Virginia Card Services - The Language of Merchant Services


Home About Us » Nexgen Partner Strategies » Our FAQs » Richmond Office » Our Green Company Credit & Debit Processing » Credit & Debit » Mobile Transactions » QuickBooks Integration Gift & Loyalty Cards » Gift Cards » Loyalty Cards Check Services » Guaranteed Check Funds » ARC Lockbox » Recurring ACH Debit Get a Cash Advance » Get a Cash Advance e-Commerce » Sales on Your Web Site » Back Office Integration Contact Us » Richmond Office » Customer Service » Industry Terms Your Account » New Accounts » Review Your Current Account » Contact Richmond Office	The Language of Merchant Services Below are some of the more common terms used in the credit card processing arena. They are provided here to help you better understand your account and the broader context of the processing industry. ACH Automated Clearing House is a banking system used to automatically transfer funds to or from a bank account using data provided such as account and routing numbers. ACH is used to deposit funds from customer transactions into the merchant's account and to deduct fees from the merchant's account. ACH Fraud The malicious practice of using stolen bank account information for the purchase of merchandise, or by a legitimate account holder to purchase merchandise with the intention of returning it used or modified for a refund. ACH fraud also occurs when account holders falsely dispute transactions they authorized. Chargeback or Return fraud occurs with paper and electronic checks. Acquirer, Acquiring Bank 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. Approval Response An affirmative reply following a transaction authorization request that tells the Merchant a transaction has been approved by the financial institution that issued the card to the cardholder. Authorization The process of checking the cardholder's account for the availability of sufficient funds or available credit limit prior to approving a transaction. In the case of a positive authorization, the cardholder's credit limit or debit account balance at the time of the request is reduced to cover the transaction amount and the funds are set aside until settlement. Authorization Approval Code The numerical code (designated by the customer's card issuer) that is assigned to a sales transaction as verification that the sale is authorized. Authorization Only (Auth Only) This function is used to reserve a specified 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. Authorization Request A Merchant's request for an authorization to accept a cardholder's sales transaction. An authorization request can occur electronically via a credit card processing terminal or via telephone as a voice authorization. Generally speaking, these requests are handled automatically by the merchant's credit card terminal. Automatic Recurring Payment An arrangement between a Merchant and his/her customer to allow automatic charges for a service to an agreed-upon credit or debit account. Often used for recurring services such as gym memberships, martial arts schools, self storage companies, HVAC service contracts, or Internet hosting services. CardPayment Solutions has powerful, easy-to-use technology for handling these recurring payments. AVS Address Verification Service - a fraud protection tool created by Visa and MasterCard. Credit card issuers can verify the customer's billing address against the card processor's existing records. AVS returns a code that indicates whether or not the address provided by the customer matches the card's billing address. There are two data that can be checked, the most common is the 5 or 9 digit zip code. The second data that can be checked is the numerical information in the mailing address. (For example: 3459 Main Street, the merchant would key in "3459"; for P.O.Box 23672, the merchant would key in "23672".) If the match is not 100%, there may be a reason to expect fraud. It is up to the Merchant's discretion as to whether to accept or deny the potentially fraudulent purchase request. Issues can arise with employees in larger companies when using a company credit card for company related purchases. The employee may use the street address and zip code thinking that this is the address to which the billing for the card is sent. If the business office is receiving the invoices at a P. O. Box or at a regional/national office. Batch Processing/Batching Out/Settling the Batch/Settlement Transactions are stored in a file in the terminal and sent as one transmission for processing, usually at the end of the business day. Once a batch has run, the process of moving money between processing entities and the Merchant begins. Merchants can ask CardPayment Solutions to either set their system to auto batch, or they may choose to do it manually. If a batch is not run daily, payments to the Merchant's account will be delayed until the information is transmitted and additional charges may apply. This is also referred to as closing. BIN 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. Capture Receiving and storing transaction data at the processor's host computer, POS or credit card terminal, to be submitted later for processing and payment. Card-Not-Present (CNP) Transaction A transaction which occurs when the cardholder is not present, or the physical card is not present. Examples include mail orders, telephone orders, and Internet sales. These types of transactions are considered higher risk transactions and typically carry a higher processing rate because the Merchant cannot always confirm that the cardholder has authorized the transaction. Card