Card acceptance terms
Acceptance marks
Signifies which payment brands are accepted at a merchant location; provides the cardholder with information on where his or her card can be used.
Account holder
Person to whom a credit and/or debit account is issued or who is authorized by such person to use the account.
Account issuer
Bank that offers card brand (Visa, Mastercard,etc.) payment cards directly to consumers.
Account number
The unique identifier (typically a number) that an account issuer, as part of providing a credit or debit account, issues to an account holder.
American Express
Multinational financial services corporation best known for its credit card, charge card, and Travelers Cheques business.
Association
Group of card-issuing banks or organizations that set common transaction terms for merchants, issuers, and acquirers.
Card acceptor business code
A four-digit numerical representation of the type of business in which the card acceptor (merchant) engages.
Card brands
Member-based corporations that connect consumers, businesses, and banks to transact through electronic payments instead of cash and check; also establish and enforce rules amongst members and promote the brands (popular card brands include Visa and Mastercard).
Card issuer
Any association member financial institution, bank, credit union, or company that issues (or causes to be issued) plastic cards to cardholders.
Cardholder
Person or entity that receives an account from a card company or issuer.
Credit card number
Unique number assigned to a credit card account.
Discover
Major credit card, issued primarily in the US; most cards with the Discover brand are issued by Discover Bank; payment transactions are processed through the Discover Network.
Expiration date
The date embossed on a credit or debit card beyond which it becomes invalid.
“Honor All Cards” rule
A network brand acceptance rule, which requires merchants that accept one of a major card network’s cards to accept all of the network’s cards regardless of card issuer or specific card program.
Master Merchant
Payment facilitator that becomes the “Merchant of Record” on behalf of a network of smaller merchants (sub-merchants) or billing companies that regularly collect payments; key markets for Master Merchant networks include government, education, utilities, and nonprofit organizations.
Mastercard
American multinational financial services corporation; its principal business is to process payments between the banks of merchants and the card-issuing banks or credit unions of the purchasers who use Mastercard debit, credit, and prepaid cards to make purchases; a publicly traded company since 2006.
Merchant
A commercial entity or person authorized to accept cards and access devices when properly presented; an organization that uses credit cards to receive payments from its customers pursuant to agreement with card brands.
Merchant agreement
A written agreement between a merchant and a bank that contains their respective rights, duties, and warranties with respect to acceptance of payment cards and matters related to card activity.
Merchant bank
Bank that has an agreement with a merchant to accept (acquire) deposits generated by card transactions.
Merchant category code (MCC)
A code designating the principal trade, profession, or line of business in which a merchant is engaged. The MCC is used by American Express, Discover, Mastercard, and Visa.
Merchant identification number (MID)
A unique number assigned to a merchant account to identify it through the course of payment processing activities.
Payment facilitator
A merchant registered by an acquirer to facilitate transactions on behalf of sub-merchants.
Payment gateway
Facilitates the transfer of information between a payment portal and the front-end processor or acquiring bank.
Payment processor
Company appointed by merchants to handle card transactions for merchant acquiring banks.
Payment system
An operational network governed by laws, rules, and standards that links bank accounts and provides the functionality for monetary exchange using bank deposits.
Primary account number (PAN)
The number that is embossed and/or encoded on a plastic card that identifies the issuer and the cardholder account.
Recurring services merchant
A merchant that provides services of an ongoing nature to a cardholder (club membership, magazine subscription, etc.) and uses recurring transactions to bill the cardholder for these services.
Standard industrial classification (SIC)
A system for classifying industries by a four-digit code; historically used by the IRS and the banking industry.
Chareback terms
Account issuer
Bank that offers card brand (Visa, Mastercard,
etc.) payment cards directly to consumers.
Account number
The unique identifier (typically a number) that an account issuer, as part of providing a credit or debit account, issues to an account holder.
American Express
Multinational financial services corporation best known for its credit card, charge card, and Travelers Cheques business.
Association
Group of card-issuing banks or organizations that set common
transaction terms for merchants, issuers, and acquirers.
Card acceptor business code
A four-digit numerical representation of the type of
business in which the card acceptor (merchant) engages.
Card brands
Member-based corporations that connect consumers, businesses, and banks to transact through electronic payments instead of cash and check; also establish and enforce rules amongst members and promote the brands (popular card brands include Visa and Mastercard).
