ABA Routing Number

Unique bank identifying number that directs electronic ACH deposits to the proper bank- this number precedes the account number printed at the bottom of a check. This number is usually printed with magnetic ink. This number is always nine digits long and has a check digits algorithm.

ACH

(Automated Clearing House)The process of moving money between checking or savings bank accounts through the Federal Reserve within 24 banking hours. This is not a wire transfer nor is an authorization given for the availability of funds.

Acquirer

A bank that sponsors merchants for the acceptance of credit card transactions.

Acquiring Bank

A financial institution that issues merchant numbers to merchants.

American Express (AMEX)

An organization that issues cards and acquires transactions, unlike Visa and MasterCard, which are bank associations.

Approval Code:

The numerical or alphanumeric code sent by the card issuer, given to a sales transaction as verification that the sale has been authorized.

Arbitration

The procedure used to determine the responsibility for a chargeback related dispute between two members.

Average Ticket

The average cost of an individual item offered by a merchant.

AVS

Address Verification Service

Authorization

The request to charge a cardholder. Reduces the cardholder’s "open to buy" but does not actually charge the account. Authorization must be SETTLED in order to charge the account. If not used within a certain time period, usually 7 to 10 calendar days, will expire. Time period determined by issuing bank.

Bank Identification Number (BIN)

the digits of a credit card that identify the ISSUING BANK. Sometimes the first six digits. Often referred to as a BIN.

Bond

A form of debt security a government or corporation issues, promising payment of the original investment plus interest on specified future dates.

Card Verification Value 2 (CVV2)

A unique check value generated using a secure cryptographic process, as specified in the VisaNet Standards Manual, that is indent-printed on the back of a Visa Card. Card Verification Value 2 may be used as an additional means of Cardholder verification during the referral process.

Chargeback

A chargeback is the process of reversing the original credit card transaction. A chargeback can occur for many reasons, potential or actual fraud, processing errors, authorization issues, and non-fulfillment of retrieval requests.

Chargeback Reference Number

An Issuer-assigned number that identifies the source of an outgoing Chargeback.

Compliance Case

A process where Visa and MasterCard resolves disputes between Members arising from violations of the Compliance Regulations. Members can certify that a financial loss has occurred, or will occur for a specific amount, and no Chargeback right is available.

Corporation

The Corporation is a separate taxable legal entity, distinct from its owners, governed according to its bylaws, and empowered to act in its own right as an individual entity. Its owners are shareholders whose ownership is represented by share certificates. The shares are salable according to the provisions of the bylaws. The Corporation’s greatest advantage is that it limits the liability of its shareholders the values of the shares they own. Creditors of the Corporation cannot pursue any remedy from the shareholders outside of the corporation (except in the case of shareholders who have committed fraud in the name of the corporation). Corporate Officers run the Corporation, and a board of directors, all of who are appointed in accordance with the bylaws, oversees them. A drawback of the Corporation, from a shareholder’s standpoint, is double taxation. The profit made by the corporation is taxed prior to distribution to the shareholders in the form of dividends. Shareholders then must pay personal taxes on the dividends received.

Correction Codes

Is the process of the RDFI notifying the ODFI of a correction to the bank routing and transit number or the account holder’s bank account number. No money is moved at this time.

Credit Card Number

A unique sequence of numbers assigned to a cardholder account which identifies the issuer and type of financial transaction card.

DBA

Doing Business As

Decline Response

An Authorization Response indicating that the Transaction is declined and the Card is not to be honored.

Electronic Commerce Merchant

A Merchant that conducts the sale of goods or services electronically over the Internet and other networks.

Electronic Commerce Transaction

A Transaction conducted over the Internet or other network using a Cardholder Access Device. An Electronic Commerce Transaction is one of the following:

• Non-Secure Transaction

• Non-Authenticated Security Transaction

• Secure Electronic Commerce Transaction

Electronic Funds Transfer (EFT)

This is the paperless act of transmitting money through a computer network.

Encryption

Is the process of scrambling the data to make it unreadable for those who should not have the file. There are several encryption types available. PROCESSOR uses XOR, Single DES and Triple DES.

• Single DES (Data Encryption Standard) Encryption: Provides 56 bit security. (PROCESSOR standard security)

• Triple DES Encryption: Provides 112 bit security. (PROCESSOR highest level of security.)

• XOR: (PROCESSOR lowest level of security)

Expired Card

A credit card on which the embossed, encoded, or printed expiration date has passed.

Funds Administration

A percentage of a merchant’s credit card funds collected by PROCESSOR, to be used as previously agreed upon between PROCESSOR and the merchant, as protection against merchants with little or no financial security, or a merchant’s requested processing volume is not balanced by correlation financial assets.

Issuer

A bank that provides credit cards to consumers.

IP Address

The address of record for a given computer’s location.

Issuing Bank

A financial institution that issues credit cards.

Magnetic Stripe

The magnetic stripe on a Card that contains the necessary information to complete a Transaction.

Mail Order Telephone Order (MOTO)

A Transaction where a cardholder orders goods or services from a Merchant by telephone, mail, or other means of telecommunication, and neither the Card nor the Cardholder is present at the Merchant Outlet.

MasterCard

An association of banks that governs the issuing and acquiring of MasterCard credit card transactions and maestro debit transactions.

