My Merchant Account Blog

Tokenization

Saturday, September 10, 2011

A process for protecting card information by which the data are replaced with an alpha-numeric substitute ("token") for their storage in a POS system. The token can be used to identify the purchaser for chargebacks or other post-transaction issues but is useless if stolen.

Terminal

Wednesday, September 07, 2011

A POS device, usually with a small display monitor and keyboard, connecting 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. is a computerized replacement for a cash register. Much more complex than the cash registers of even just a few years ago, the POS system can include the ability to record and track customer orders, process credit and debit cards, connect to other systems in a network, and manage inventory.

Tamper Resistant Security Module

Thursday, September 01, 2011

A payment acceptance device with built-in physical protection to prevent tampering, such as the placement of a skimming device on the module.

Super ISO

Tuesday, August 30, 2011

A large, independent sales organization that supports multiple downstream ISOs and MLSs. Some super ISOs are also processors. The application supports multi-level hierarchical accounting, reporting and security access so that the user can define the levels of processing as a financial institution, Super ISO or standard ISO to fit the requirements of their business.

Sponsor Bank

Monday, August 29, 2011

A federally insured financial institution responsible for connecting merchants to Visa Inc. and MasterCard Worldwide authorization and settlement systems. Also called an acquiring bank, merchant bank or sponsor bank. Acquirers and merchants are the two signatories to merchant agreements. Acquirers can be thrifts, banks or credit unions. For example, First National Bank of Omaha is an acquirer and a bank. To sell bankcard services, it is necessary to have a signed agreement with an acquirer or be part of an ISO that is sponsored by an acquirer. Among other things, an acquirer deposits daily card totals to merchant accounts and debits monthly processing fees from those accounts. The acquiring bank must handle all funds, deposits and settlements with merchants. ISOs and other entities on the acquiring side of the bankcard business also refer to themselves informally as acquirers, as evidenced by several regional acquirers associations thriving throughout the United States, but strictly speaking, they are not acquirers. Also known as: acquirer.

Sniffer

Thursday, August 25, 2011

Malware used by hackers to intercept payment card data traveling through merchant or processor networks.Sniffers monitor network data. A sniffer can be a self-contained software program or a hardware device with the appropriate software or firmware programming. Sniffers usually act as network probes or "snoops." They examine network traffic, making a copy of the data without redirecting or altering it.

Skimming

Tuesday, August 23, 2011

Running credit or debit cards through an electronic device (skimmer) to capture and store account information from cards' magnetic stripes. The data are then used to create counterfeit cards or fraudulent transactions. Often skimmers are placed surreptitiously over legitimate payment equipment, from which they lift the payment data from any subsequent transactions.

Signature Debit

Saturday, August 20, 2011

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. Signature-debit transactions are processed much like credit card transactions. They are sent over one of the major credit card networks -- Visa, MasterCard, Discover, etc -- depending on which credit card network your bank is associated with as a member bank.

Settlement

Friday, August 19, 2011

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.

Self-Assessment Questionnaire

Wednesday, August 17, 2011

A document used as a validation tool by merchants and service providers to demonstrate compliance with the PCI DSS. Updated in 2008, it is designed to simplify and streamline the assessment process and aid small and mid-sized merchants who are not required to have on-site PCI compliance assessments. The new SAQ comes in four versions with questions tailored specifically for different categories of card acceptors.It has been developed to address requirements applicable to merchants who retain only paper reports or receipts with cardholder data, do not store cardholder data in electronic format and do not process or transmit any cardholder data on their systems or premises.

Reversal

Tuesday, August 16, 2011

A method of recourse for merchants to counter chargeback claims. Cardholders can also set reversals in motion when they rescind chargeback claims. A change in the direction of a price trend. On a price chart, reversals undergo a recognizable change in the price structure. An uptrend, which is a series of higher highs and higher lows, reverses into a downtrend by changing to a series of lower highs and lower lows. A downtrend, which is a series of lower highs and lower lows, reverses into an uptrend by changing to a series of higher highs and higher lows.

Restricted Authorization Network

Thursday, August 04, 2011

Pertains to cards issued by a corporate entity, or group of corporate entities. They can only be redeemed within a restricted selection of corporate entities, defined by geography, type of business, type of terminal et cetera. Also known as restricted loop card or semi-open-loop cards.