Card issuer
Any association member financial institution, bank, credit union, or company that issues (or causes
to be issued) plastic cards to cardholders.
Cardholder
Person or entity that receives an account from a card company or issuer.
Credit card number
Unique number assigned to a credit card account.
Discover
Major credit card, issued primarily in the US; most cards with the Discover brand are issued by Discover Bank; payment transactions are processed through the Discover Network.
Expiration date
The date embossed on a credit or debit card beyond which it becomes invalid.
“Honor All Cards” rule
A network brand acceptance rule, which requires merchants that accept one of a major card network’s cards to accept all of the network’s cards regardless of card issuer or specific card program.
Master Merchant
Payment facilitator that becomes the “Merchant of Record” on behalf of a network of smaller merchants (sub-merchants) or billing companies that regularly collect payments; key markets for Master Merchant networks include government, education, utilities, and nonprofit organizations.
Mastercard
American multinational financial services corporation; its principal business is to process payments between the banks of merchants and the card-issuing banks or credit unions of the purchasers who use Mastercard debit, credit, and prepaid cards to make purchases; a publicly traded company since 2006.
Merchant
A commercial entity or person authorized to accept cards and access devices when properly presented; an
organization that uses credit cards to receive payments from its customers pursuant to agreement with card brands.
Merchant agreement
A written agreement between a merchant and a bank that contains their respective rights, duties, and warranties with respect to acceptance of payment cards and matters related to card activity.
International payment terms
Bank identification code (BIC)
Similar to a routing number in the US, a BIC uniquely identifies financial institutions globally. Mainly used when transferring money between banks (e.g., SEPA payments). Also known as SWIFT code.
Cross-border fees
Fees associated with cross-border transactions.
Cross-border transaction
A transaction for which the country/region of the payment card’s issuing bank and that of the merchant’s acquiring bank are different.
Domicile
See local entity.
Dynamic currency conversion
Conversion of the purchase price of goods or services from one currency to another, as agreed to by the cardholder and merchant; that currency becomes the transaction currency, regardless of the merchant’s local currency.
Foreign currency
A currency other than local currency.
IBAN (International Bank Account Number)
An internationally agreed system of identifying bank accounts across national borders to facilitate the communication and processing of cross-border transactions with a reduced risk of transcription errors.
Interchange Fee Regulation (IFR)
Also known as the EC MIF Regulation, IFR refers to the regulation of the European Parliament and of the Council on multilateral interchange fees (MIFs) for card-based payment transactions.
Local acquiring
The ability to acquire in country/region in which acquiring and issuing banks reside. Generally drives higher approvals and lower issuer and network assessment fees.
Local entity
An organization or business that has a legal and separately identifiable existence within a given jurisdiction.
Purchase currency
The currency in which an issuer bills a cardholder for transactions.
SEPA
Stands for Single Euro Payments Area. Refers to an initiative within the European Union to streamline Euro-denominated bank transfers across the EU. Now serves as the infrastructure supporting all direct debit payments in the EU.
Settlement currency
The currency in which the merchant will be paid in.
Fraud and security terms
3-D Secure
XML-based protocol designed as an additional security layer for online credit and debit card transactions; initially developed by Visa, the protocol has been adopted by Mastercard, American Express, and other card brands under various names.
Address verification service (AVS)
The process of validating a cardholder’s given address against the issuer’s records to determine authenticity and deter unauthorized use; a code is returned with the authorization result that indicates the accuracy of the address match.
American Express SafeKey
American Express’ version of 3-D Secure, an online authentication process used to decrease online fraud and increase consumer confidence.
Authentication
The process of assuring that data has come from its claimed source, or a process of corroborating the claimed identity of a communicating party.
Card control
Mobile application powered by Ondot Systems that allows cardholders to decide when and where their cards can or cannot be used based on a series of preference settings.
Card security code (CSC)
A three- or four-digit code printed on charge, credit, and debit cards for the purpose of establishing the owner’s identity and minimizing the risk of fraud. On Mastercard, Visa, and Discover cards, the three-digit CSC is printed in the signature panel on the back following the account number. On American Express cards, the four-digit CSC appears on the front of the card above the account number. The CSC
is also known as the card identification number (CID), card verification code (CVC), and card verification value (CVV).
Check verification
Process that screens checks and check writers against a “negative database” at the POS when the customer presents a check as payment.
