchant’s qualified fees do not equal or exceed the monthly minimum, they will be charged up to the monthly minimum to satisfy their minimum fee requirements. In a three-tier or four-tier pricing structure, the qualified discount rate is used in calculating the monthly minimum. With NAB, a monthly minimum of $25.00 is required for free equipment. For example, if a merchant usually processes $10,000 in Visa/MasterCard volume and their qualified discount rate is 1.69%, the merchant would have paid $169.00 in qualified discount rates. Because this is more than $25.00, the merchant would not be billed any portion of the monthly minimum. If however the merchant processes $1,000 in Visa/MasterCard volume and their qualified discount rate is 1.69%, the merchant would have paid $16.90 in qualified discount rates. This means that the merchant did not reach their $25.00 in monthly minimum and so would be assessed with an additional charge of $8.10 to get the merchant up to $25.00 in qualified discount rates. In an interchange plus pricing scenario, the basis points charged to the merchant are what count towards the monthly minimum.

MOTO

See “Mail Order/Telephone Order”.

MSP

Short for Member Service Provider. See “Independent Sales Organization”.

National Automated Cleaning House Associ

The national association that establishes the standards, rules and procedures that enable depository financial institutions to exchange ACH payments on a national basis.

Non-Qualified Discount Surcharge

discount rate and sometimes transaction fee charged in addition to the qualified discount rate for transactions that do not meet the qualified or mid-qualified requirements. Additionally, Visa/MasterCard/Discover business card transactions and key-entered foreign card transactions will always be charged the non-qualified rate

Non-Qualified Transactions

A card transaction that does not meet qualifications for authorization by the card-holder’s bank—qualifications such as receipt of a valid billing address or completion of batch settlement within three days.

NSF (Non-Sufficient Funds)

Used to indicate that a demand for payment cannot be honored because insufficient funds are available in the account on which the instrument was drawn.

Off-line Debit

An off-line debit card does not deduct funds from the checking account immediately. Transactions are processed like a regular credit card and the funds are not deducted for approximately 24-72 hours. Off-line debit cards have a MasterCard, and Visa, or Discover logo.

On-line Debit

An on-line debit card deducts funds from the bank account immediately, as soon as the card is used. There is no delay for processing the transaction. On-line debit cards can either have the MasterCard, Visa, or Discover logo, or they can have only the user’s logo, like an ATM card.

Pass-Through Pricing

See “Interchange Plus Pricing”.

Payment Card Industry (PCI) Data Securit

Created to ensure the security of payment card information. Failure to adhere to the standard (by any party that handles card information, including merchants and ISOs) can result in hefty fines. Often shortened to PCI.

Payment Gateway

An e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets; see also “Gateway”.

PCI Compliance

Adherence to the Payment Card Industry Data Security Standard. PCI compliance is required by all card brands.

PCI DSS

See “Payment Card Industry Data Security Standard”.

Personal Identification Number (PIN)

A number issued to a cardholder to uses towards authorizing card payments and make ATM withdrawals.

PIN

See “Personal Identification Number”.

PIN Debit

A debit card transaction authorized by a cardholder using a personal identification number to complete the transaction.

Plug'n Pay

A pioneer of Internet payment solutions that enable customers to maximize online and point-of-sale profits, reduce risk of fraud and build customer loyalty with a wide array of leading-edge premium products and services. All of North American Bancard’s products are simple to use, fast to integrate and highly cost effective.

Point of Sale (POS)

The point at which a product is purchased and delivered.

POS

See “Point of Sale”.

POS Terminal

Electronic transaction terminal used in an electronic point-of-sale (POS) system. The terminal interacts with a computer file to approve transactions and transmits sales information for posting against customer accounts.

Posting

The process of updating individual cardholder account balances to reflect a merchants sales, instant cash, cash advances, adjustments, payments and any other charges or credits.