Response Code

Friday, July 29, 2011

A number provided by a card issuing bank to a merchant either verifying that a particular transaction was accepted or explaining why it was declined. Respose code is approved, declined, HV, CV, Etc. Exact Match 00 or 85 Approved transaction. There was an exact match on the zipcode and address that was provided.

Reserve

Saturday, July 23, 2011

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. Also known as: hold back . In asset-based lending, the difference between the value of the collateral and the amount lent. Also, funds set aside for emergencies or other future needs. In an auction, the minimum amount a seller is willing to sell at, known to the auction house but not the bidders. From the point of view of financial statements, reserves are provided as an estimate of liabilities that have a good probability of arising, such as bad debt reserve attempts to estimate what percentage of the firm's creditors will not pay (based on previous records and practical experience). Reserves are always a subjective estimate (since they reflect contingent liabilities).

Remote Deposit Capture

Tuesday, July 19, 2011

Electronic check services by which paper checks are converted into digital images for electronic clearing and settlement, through either electronic check or ACH systems. Remote deposit capture (RDC) is a system that allows a customer to scan checks remotely and transmit the check images to a bank for deposit, usually via an encrypted Internet connection. When the bank receives a check image from the customer, it posts the deposit to the customer's account and makes the funds available based upon the customer's particular availability schedule. Banks typically offer RDC to business customers rather than to individuals.

Remittance Card

Monday, July 18, 2011

A card that enables the user to transfer funds to another party, normally overseas, and often in another currency. No bank is required to transfer the money, and the recipient has instant access to the funds made available, either to spend in a retail outlet or to obtain cash through an ATM.

Qualified Security Assessor

Tuesday, July 12, 2011

An auditor, certified by the PCI SSC, who assesses the PCI compliance of payment systems to ensure they are properly protecting card data. The PCI DSS requires that all Level 1 merchants (those that process over 6 million card transactions a year) be evaluated annually by a QSA.

Program Manager

Saturday, July 09, 2011

The entity responsible for managing the core attributes of a prepaid card program. Program managers can either manage for other companies, or be responsible for issuing their own prepaid card products. For MasterCard Worldwide, entities are required to have an ISO /MSP license in order to become program managers.

Processor

Friday, July 08, 2011

The company that moves transactions on behalf of acquirers among merchants, banks and the card networks. Some, but not all acquirers are processors. Non-bank service firm which handles credit card transactions of the customers (merchants) of an acquiring bank.

Prepaid Card

Wednesday, July 06, 2011

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 mallbranded). The most common type of prepaid card in use today is the gift card. It allows a person the convenience of a credit card without going into debt. You can use them to purchase items online or in person, but since you must load them with funds before using them, you never spend more money than you have.

Merchant

Monday, July 04, 2011

A merchant is a business / businessperson who sales products / services to other individuals or companies.

In the United States, "merchant" is defined (under the Uniform Commercial Code) as any person while engaged in a business or profession or a seller who deals regularly in the type of goods sold. Under the common law and the Uniform Commercial Code in the United States, merchants are held to a higher standard in the selling of products than those who are not engaged in the sale of goods as a profession.

Point Of Sale

The place where retail sales occur and payment transactions are initiated. Point of sale, or POS as it is more commonly abbreviated, refers to the capturing of data and customer payment information at a physical location when goods or services are bought and sold. The POS transaction is captured using a variety of devices which include computers, cash registers, optical and bar code scanners, magnetic card readers, or any combination of these devices.

PIN Transaction Security

Sunday, July 03, 2011

A special list of security requirements for PINenabled card acceptance modules. This was formerly called the PCI PIN Entry Device (PCI PED) requirements. To gain approval by PCI Security Standards Council, PIN transaction security must comply with the requirements and guidelines specified in the following documents. Vendors preferring to complete forms electronically should download the appropriate documents.

PIN Debit

Friday, July 01, 2011

A debit card transaction authorized by the cardholder using a personal identification number. A password that a person uses to access an ATM with one's debit card, though they are increasingly being used for all debit card transactions. A PIN protects the person who owns the card from identity theft as well as the risk that a thief can steal the card and then use it without limit.