Present A type of transaction in which the card is physically present along with the actual cardholder at the business or Merchant location and is swiped through an electronic device that reads the contents of the magnetic stripe on the back of the card. Cardholder The person or company to whom a payment card is issued, owning an active credit card account that can be used to make purchases. Cardholder Account Number A sequence of numbers assigned specifically to a cardholder account that also identifies the issuer and type of payment card. Chargeback Reversal of a sales transaction initiated by the issuer or cardholder that is returned to the acquirer for resolution. When the cardholder initiates the chargeback, the card issuer is obligated to refund the cardholder immediately on the charged back amount. The Merchant then has the opportunity to contest and provide proof of the transaction's validity. Chargeback Fee The amount assessed by the acquirer for processing chargebacks. Chargeback Reason Code A numerical code which identifies the specific reason for a chargeback. MasterCard and Visa each have their own chargeback codes. If you receive a chargeback, please contact our Customer Service Department for assistance in understanding the reason codes. Check Guarantee Service A service that guarantees check payment to a Merchant up to a specified amount. Merchants need only perform correct authorization procedures to qualify for the guarantee. Feel free to contact our Customer Service Department (1-800-554-2777) for tips on following the proper authorization procedures. CID Card Identification Number/Card Identifier - An American Express and Discover verification process that utilizes a non-embossed three- or four-digit number printed on the front or back of a consumer credit card. The CVV2. CID, and CVC2 are often referred to as the CVV number. 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. Close (same as Batch Processing/Batching Out/Settling the Batch/Settlement) Transactions are stored in a file in the terminal and sent as one transmission for processing, usually at the end of the business day. Once a batch has run, the process of moving money between processing entities and the Merchant begins. Merchants can ask CardPayment Solutions to either set their system to auto batch, or they may choose to do it manually. If a batch is not run daily, payments to the Merchant's account will be delayed until the information is transmitted and additional charges may apply. This is also referred to as closing. Compliance Compliance to the Visa and MasterCard regulatory bylaws (PCI DSS). Credit See refund. Credit Card 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. Credit Rating The Merchant's business or personal history of paying back loans. Credit Slip A form stating a refund or price adjustment will be credited to a cardholder account. Also referred to as a credit voucher or credit draft. When doing a refund transaction for a customer/cardholder always be sure to give the customer a copy of the refund which is created by your terminal. This slip will clearly state that the transaction was a refund or credit. Credit Line The cardholder's credit limit, meaning the maximum amount he/she can borrow when using his card. CVC2 Card Validation Code - MasterCard term for the three-digit code printed next to the signature panel on the back of a credit card and used as part of the authorization process. The CVV2. CID, and CVC2 are often referred to as the CVV number. CVV2 Card Verification Value 2 - the three-digits on the back of a Visa (or the four-digits on the front of the American Express card) that links the card number to a specific cardholder. This number ensures the validity of the card. The CVV2. CID, and CVC2 are often referred to as the CVV number. Data Encryption The systematic, mathematical scrambling of data so only the intended users can read and understand the coded information. DDA Demand Deposit Account - a checking account. Decryption Decoding or unscrambling data so it can be accessed or read after having been encrypted. Debit Card A bankcard used to purchase goods and services and to obtain cash, which debits the cardholder's personal checking account. Debit Cards can be run with a PIN Pad (referred to as Online Debit) where the customer enters their unique PIN number. If the card has a Visa or MasterCard logo it can also be run as a credit card (referred to as Offline Debit). Debit - Regulated The Durbin Amendment to the Financial Reform Act, also known as the Frank Dodd Act, put rules in place for the amount that banks could charge for card transactions that drew funds from asset accounts held by those banks. Under the Durbin rule, banks that "together with its affiliates had more than $10-Billion in assets" could not charge more than an amount designated by "a board" established by the Durbin Amendment. The Amendment has several exceptions to these limitations. The Amendment does not limit the fees on these transactions that can be charged by the "Associations" [Visa, MasterCard, etc] nor does it limit the fees that can be charged by the processor. Also see "Debit - Unregulated" immediately below. Debit - Unregulated The Durbin Amendment to the Financial Reform Act, also known as the Frank Dodd Act, put rules in place for the amount that banks could charge for card transactions that drew funds from asset accounts held by those banks. Under the Durbin rule, banks that "together with its affiliates had less than $10-Billion in assets" were allowed to charge the same debit fees as before and were deemed to be unregulated. Also see "Debit - Regulated" immediately above. Decline 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. Digital Signature A digital code attached to an e-mail that identifies the sender. Digital signatures are used to ensure the sender's identity matches the real sender. Digital signatures play a crucial role in e-commerce and are a vital aspect of most authentication plans. Discount Rate The fee percentage assigned to each electronic transaction. The Discount Rate is paid for the right to process cards and use a Merchant account. Rates are determined by the Visa/MasterCard interchange with additional percentages added by processors, acquiring banks and other processing entities. E-Commerce Electronic Commerce - the sale and purchase of goods or services over the Internet. Encryption Method of scrambling data to protect a cardholder's personal information. EMV Chip Cards EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. This on-board card technology is designed to make transactions more secure. The most widely known chip card implementations of the EMV standard are: VSDC - Visa; M/Chip - MasterCard; AEIPS - American Express; J Smart - JCB; and D-PAS - Discover/Diners Club International. Entitlement License or permission to accept a particular type of payment card or other payment method. Exceeded Timeliness A transaction that is deposited too late to qualify for the best interchange rate. Expiration Date The embossed expiration date on a bankcard. After that date, the card becomes invalid and should no longer be accepted. Factoring When a legitimate Merchant processes another Merchant's transactions in return for payment. This practice is forbidden by the card associations. Floor Limit/High Ticket Value A specific dollar limit which defines the transaction limits for a Merchant account. Transactions above the determined limit require the Merchant to obtain authorization and provide additional documentation for the specific transaction. Firewall A security tool that prevents file access or access to a server or database via the Internet. This in turn ensures the safety of cardholder information. Force The process by which a voice-authorized transaction is key-entered into a point-of-sale system and then settled electronically with a batch of transactions. Fraud Investigation The process of identifying suspicious Merchant or cardholder activity. Fraud Scoring A set of fraud prediction technologies or models that assign a numeric value to define the risk of fraud. Gateway The acquirer's connection between its online Merchants and the Visa, MasterCard, Discover, and American Express transaction processing systems. The Merchant server sends an encrypted transaction form to the payment gateway, which then authenticates the Merchant, performs a decryption process, and forwards the data via Visa, MasterCard, Discover, or American Express to the issuer for authorization. Hard Decline A declined authorization attempt resulting from a lost or stolen card, pick-up card, etc. Interchange Rates/Fees Fees paid by the acquirer to the issuer to compensate for transaction-related costs. MasterCard, Visa, Discover and American Express establish interchange fee rates. All processor pay the same amount for Interchange Fees. Interchange Fees account for the bulk of the fees paid by merchants. Internet Payment Gateway Service (IPGS) See gateway. IP Address Internet Protocol Address. All computers have a unique IP address to help in identification and to track data sent or received from the specific address. The format of the IP Address is four sets of numbers (between 0 and 255) separated by dots (e.g.., 174.37.4.205). Issuer, Issuing Bank The banks/financial institutions that are members of Visa and/or MasterCard that hold contractual agreements with, and issues cards to, cardholders. Mail Order/Telephone Order Account (MOTO) Merchants who process 50% or more of their transactions with the cardholder not physically present at their business (phone, fax, Internet, mail) are considered MOTO accounts. Examples include catalog companies, phone or Internet order for pizza delivery, or phone in flower delivery service. MCC 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. Media Retrieval Requests 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. Member A financial institution that is a member of Visa and/or MasterCard. A member is licensed to issue credit cards to consumers (issuer) and/or accepts Merchant drafts (acquirer). Merchant Agreement The written contract between the Merchant and acquirer that details their respective rights, responsibilities and warranties which govern the handling of credit cards and payments. Most of the text of these agreements are mandated by the Associations (Visa, MasterCard). Merchant Bank See Acquirer. Merchant Discount The fee an acquiring member charges the Merchant to cover the costs of providing credit authorizations and handling credit card sales transactions. See Discount Rate. Merchant ID Merchant Identification Number is a unique 16-digit identification number assigned to a Merchant by the acquirer. When calling Customer Service or Tech Support (1-800-554-2777), it's best to have this number; however, your account's information can be found by our staff using your company name and address. MOP Method of Payment - the way a Merchant chooses to accept payment for products or services. Examples include: MasterCard, Visa, American Express, Discover, Carte Blanche, Diners Club, JCB, Electronic Check and private label cards. It also would include payments in cash and by check. Offline Debit 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. Offline