Data breach
Unintentional release of secure information to an entrusted environment which often times refers to payment card details or sensitive account information.
Discover ProtectBuy
Discover’s version of 3-D Secure, an online authentication process used to decrease online fraud and increase consumer confidence.
Duplicate checking
The policy and procedures that prevent identical sales records from being processed.
EMV
Stands for Europay, Mastercard, and Visa; global standard for inter-operation of integrated circuit cards (chip cards) and integrated circuit card capable POS terminals and ATMs, for authenticating credit and debit card transactions.
Encryption
The process of encoding sensitive information for secure transmission across the internet.
end-to-end encryption (E2EE)
Uninterrupted protection of the confidentiality and integrity of transmitted data by encoding it at its starting point and decoding it at its destination.
Friendly fraud
When a consumer makes a purchase with their own credit card and then issues a fraud coded chargeback through the card provider (after receiving the goods or services) to cancel the transaction and refund the money.
Malware
Software that is intended to damage or disable computers and computer systems.
Mastercard SecureCode
Mastercard’s version of 3-D Secure, an online authentication process used to decrease online fraud and increase consumer confidence.
PA-DSS (Payment Application DataSecurity Stan- dard)
Global security standard created by the Payment Card Industry Security Standards Council, formerly referred to as the Payment Application Best Practices.
Integrated payment technology terms
Application programming interface (API)
A set of routines, protocols, and tools that are used for building software applications. A company releases its API to the public so that software developers can design products that are powered by its service.
Integrated payments
When payment processing solutions are integrated with other business functions such as accounting, customer relationship management, and inventory management systems.
Integrated Software Vendor (ISV)
A company specializing in developing or selling software that runs on one or more operating system; ISVs often embed payment technology into POS systems for merchants.
Middleware
Software that acts as a bridge between an operating
system or database and applications.
point of sale (POS) developer
A person concerned with researching, designing, implementing, and testing software; POS developers embed payment technology into POS systems.
Software as a service (SaaS)
Software delivery model in which software is licensed on a subscription basis and is centrally hosted.
Software development kit (SDK)
A set of software development tools that allow the creation of applications for a certain software package.
Value added reseller (VAR)
A company that adds features or services to an existing product and then resells it as an integrated product.
Mobile payment terms
Android Pay
Android Pay is a digital wallet platform developed by Google to power in-app and tap-to-pay purchases on mobile devices.
Apple Pay
A mobile payment and digital wallet service offered by Apple that allows users to make payments through NFC technology.
Cloud-based mobile payments
Stores payments information “in the cloud” or on a remote server and not on the mobile device.
Contactless payments
Devices that use radio-frequency identification for making secure payments; embedded chip and antenna enable consumers to wave a device over a reader at the POS.
CurrentC
Free mobile wallet deployed by the Merchant Customer Exchange (MCX) that allows customers to securely save, earn loyalty rewards, and pay across MCX’s growing network of merchants.
Digital wallet
A digital wallet refers to an electronic device (e.g., smartphone) that allows an individual to make eCommerce transactions. Examples of a digital wallet include Android Pay, Apple Pay, and Samsung Pay.
Dongle
Provides electronic copy protection and content protection which, when attached to a computer or other electronic appliance (such as a smartphone), unlocks software functionality or decodes content; commonly used with smartphones to accept payments.
In-app payments
The ability to sell digital content in mobile applications.
Merchant Customer Exchange (MCX)
Company created by a collaboration of leading US retail companies looking to offer a new platform for smartphone-based transactions.
Payment types
Affinity card
A card offered by two organizations, one a card issuer and the other a non-financial group such as a university, sports franchise, or nonprofit organization; cardholders typically receive special discounts or deals for using their cards issued in partnership with a major bank.
Alternative payments
Payment methods that are used as a substitute to traditional card payment; these third-party payment brands use the traditional payment systems of Visa, Mastercard, ACH, etc. for settlement of transactions and are typically used in an eCommerce environment. Some examples of alternative payments include eCheck and PayPal, among others.
Biometric payment
The identification of humans by their characteristics or traits; in payments, a POS technology that uses biometric
authentication to identify the user and authorize the payment.
Bitcoin
A decentralized digital currency.
Charge card
A type of payment card; charges to these cards must be paid in full each month that a statement is issued.