Personal Identification Number

Thursday, June 30, 2011

A number used by a cardholder to authorize card payments. It is often abbreviated as PIN, a secret code consisting of letters and/or numbers that is used to verify the identity of the individual trying to access a computer system, network, credit card account, ATM, etc. Also called access code or security Number.

PCI Security Standards Council

Saturday, June 25, 2011

An agency responsible for the development, management and education of the PCI security standards, including the PCI DSS, PA DSS, and PTS. The council was founded in 2006 by AmEx, Visa, MasterCard, JCB and Discover. It is the governing organization and open forum responsible for the development, management, education, and awareness of PCI Security Standards Council, including the Data Security Standard (PCI DSS) and the Payment Application Data Security Standard (PA-DSS).

PCI PIN Entry Device

Tuesday, June 21, 2011

Renamed PIN Transaction Security (PTS), this is a special list of security requirements for PIN-enabled card acceptance modules. To gain approval by PCI Security Standards Council, PIN transaction security must comply with the requirements and guidelines specified in the following documents. Vendors preferring to complete forms electronically should download the appropriate documents.

PCI DSS

Sunday, June 19, 2011

Established by the major payment brands, including American Express Co., Discover Financial Services, JCB International Co. Ltd., MasterCard Worldwide and Visa Inc., the PCI DSS is now managed by the PCI Security Standards Council. The is designed to enhance payment account data security worldwide and consists of 12 requirements governing security management, policies, procedures, network architecture, software design and other areas critical to the protection of cardholder data. 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. Also known as: Payment Card Industry Data Security Standard (PCI DSS)

Payroll Card

Tuesday, June 14, 2011

A reloadable, network-branded prepaid card on which is deposited an employee's salary (usually through a bank transfer). Used as an alternative to cash or check where the employee does not have a bank account or prefers this method of payment. Payroll cards are financial cards that make it possible to access wages and other earnings issued to the cardholder by an employer. The use of a payroll card service makes it possible to eliminate the need for a direct deposit into a checking account as well as the necessity to manually deposit a paycheck into a bank account. With a payroll card, the employee can withdraw money from any automatic teller machine, or use the card in the same manner as any debit card.

Payment Card Industry Data Security Standard

Monday, June 13, 2011

Established by the major payment brands, including American Express Co., Discover Financial Services, JCB International Co. Ltd., MasterCard Worldwide and Visa Inc., the PCI DSS is now managed by the PCI Security Standards Council. The PCI DSS is designed to enhance payment account data security worldwide and consists of 12 requirements governing security management, policies, procedures, network architecture, software design and other areas critical to the protection of cardholder data. 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. Also known as: PCI DSS

Payment Card Industry Data Security Standard (DSS)

Wednesday, June 08, 2011

Established for securing 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.e PCI DSS applies to any entity that stores, processes, and/or transmits cardholder data. It covers technical and operational system components included in or connected to cardholder data. If your business accepts or processes payment cards, it must comply with the PCI DSS.

Payment Application Data Security Standard

Monday, June 06, 2011

Established to help software vendors and others develop secure payment applications that do not store prohibited data and to ensure their compliance with the PCI DSS. Payment applications that are sold, distributed or licensed to third parties are subject to PA DSS requirements. In-house payment applications developed by merchants or service providers that are not sold to a third party are not subject to PA DSS requirements but must still be secured in accordance with the PCI DSS.

Non-Reloadable

Sunday, June 05, 2011

A prepaid product with a fixed value. Additional funds cannot be added to the existing value.A "non-reloadable prepaid" card, meaning the initial value is set by the person who purchased the card. Additional funds cannot be added later.

Network-Branded

Friday, June 03, 2011

A prepaid product that can be accepted as payment by any merchant subscribing to that network's service. Also called open-loop. The Network Branded card can be used anywhere Visa, MasterCard, or Discover cards are accepted. SVS currently supports both cards branded with a Visa, MasterCard or Discover logo as well as private label cards with access restricted to specific locations or redeeming qualifications.

MSP

Wednesday, June 01, 2011

An organization registered with Visa and sponsored by an acquiring bank to sell VISA card acceptance services; also refers to an organization that works with and does business under the name of such a registered ISO. ISOs may also service merchant accounts once they are registered, dependent upon the contract with the acquirer. MasterCard uses the term "member service provider" to describe ISOs. However, it is common within the payments industry to use the term "ISO" when referring to independent sales organizations registered with either or both card brands. Also known as: independent sales organization (ISO).