debit transactions do not make use of a PIN pad for customer identification using, instead, the customer's signature as in a standard credit card transaction. Offline Transaction A transaction that is authorized through a voice authorization and later keyed into a POS terminal to initiate the change and settlement process. Online Debit 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. Online debit transactions make use of a PIN pad for customer identification instead of having the customer sign the transaction slip. Online Transaction A transaction that is authorized electronically. Payment Card Industry (PCI) Data Security Standard (DSS) The Payment Card Industry (PCI) Data Security Standard (DSS) is being utilized worldwide by MasterCard, Visa, Discover, and American Express to decrease debit and credit card fraud by imposing strict security standards on how cardholder data is handled and kept. Failure to comply with PCI-DSS that results in a breach of cardholder data may result in substantial fines and, potentially, the suspension of the ability to accept card payments. Banks, processors, gateways, POS software vendors, and merchants must all comply with PCI-DSS standards and demonstrate their compliance on an annual basis through an audit process. Only Visa/MasterCard approved security compliance companies can conduct these annual audits. Pending Transaction A pending transaction is one that has been approved but not finalized by the merchant via the batching (settlement) process. Customers with access to their credit or debit accounts online will often see these pending transactions. Once the merchant closes (batches/settles) the terminal for the day and the data passes through the processing system, these transactions will be finalized. Pick Up Card An issuer's electronic response to an authorization request, asking that the card be retained by the Merchant and returned to the issuer. This typically occurs when fraudulent cardholder activity is suspected. PIN Personal Identification Number - a secret code used to verify the identity of the person trying to use a credit card by the alphanumeric or numeric code. The PIN number is entered into a keypad and is encrypted to travel along with the authorization. Merchants are never allowed to ask for or enter a customer/cardholder's PIN number. Posting The process of recording debits and credits to an account. Prenote In the electronic check-processing environment, a non-dollar transaction sent through the ACH network for the purpose of verifying the accuracy of the cardholder's account data. Processing Fees The fees associated with the processing of credit card transactions. Processor A company responsible for processing interchange transactions - operated by an acquirer or acting on the acquirer's behalf. Purchasing Card A payment card used by companies to replace paper invoices. P-Cards can be used to purchase goods for business purposes. Quick Service Restaurant - QSR This is a special service designed for restaurants where speed of delivery is critical. Under this special system, customers do not sign for their transactions up to a certain dollar amount. This helps the restaurant serve more people faster while reducing the length of the customer line. Real-time Authorization Performs card authorization in real-time, as the purchase occurs. If the authorization is accepted, the order proceeds as expected. If the authorization is negative, the shopper receives an error message and is unable to complete the purchase until an approved card is entered. Reason Code A two-digit code identifying the reason a chargeback was initiated. If you receive a chargeback, please contact our Customer Service Department (1-800-554-2777) for assistance in understanding the reason codes. Re-authorization A request for 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 (for example when a customer elects to extend their stay). Rebilling Tool designed to manage and control recurring transactions for customers receiving ongoing services. Recurring Transaction A transaction charged to a cardholder's account (with prior permission) on a periodic basis for recurring goods and services. Examples would be monthly gym memberships, martial arts schools, self storage companies, HVAC service contracts, or Internet hosting services. CardPayment Solutions has powerful, easy-to-use technology for handling these recurring payments. Refund A refund occurs when the Merchant rebates all, or a portion, of an original transaction amount to the cardholder. Refunds are typically made to the same card that was used for the original transaction. Similar to a Credit. Representment The attempt to rectify a chargeback situation with the bank. The Merchant and processor provide additional proof/background to support the validity of the transaction in question. Retrieval Request The card issuer can initiate a retrieval request when a cardholder does not remember a credit card transaction, or if the bank wants information on the transaction. The Merchant has 10 days to reply with the order information or the retrieval request is turned into a chargeback. Merchants are usually charged a fee. Reversal See Void. Secure Server A web server or computer that is connected to the Internet and is able to establish a secure, encrypted form of communication with clients. A secure server generally uses SSL or SET encryption systems. Settlement The process in 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. SmartCard A card embedded with a microchip that stores programmable data. The smartcard is used for telephone calls, storing