Check guarantee
Program in which the merchant is guaranteed payment on a check; fee is charged to the merchant in exchange for the
service of paying the merchant on any checks that are returned.
Chip card
A card with an embedded EMV-compliant chip containing memory and interactive capabilities used to identify and store additional data about a cardholder, the cardholder’s account, or both.
Closed loop gift card
Prepaid gift card only accepted by the merchant who issued the card.
Co-branded card
A co-branded card is sponsored by both the issuing bank and a retail organization, such as a department store or an airline; cardholders may get benefits from the sponsoring merchant, such as discounts or free merchandise, based on account usage and terms.
Commercial card
General name for cards typically issued for business use; may include corporate, purchase, business, travel, and entertainment cards.
Corporate card
Credit card typically issued to corporate executives or business owners to keep business expenses separate from personal charges.
Credit card
A credit card is a payment card issued to users (cardholders) as a method of payment. It allows the cardholder to pay for goods and services based on the holder’s promise to pay for them. The issuer of the card (usually a bank) creates a revolving account and grants a line of credit to the cardholder, from which the cardholder can borrow money for payment to a merchant or as a cash advance.
Debit card
A payment card that provides the cardholder electronic access to his or her bank account at a financial institution; payments using a debit card are immediately transferred from the cardholder’s designated bank account.
Digital wallet
A digital wallet refers to an electronic device (e.g., smartphone) that allows an individual to make eCommerce transactions. Examples of a digital wallet include Android Pay, Apple Pay, and Samsung Pay.
eCheck
Electronic version of a paper check, used to conduct transactions over the internet.
Gift card
Type of stored-value payment card commonly issued by retailers and banks.
Offline debit
Mastercard or Visa card that is linked to a consumer checking or savings account; transaction is processed in the same manner as any other Mastercard or Visa card.
Online debit
Card account tied to a consumer’s checking or savings account; transaction is processed in a single online message and a PIN is required for authentication; clearing and settlement happens simultaneously.
Open loop gift card
Prepaid gift card issued by banks or credit card companies; can be redeemed at different establishments.
Payment card
Financial tools that allow customers to make purchases without having cash on hand; includes credit, charge, debit, and prepaid cards.
Payment type
Method of payment that a merchant, either now or in the future, honors from account holders as payment for their purchases; payment types may include, but are not limited to, credit, debit, or prepaid cards.
PayPal
Payment processing service that allows payments and money transfers to be made through the internet, via a mobile device, and in-store.
PayPal Credit
A proprietary payment method (formerly named Bill Me Later) that offers consumers a line of revolving credit; allows purchases to be made online without using a credit card.
Peer-to-peer payment
Online technology that allows customers to transfer funds from their bank account or credit card to another individual’s account via the internet or a smartphone.
Prepaid credit card
A type of secured credit card that is tied to a previously deposited cash balance, where purchases are checked for approval against existing funds; essentially a stored-value card that usually carries major card brand logos.
Payment processing terms
An approval response obtained through interactive communication between an issuer and an acquirer or the International Automated Referral Service via telephone, facsimile, or telex communications.
Bank identification number (BIN)
The first four-to-six digits of a card that identifies the institution issuing the card.
Credit limit
The amount established by the issuer that a cardholder may carry as a balance.
Durbin Amendment
Part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (introduced in 2010) that limits transaction fees imposed upon merchants by debit card issuers.
Federal Trade Commission (FTC)
Independent agency of the US federal government that maintains fair and free competition and enforces federal antitrust laws; also educates the public about identity theft.
Fiscal period
Accounting period designation by a person or corporation that may be a variation from the calendar equivalent.
FTC regulations
Rules or guidelines of the FTC (including the Mail or Telephone Order Merchandise Trade Regulation Rule) that govern the shipment of products and charges/refunds related to consumer orders.
Funds delivery date
The date that funds are deposited via ACH or wire in a merchant’s designated depository account.
Funds transfer
ACH transfer of funds between accounts, unless a merchant has specifically requested to have all of its funds transfers delivered by wire.
Interchange Fee Regulation (IFR)
A regulation adopted by the European Parliament in 2015 (and effective December 2015) that caps interchange fees on Visa and Mastercard consumer credit and debit cards issued in the EU.
Know Your Customer (KYC)
Due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them.
Marketplace fairness act
Proposed legislation pending in the US Congress that would enable state governments to collect sales and use taxes from remote retailers (i.e., online and catalog retailers) with no physical presence in their state.