Merchant Discount

Saturday, May 28, 2011

Consists of interchange fees charged to merchants by issuing banks for the ability to accept bankcard transactions combined with fees charged to merchants by acquirers to cover such services as processing, terminal installation, help desks and statement rendering. The merchant discount is set by the acquirer at a percentage of the purchase amount, typically between 1.5 percent and 3.5 percent. Sometimes the acquirer's portion of the merchant discount is referred to as the net merchant discount. Also referred to as a transaction fee.

Merchant Bank

Tuesday, May 24, 2011

A federally insured financial institution responsible for connecting merchants to Visa Inc. and MasterCard Worldwide authorization and settlement systems. Also called an acquiring bank, merchant bank or Sponsor Bank. Acquirers and merchants are the two signatories to merchant agreements. Acquirers can be thrifts, banks or credit unions. For example, First National Bank of Omaha is an acquirer and a bank. To sell bankcard services, it is necessary to have a signed agreement with an acquirer or be part of an ISO that is sponsored by an acquirer. Among other things, an acquirer deposits daily card totals to merchant accounts and debits monthly processing fees from those accounts. The acquiring bank must handle all funds, deposits and settlements with merchants.ISOs and other entities on the acquiring side of the bankcard business also refer to themselves informally as acquirers, as evidenced by several regional acquirers associations thriving throughout the United States, but strictly speaking, they are not acquirers. Also known as: acquirer.

Member Service Provider

Sunday, May 22, 2011

An organization registered with Visa and sponsored by an acquiring bank to sell VISA card acceptance services; also refers to an organization that works with and does business under the name of such a registered ISO. ISOs may also service merchant accounts once they are registered, dependent upon the contract with the acquirer. MasterCard uses the term "member service provider" to describe ISOs. However, it is common within the payments industry to use the term "ISO" when referring to independent sales organizations registered with either or both card brands. Also known as: independent sales organization (ISO).

Mail Order-Telephone Order

Monday, May 16, 2011

A category of card-not-present transactions involving purchases made through mail order or telesales companies. In this type of transaction, the merchant typically has a card terminal and manually keys in required card information for transmission to the appropriate authorization network. Interchange rates for these transactions are among the highest.

Magnetic Ink Character Reader

Monday, May 09, 2011

A countertop device used to scan magnetic ink character recognition lines. A MICR line is a sequence 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.

Issuing Bank

Sunday, May 08, 2011

A federally insured financial institution that issues credit and debit cards; this is the cardholder's financial institution. The issuing bank assumes primary liability for the consumer's capacity to pay off debts they incur with their card. In the case of credit cards, the issuing bank extends a line of credit to the consumer. Liability for non-payment is then shared by the issuing bank and the acquiring bank, according to rules established by the card association brand.

ISO

Saturday, May 07, 2011

An organization registered with Visa and sponsored by an acquiring bank to sell VISA card acceptance services; also refers to an organization that works with and does business under the name of such a registered ISO. ISOs may also service merchant accounts once they are registered, dependent upon the contract with the acquirer. MasterCard uses the term "member service provider" to describe ISOs. However, it is common within the payments industry to use the term "ISO" when referring to independent sales organizations registered with either or both card brands. Also known as: independent sales organization (ISO)

ISA

Friday, May 06, 2011

People 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. Also known as: independent sales agent (ISA)

Interchange

Wednesday, May 04, 2011

The fee paid to the card issuing bank by the card acquiring bank by way of the processor. Interchange is the base fee to which all other acquiring and processing fees are added to come up with the merchant discount rate. Interchange rates vary widely based on card type, transaction amount, risks and retail sector. It is assessed on all Visa- and MasterCard branded cards, even PIN-based debit cards. In certain circumstances interchange flows in reverse, such as following a chargeback.