Merchant

A retailer, or any other entity (pursuant to a merchant agreement), that agrees to accept credit cards, debit cards or both, when properly presented.

Merchant Agreement

A contract between a Merchant and an Acquirer containing their respective rights, duties, and obligations for participation in the Acquirer's program.

Merchant Category Code

A code designating the principal trade, profession, or line of business in which a Merchant is engaged, as specified in the Merchant Data Manual. This 4 digit code is also known as the SIC code.

ODFI

(Originating Depository Financial Institution) Financial Institution where the ACH transaction originates.

Outbound Telemarketing

Merchant-initiated contact with a Cardholder via a telephone call or a mailing (other than a catalog) that instructs the Cardholder to call the Merchant. These solicitations include, but are not limited to, those for cosmetics, health care products, vitamins, and timeshare facilities.

Partnerships

Partnerships are associations of two or more people who are co-owners of a business. Partnerships are usually formed when potential partners see a business advantage in pooling their resources and skills. In many respects, partnerships are similar to sole proprietorships. Partners will often buy life insurance in the amount of their respective partnership share, each naming the others as beneficiaries. Should disagreements develop among partners, the management of the business may be adversely affected. A special form of partnership is the limited partnership. Such partnerships are made up of limited partners and at least one unlimited (general) partner. The limited partners’ liability usually does not extend beyond their investment in the partnership and they forfeit certain management rights. The general partner or partners have unlimited liability for all of the partnership’s obligations and have greater say in the management of the business. Limited partnerships are usually a vehicle for tax-motivated passive investors.

Point of Sale

The place and time at which a transaction occurs. This term also refers to the devices or software used to capture transactions.

Processor

A transaction processor; a large computer center that processes data from credit card transactions and settles funds to merchants.

RDFI

(Receiving Depository Financial Institution) Financial Institution where ACH transaction is sent.

Recurring transaction

A Transaction for which a cardholder or bank account holder provides written permission to a Merchant to periodically charge his/her Account Number for recurring goods or services. These may include payment of recurring charges such as insurance premiums, subscriptions, membership fees, tuition, or utility charges.

Reserve

PROCESSOR requires that a merchant provide PROCESSOR a percentage of their processing funds to cover any ACH returns or credit card chargebacks.

Retrieval Request

A request to a merchant for documentation concerning a transaction, usually a cardholder dispute or suspicious sale/return. A retrieval request can turn into a chargeback.

Rolling Reserve

A percentage of a merchant’s credit card or ACH processing funds held on a monthly basis and released to the merchant after a said on going time period, as a means of securing the lender’s financial risk.

Return

Is the process of the RDFI returning an ACH transaction to the ODFI. ACH transaction can be disputed for several reasons. Please see the table of return codes.

Settlement

Is the process of closing an open batch of ACH or credit card transactions for payment. 

Sole Proprietorships

A Sole Proprietorship is the simplest form of business organization. Three is only one owner, who has sole control over all the actions of the business. Entrepreneurs find this form of ownership appealing. Sole Proprietors sink or swim on their own decisions, answer to no one, and can do as they please with any net profits they make. The drawback is that the sole proprietor is also personally liable for all the debts and other legal obligations of the business. In case of financial difficulties, everything the proprietor owns over and above the business (house, car, furniture, etc.) is on the line. All income of the business must flow through to the proprietor’s personal; tax statement and is taxed as personal income.

Subchapter "S" Corporation

An option favored by many small businesses is the Subchapter S Corporation, a form of organization combining the advantages of corporations and partnerships or proprietorships. Like the shareholders of regular corporations, shareholders of the Subchapter S Corporations are protected from personal liability, but they can avoid double taxation. From a tax standpoint, Subchapter S Corporations are treated as partnerships and sole proprietorships. Shareholders can withdraw pre-tax income from the Subchapter S Corporation and pay only personal income tax on the withdrawal. An additional attraction is that, for many tax scenarios, the personal tax rate is lower than the corporate rate. The number of shareholders in the Subchapter S Corporation is limited to 35, and some other restrictions apply.

SIC Code

Standard Industrial Classification. A four-digit ID number that identifies the industry of a merchant.

Static Reserve

A percentage of a merchant’s credit card or ACH processing funds held by PROCESSOR and /or Bank in a reserve account for an indefinite period of time. Sometimes a static reserve may be capped at a certain volume.

TMF (Terminated Merchant File)

The Terminated Merchant File is a file maintained by MasterCard International to identify the business names and principals of Merchants that Acquirers have terminated for the reasons specified in Section 2.2.C.2.a.

Third Party Processor

A non-member agent, employed by an acquiring bank, which provides authorization, settlement and merchant services to a merchant.

Transaction Fee

A per transaction charge incurred by merchants who are on scale pricing. This is an addition to the percentage Discount fees.

Underwriting

Is the process of applying for a merchant account with PROCESSOR.

Upload Number

Is either a file of ACH or credit card transactions sent at one time to be processed or an open file that real-time ACH or credit card transactions are added between settlement times.

VISA

An association of banks that governs the issuing and acquiring of Visa credit card transactions.

Voice Authorization Center

An authorization center operated either by card issuers or by processors on behalf of issuers to respond to requests for authorizations for purchases from merchants who do no have terminals, or whose terminals are not functioning properly, or for transactions for which special assistance is required.