Pre-Auth

Also called an authorization hold, pre-authorization occurs when the cardholder’s bank immediately authorizes a credit card transaction but holds the funds as unavailable from the merchant until he or she officially clears (settles) the transaction. This allows for changes in the sale amount that might occur between the time of authorization and settlement, as in hotel stays where last-minute phone calls or room service use could affect the amount of the final bill after checkout.

Prepaid Card

A payment card with a set amount of money that has been preloaded onto it for future use by the consumer. It is not a credit card or debit card. Prepaid cards can be used in an open-loop (branded by Visa, MasterCard and so forth) or closed-loop (merchant or mall-branded). The most common type of prepaid card in use today is the gift card.

Primary Account Number (PAN)

The cardholder’s account number to which transactions are to be charged.

Private Label Cards

Unique cards branded for a specific retailer, independent dealer or manufacturer. If the retailer does not manage the private label card, a third party issues the cards and collects the payments from cardholders. Terms and conditions for private label credit cards are made through contracts between the retailer and the third party. Retailers prefer to have private label cards because it offers customers another way to shop in their store, thus increasing sales.

Processor

A company that moves transactions on behalf of acquirers among merchants, banks and the card networks. Some, but not all, acquirers are processors.

Purchasing Cards

A purchasing card is a form of company charge card that allows goods and services to be procured without utilizing a traditional purchasing process.

QSR

See “Quick Serve Restaurant”.

Qualified Discount Rate

the percentage of the merchant's volume that is charged to process their transactions. The qualified rate is the best rate a merchant can receive per their merchant agreement. For a retail merchant, this will be a swiped consumer credit or check card transaction. For a MOTO or Internet merchant, this will be a keyed consumer credit or check card transaction using AVS and including an invoice number. For both retail and MOTO/Internet merchants, the transaction must be batched out within 24 hours of the time of the transaction.

Quick Serve Restaurant

No signature required for transactions under $25.00 for certain MCC/SICs.

QuickBooks

Business accounting software.

RDC

See “Remote Deposit Capture”.

Recurring Transaction

A transaction that is periodically charged to the cardholder's account for ongoing goods or services, for which written permission has been granted by a cardholder to a merchant.

Referral

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

Remote Deposit Capture

Electronic check services by which paper checks are converted into digital images for electronic clearing and settlement, through either electronic check or ACH systems.

Representment

A transaction presented to the issuer by the Acquirer when the establishment requests a reversal of a chargeback.

Reserve

The money set aside from a merchant's credit card receipts to cover potential chargebacks or other disputes. Typically, the amount is returned after a specified period. Also known as a hold back.

Response Code

A number provided by a card issuing bank to a merchant explaining why a particular transaction was declined, or verifying the transactions acceptance

Retrieval Request

A request to a merchant for either a legible copy of or the original sales record.

Reversal

A request by the establishment to signify a chargeback to the card issuer.

Rewards Surcharge

Additional discount rate charged for swiped rewards transactions. The default pricing for swiped rewards cards is mid-qualified.

Sales Partner

The independent contractor that submits merchant account business to North American Bancard.

Settlement

The process by which the processor, working on behalf of the acquirer, debits the issuer for a transaction and credits the acquirer, and where the acquirer then credits the merchant. Settlement also involves payment to the card brands, calculating discount and qualifying a transaction for the appropriate interchange. Other aspects include exception processing, returns and disputes.

Shopping Cart

Gateway software that acts as an online store's catalog and ordering process. Typically, a shopping cart is the interface between a company's website and its deeper infrastructure, allowing consumers to select merchandise; review what they have selected make necessary modifications or additions; and purchase the merchandise.

SIC Code-Standard Industry Classificatio

Code assigned by an Acquirer to identify a merchant's business type.

Signature Debit

A Visa Debit or Debit MasterCard transaction authorized by a cardholder's signature; to the casual observer it looks just like a credit card transaction; See also “Check Card” and “Off-line Debit”.