Independent Sales Organization

Saturday, April 30, 2011

An organization registered with Visa and sponsored by an acquiring bank to sell VISA card acceptance services; also refers to an organization that works with and does business under the name of such a registered ISO. ISOs may also service merchant accounts once they are registered, dependent upon the contract with the acquirer. MasterCard uses the term "member service provider" to describe ISOs. However, it is common within the payments industry to use the term "ISO" when referring to independent sales organizations registered with either or both card brands. Also known as: ISO, member service provider, MSP

Independent Sales Agent

Tuesday, April 26, 2011

People 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. Also known as: agents,ISA.

Hold Back

Sunday, April 24, 2011

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. Also known as: reserve

Gift Card Mall

Thursday, April 21, 2011

A physical or virtual rack or display unit that allows customers of a destination retailer to buy a prepaid card issued by a range of different prepaid card issuers. Also referred to as "gift card center" and "gift card shop."

General Purpose - General Spend Card

Monday, April 18, 2011

An open-loop or network-branded card whose sole purpose is to facilitate normal spending transactions, with functionality similar to a debit card but without the need for a bank account.

Floor Limit

Friday, April 15, 2011

The payment amount above which credit and debit card transactions must be authorized; this amount is specified in each merchant's processing agreement.The term floor limit comes from the days when it was the maximum amount which could be approved on the floor (of the retailer), beyond which the cash register operator would have to call for approval.

Factoring

Monday, April 11, 2011

When a merchant processes sales through his or her merchant account on behalf of another merchant. Laundering violates the terms of merchant agreements. Also called draft laundering and factoring. Also known as: card laundering.

Expiration Date

Sunday, April 10, 2011

Date after which a card can no longer be used. Most network-branded cards have an expiration date. Some closed-loop cards expire after a certain period of inactivity or after a certain date, although this is becoming increasingly rare.

End-To-End Data Encryption

Tuesday, April 05, 2011

Refers to the process of converting card data to seemingly unreadable text from the moment it gets entered at the POS and through to the final authorization. Sensitive data that travels over a network are securely encrypted from the point of data entry to the point where the data is processed. Sensitive data may be user name, password, credit card number, etc.

Encryption

Saturday, April 02, 2011

A method of protecting data. Encryption transforms readable information using an algorithm (called a cipher) and makes it unintelligible to anyone except those who possess a key that converts the information back into readable form. See also end-to-end data encryption. Encryption is the most effective way to achieve data security. To read an encrypted file, you must have access to a secret key or password that enables you to decrypt it. Unencrypted data is called plain text ; encrypted data is referred to as cipher text.

Electronic Funds Transfer

Tuesday, March 29, 2011

A way of performing financial transactions electronically. The Pulse and Star networks are examples of EFT systems. It is a system of transferring money from one bank account directly to another without any paper money changing hands. One of the most widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into an employee's bank account, although EFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM, Fedwire and point-of-sale (POS) transactions. It is used for both credit transfers, such as payroll payments, and for debit transfers, such as mortgage payments.

Draft Laundering

Wednesday, March 23, 2011

When a merchant processes sales through his or her merchant account on behalf of another merchant. Laundering violates the terms of merchant agreements.Also called draft laundering and factoring. Credit card factoring, also known as credit card laundering, or even money laundering, can exist in many forms. The most basic form of factoring would be a business processing transactions for another business. Another common case of factoring is when a business opens a branch, DBA, or sub-business and attempts to process through the central company’s merchant account. This case is often seen when a business starts a website, and tries to process credit card transactions without opening a separate merchant account for their website.

Discount Rate

Thursday, March 17, 2011

The percentage of card sales acquirers collect from merchants for transaction authorization, settlement and so forth.The same as interest rate; the term "discount" does not refer to the common meaning of the word, but to the meaning in computations of present value, e.g. net present value or discounted cash flow.

Demand Deposit Account

Wednesday, March 16, 2011

A checking account with a financial institution. An account from which deposited funds can be withdrawn at any time without any notice to the depository institution.This account allows you to "demand" your money at any time, unlike a term deposit, which cannot be accessed for a predetermined period (the loan's term). Most checking and savings accounts are demand deposits, accessible by the account holder at any time.

Debit Cards

Tuesday, March 15, 2011

Issued by financial institutions and tied to cardholders' DDAs. Debit cards come in online/offline and offline-only versions. Online in this context means able to interface with the card brand networks for authorization at the POS. Debit cards can be co-branded with Discover, MasterCard or Visa. Online debit requires customers to enter PINs; offline debit card payments are authorized with cardholder signatures.