electronic cash, or for paying public transportation, tollbooths, and parking. When the money on the card is used up, the card can be recharged and can be used again. Soft Decline 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. As with all declined transactions, the merchant should ask for an alternative form of payment such as a different card. SSL (SHA2) 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. At the end of December 2016 the industry moved from SHA1 to SHA2 to increase the security of data flow. Submission A file sent by the Merchant to the processor/acquirer that contains one or more transactions. Summary Adjustment A correction to a deposit, made by the acquirer, when there is an error in the submitted deposit. TCS Terminal Capture System - the process in 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. TID Terminal Identification Number is a number coded to a Merchant's POS/credit card terminal that identifies that Merchant to the processor's /acquirer's data management system. Tip Hold Merchants that accept tips (salons, spas, restaurants, etc.) have the ability to add the customer's tip to the transaction after the base amount has been authorized. When the processing system receives a request for a transaction approval from a merchant account configured for tips, a Tip Hold equaling 20% of the base amount of the requested charge is added to the approval amount in anticipation of a tip being added later. This ensures that the transaction will not exceed the credit limit set for the account. When the merchant enters the tip and then closes the batch, this updated information is transmitted to the cardholder's account. With the actual amount of the tip now known, the amount of the transaction is adjusted accordingly and the transaction is finalized for the correct amount. Cardholders who view their account online may see a pending transaction from the merchant with a dollar amount not in keeping with the actual charge (as 20% had been added as a Tip Hold to the pending transaction). Tokenization The process of replacing the card number in a transaction with a randomized token, eliminating the Merchant's need to store the actual card data. This process significantly reduces the likelihood of a security breach and, should a breach occur, minimizes the impact of an attack. Equally important, it can limit the scope of PCI-DSS compliance audits, saving Merchants time and money. Transaction The exchange of goods for payment. A transaction is started when a credit card order is placed. Each attempt to authorize a credit card is considered to be an order attempt and therefore also considered to be a transaction. Transaction Date The actual date on which a transaction occurs. Transaction Fee The amount a Merchant pays per transaction for processing and handling. Triple DES Triple Data Encryption System is one of the newest technologies designed to ensure the security of sensitive cardholder data. As of July 2010 Triple DES is required to process all PIN-based debit transactions. Merchants using older PIN pads should contact their agent to see if their PIN pad is approved for this new technology. Valid Date The date embossed on a payment card stating when the card may first be used. Virtual Terminal A Virtual Terminal is an online, browser-based or Internet-based credit card processing system that replaces the traditional swipe units and POS systems generally found in retail locations. This technology is ideal for recurring payments (gym memberships, martial arts schools, self storage companies, HVAC service contracts, or Internet hosting services) and e-commerce. Virtual Terminals have powerful processing features and robust data handling which can interface with IT departments and back-office systems. Voice Authorization Transactions authorized by a voice operator. Voice-approved transactions are put into a terminal batch for settlement. Void When an acquirer successfully represents a chargeback to the issuer, the chargeback is reversed and the funds are returned to the Merchant. Also the processes of voiding a transaction at the Point of Sale, typically for an incorrect sale amount. Merchants may only Void a transaction that has not been Batched (see above). After the batch with the original transaction has been batched, the merchant must use the Refund function on their terminal to return the funds. Merchants and cardholders should also understand that voided transactions will continue to be listed at "pending transactions" until the 30-day approval expires. This is generally not an issue on credit cards as most cardholders have substantial unused credit limit. However, this may cause a huge problem for debit card transactions as the funds will be frozen and unavailable to the account holder until the authorization expires. For this reason, merchants needing to reverse a debit transaction are encouraged to do a Refund to the card using the same procedure as one would for a credit card. Wireless Terminal Wireless Terminals are small, battery-run credit card machines that process credit and debit transactions in real time without a phone line or Internet connections. They use encrypted communications via the cell phone network allowing them to work virtually anywhere in the United States. Wireless terminals are perfect for conventions, trade shows, craft shows, repair and installation companies. plumbers, landscapers, taxi drivers, or any business person who travels to his customer's location to work. Zero Floor Limit Requires that all transactions receive authorization.

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