Skimming

A method of stealing credit card information using a small, handheld electronic device that scans and stores card data from the magnetic strip. This process can be done manually by criminals who place a skimming device on top of a regular credit card reader (usually at gas stations or ATMs machines) and retrieve it later.

Small Ticket Program

Pricing available on the interchange for certain MCC/SICs when the average ticket is less than $15.00.

Smart Card

A plastic card containing a computer chip with memory capabilities used for identification purposes or to store information, financial amounts or other forms of data.

Sponsor Bank

See “Acquirer”.

Stored-Value Card

A credit-card-sized device that is implanted with a computer chip with stored money value which can be reloaded reused by transferring a dollar value to it from an automated teller machine or other device.

Submission

The process of sending batch deposits to the Acquirer for processing.

Summary Adjustment

A correction to an establishment's deposit made by the Acquirer when there is an error in the submitted deposit.

Super ISO

A large, independent sales organization that supports multiple downstream ISOs and MLSs. Some super ISOs are also processors.

Surcharge Table

A check card rewards a mid-qualified or non-qualified bump selection that is part of tiered pricing structure.

Terminal

A POS device connected to the Visa and MasterCard payment network and/or to a proprietary network that authorizes payment card transactions and transmits card data to a receiving institution.

Terminal Capture

A piece of software that acts as an online store's catalog and ordering process. Typically, a shopping cart is the interface between a company's Web site and its deeper infrastructure, allowing consumers to select merchandise; review what they have selected; make necessary modifications or additions; and purchase the merchandise.

Third Party Processor

A company that lets a company process another merchants’ payments via their merchant account and then transfer the money to their bank account.

TID

A unique identification number assigned to a specific point of sale device by the Acquirer.

Tiered Pricing

Pricing structure that has set amounts for the different qualification levels.

TMF (Terminated Merchant File)

A list when consumers do not honor the terms of their credit agreements, the creditor may report the default to a credit reporting agency. Also known as “MATCH”.

Touch Tone Capture

Allows the manual keyed entry and subsequent authorization of a credit card over a cellular or land-line telephone. With this method, a merchant typically imprints their customer’s card with an imprinter to create a customer receipt and merchant copy, and then processes the transaction instantaneously over the phone.

Transaction

A credit card sale or refund between the cardholder and merchant, or the processing of the exchange by the Acquirer.

Transaction Fees

Service costs charged to a merchant on a per transaction basis.

Travel and Entertainment Cards (T&E Card

Charge card used to pay for hotel, airline, and other business related expenses.

Truncation

To shorten by or as if by cutting off.

Valid Date

The date embossed by the card issuer on the credit card. An establishment cannot accept a card for payment of goods or services prior to this date.

Value Added Reseller (VAR)

A company that adds features to an existing products, then resells it (usually to end-users) as an integrated product or complete "turn-key" solution.

VAR Sheet

A sheet used by Value Added Resellers to assist in setting up the account.

VIVOpay

Line of contactless payment devices.

Vivotech

A market leader in contactless/NFC (Near Field Communication) payment software, over the air (OTA) card provisioning, promotion, and transaction management infrastructure software, NFC smart posters, and contactless readers/writers.

Voice Authorization

An approval response that is obtained through interactive communication between an issuer and an acquirer, their authorizing processors or stand-in processing or through telephone, facsimile or telex communications.

Voyager Card

A Fleet card that provides an array of fuel, maintenance and service solutions.

Way Systems

A wireless terminal that is based on a cell phone with a swiper.

Way Terminal

a wireless terminal that is based on a cell phone with a swiper.

Web Merchant Account

an account utilizing the Internet

Wex Card (Wright Express)

a commercial fleet fuel (gas)/vehicle service charge card programs

Wire Transfer

An electronic transfer of funds

Wireless Credit Card Terminal

a machine that allows usage over wireless networks similar to a cell phone.

Wireless Fees

fee charged for wireless usage

Wireless Merchant Account

an account using a wireless terminal/POS system.

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