Data Breach

Wednesday, March 09, 2011

The capture of sensitive payment card data by an untrusted party.Other terms for this phenomenon include unintentional information disclosure, data leak and also data spill. Incidents range from concerted attack by black hats with the backing of organized crime or national governments to careless disposal of used computer equipment or data storage media.

Credit Cards

Can be issued by banks and nonbanks and are associated with such brand names as AmEx, Discover Financial Services, MasterCard, JCB International Co. Ltd. and Visa. It is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

Chargeback

Monday, March 07, 2011

When a cardholder's bank (issuer) reverses all or part of a card transaction back to the merchant bank (acquirer), which typically kicks the transaction back to the merchant's account, leaving the merchant financially liable for the payment and subject to fines.

Chargebacks can be initiated by customers or by cardholders' banks (for example, due to procedural errors). Chargeback Ratios that exceed 1 percent of monthly sales generally are considered excessive.

Types of Chargebacks

Chargebacks are currently divided into

• Non Receipt of Goods or Services Chargeback Codes
• Cancelled or Returned Chargeback Codes
• Authorization Error Codes for Chargebacks
• Fraud Codes for Chargebacks
• Non Receipt of Information Chargebacks

Closed-Loop

Sunday, March 06, 2011

Cards (such as retail gift cards) issued by a single corporate entity. Such cards can only be redeemed within that entity or within a series of entities that have agreed to take the cards.

Check Scanner

Saturday, March 05, 2011

A counter-top device used to scan images of checks, according to legal specifications, for electronic clearing and settlement. Some of it offers new innovative features, the highest MICR accuracy available and the quality and reliability.If your business takes in less than 50 checks per day, a single-feed check scanner will probably be adequate.

Certificate Authority

Friday, March 04, 2011

An e-commerce service that validates Internet parties to an online transaction. If the user trusts the CA and can verify the CA's signature, then he can also verify that a certain public key does indeed belong to whoever is identified in the certificate.

Card Verification Value Number

Friday, February 25, 2011

The three-digit number on the back of Visa Inc. and MasterCard Worldwide credit and debit cards. It is used as a security feature in card-not-present transactions. The CVV number helps guard against the use of data stolen from payment networks by hackers. Intercepted data will usually comprise the cardholder name, card number and card expiration date, but not the CVV, which is generally obtained only by viewing the physical card.

Card Laundering

Sunday, February 20, 2011

When a merchant processes sales through his or her merchant account on behalf of another merchant. Laundering violates the terms of merchant agreements. Also called draft laundering and factoring.

Card-Not-Present

Saturday, February 19, 2011

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

Buy Rate

Friday, February 18, 2011

The acquiring bank's fee; it is equal to interchange (which is paid to the issuing bank) plus the acquiring bank's markup. Think of it as the wholesale price of a transaction to which processing and other fees are added to come up with the cost to a merchant. Buy rates have not been widely used since the multitude of interchange rates came into being; many ISOs and acquirers now use pricing models that involve splits of net revenue.

Breakage

The unredeemed or unspent funds on a gift or prepaid card. It used in sales, distribution, and multi-level marketing organizations to indicate commissions that are lost for the failure to meet certain conditions or requirements. Revenue from breakage is almost entirely profit as commissions lost for failure to meet those conditions or requirements can never be recovered.

Batch

A collection of card receipts saved for submission, usually at the end of the business day. When the receipts are sent, the batch is "closed."

Bank Identification Number

A numerical code assigned to each federally insured financial institution for the routing of transactions and other purposes. Independent Sales Organizations (ISO) and Merchant Level SalespersonsMLSs board merchants using the BINs of their respective acquiring banks.

As we discussed earlier in How Credit Card Numbers Are Determined, the card assocations (Visa, MasterCard, Discover, American Express, etc) all have a unique way of starting their account numbers for consumers.  However, they all have something in common: the way the number is determined, called the mod-10 or Luhn's method.

AVS

Thursday, February 17, 2011

A fraud deterrent technique used in card-notpresent situations. AVS offers various levels of address verification detail, including cardholder ZIP codes and street numbers.The Address Verification Service (AVS) is an extra security measure that could substantially reduce the number of disputed transactions you have to deal with. As the name suggests, AVS verifies a cardholder’s billing address. The system works by checking the street address and postcode supplied by the buyer, which are included in the message you send during the normal course of a transaction authorisation.

Authorization

An electronic exchange between a card issuing bank and an acquiring bank, initiated through a POS terminal, confirming a cardholder has sufficient credit (or funds in a demand deposit account if it is a debit card) to cover a pending transaction. It is the function of specifying access rights to resources, which is related to information security and computer security in general and to access control in particular. More formally, "to authorize" is to define access policy. For example, human resources staff are normally authorized to access employee records, and this policy is usually formalized as access control rules in a computer system.

Aggregator

Wednesday, February 16, 2011

A company that manages the commercial relationships, physical transactions and physical distribution of prepaid cards sold in a destination retailer through a gift card mall on behalf of issuers. Also called a distributor. An entity that buys noncompeting products or product lines, warehouses them, and resells them to retailers or direct to the end users or customers. Most distributors provide strong manpower and cash support to the supplier or manufacturer's promotional efforts. They usually also provide a range of services (such as product information, estimates, technical support, after-sales services, credit) to their customers.

Agents

People 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. Also known as: independent sales agent (ISA).

Acquiring Bank

A federally insured financial institution responsible for connecting merchants to Visa Inc. and MasterCard Worldwide authorization and settlement systems. Also called an acquiring bank, merchant bank or sponsor bank.

Acquirers and merchants are the two signatories to merchant agreements. Acquirers can be thrifts, banks or credit unions. For example, First National Bank of Omaha is an acquirer and a bank. To sell bankcard services, it is necessary to have a signed agreement with an acquirer or be part of an ISO that is sponsored by an acquirer. Among other things, an acquirer deposits daily card totals to merchant accounts and debits monthly processing fees from those accounts. The acquiring bank must handle all funds, deposits and settlements with merchants.

ISOs and other entities on the acquiring side of the bankcard business also refer to themselves informally as acquirers, as evidenced by several regional acquirers associations thriving throughout the United States, but strictly speaking, they are not acquirers. Also known as: acquirer

Acquirer

Monday, January 31, 2011

The financial institution that establishes and maintains the merchant account, receives transactions from the merchant, and initiates the interchange via VISA / MasterCard. The acquirer must be a licensed member of MasterCard or VISA.

A federally insured financial institution responsible for connecting merchants to Visa Inc. and MasterCard Worldwide authorization and settlement systems. This can also be known as:

• An acquiring bank
• Merchant bank
• Sponsor bank

Acquirers and merchants are the two signatories to merchant agreements. Acquirers can be thrifts, banks or credit unions. For example, First National Bank of Omaha is an acquirer and a bank. To sell bankcard services, it is necessary to have a signed agreement with an acquirer or be part of an ISO that is sponsored by an acquirer. &nbsb;Among other things, an acquirer deposits daily card totals to merchant accounts and debits monthly processing fees from those accounts. The acquiring bank must handle all funds, deposits and settlements with merchants.

ISOs and other entities on the acquiring side of the bankcard business also refer to themselves informally as acquirers, as evidenced by several regional acquirers associations thriving throughout the United States, but strictly speaking, they are not acquirers.

Automated Clearing House - ACH

Saturday, January 29, 2011

When applying for a merchant account, you might see this term (ACH).  The Automated Clearing House is an electronic network for financial transactions in the United States.  Merchant account providers usually rely on this network to deposit your funds into your checking account.

Retrieval Request

Wednesday, October 27, 2010

A retrieval request happens when the cardholder’s bank asks for a readable copy of the transaction sales draft.  Things like billing questions, fraud inquiries, POS mistakes and cardholder disputes are among a variety of reasons for a retrieval request.

MasterCard requires merchants keep their sales drafts in storage 180 days; Visa has a three-year requirement.  It is advisable to keep these records seven years, however, for your business tax purposes. 

There are ways to avoid retrievable requests.  Whenever possible, obtain a card imprint and make sure the customer signs it.  Check all the card’s security features and compare the signature on the card to the customer’s signature. 

Since time and money are involved in this type of request, there is usually a (retrieval request) fee involved.