Non-regulated (Exempt)
A card-issuing bank with assets less than $10 billion that is exempt from the limits set forth by the Durbin Amendment.
Regulated (Nonexempt)
A card-issuing bank with assets greater than $10 billion; maximum interchange fee an issuer may receive for an electronic debit transaction is $0.21 per transaction, plus 5 basis points.
Regulated with fraud
An additional $0.01 adjustment toward an issuer’s debit card fee if the issuer develops and implements policies and procedures designed to achieve fraud- prevention standards; debit with fraud adjustment is
$0.22 per transaction, plus 5 basis points for regulated transactions under the Durbin Amendment.
Regulation E
Federal regulation governing all electronic funds transfers.
Regulation Z
Under Regulation Z, credit card issuers are required to disclose the terms and conditions to potential and existing cardholders at the point of account opening and at regular intervals; upon soliciting and opening new credit card accounts, credit card issuers must generally disclose key information relevant to
the costs of using the card, including the applicable interest rate that will be assessed on any outstanding balances and several key fees or other charges that may apply, such as the fee for making a late payment; in addition, issuers must provide consumers with an initial disclosure statement, which is usually a component of the issuer’s cardholder agreement, before the first transaction is made with a card.
Transaction terms
Regulations
Rules, applicable law, operating procedures, etc., that govern the operations of merchants, processors, acquirers, account issuers, and account holders with respect to a payment type; determined by the related acquirer, FTC,
or other relevant administrative or governmental body.
Reserve
Amount in a liability account owned by the acquirer at the settlement bank; it is funded by the merchant and used by the processor, through directions to the settlement bank, to satisfy liabilities and any potential losses attributed to the merchant.
Rolling reserve
Reserve funding method that transfers a specific percentage of a fiscal day’s gross purchased sales into a reserve liability account; after a specified period of time, the remaining fiscal
day’s original transfer amount after appropriate adjustments is automatically reversed by a transfer from a liability account to the then-current fiscal day’s daily proceeds as a reserve surplus.
Truth in Lending Act (TILA)
US federal law designed to ensure more accurate disclosure of credit terms so that consumers can: i) compare the various credit terms available in the credit marketplace; ii) avoid the uninformed use of credit; iii) protect themselves against inaccurate and unfair credit billing and credit card practices; regulation that implements TILA’s requirements is Regulation Z, which is administered by the Federal Reserve.
Automatic bill payment
An arrangement between a merchant or service provider and a customer that allows recurring automatic charges for a service to an agreed-upon card account.
Card reader
A device that is capable of reading the encoding on plastic cards.
Cross-border transaction
A transaction for which the country/region of the payment card’s issuing bank and that of the merchant’s acquiring bank are different.
Deferred billing
A transaction completed in a card-not-present environment for which the cardholder is billed
once no more than 90 days after the first shipment
of merchandise.
eCommerce transaction
Transaction between a merchant and a cardholder over the internet and other networks using a cardholder access device.
electronic funds transfer (EFT)
Any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account.
Imprint
An impression of a customer’s card made on the draft; proves that the card was present when the sale was made; imprint can be created electronically by using a magnetic stripe- reading terminal that includes the correct POS entry code.
Imprint machine
A manual credit card impression machine that creates multiple receipts by sliding a handle to record the raised numbers on the front of a card onto carbon paper copies.
Installment transaction
The single purchase of goods or services billed to an account in multiple segments over a period of time agreed to between a cardholder and a merchant.
Magnetic stripe
A stripe of magnetic information affixed to the back of a plastic card; contains customer and account information that is required to complete electronic financial transactions.
mail order/telephone order (MO/TO) transaction
Transaction where a cardholder orders goods or services from a merchant by mail, telephone, or other means of telecommunications; neither the card nor the cardholder is present at the merchant.
Online bill presentment and payment
Process that allows consumers to receive, view, and pay certain bills online by transferring money from their checking accounts or charging bills to their credit card.
Point of interaction (POI)
A hardware and/or software component in POS equipment (e.g., a magnetic stripe reader) that enables a card purchase at a retailer (can be attended or unattended); the new generation of POI systems allows devices other than
credit cards to make payments (i.e., smartphones).
point of sale (POS)
Location in a merchant establishment at which
the sale is consummated by payment for goods or services received.
Receipt
A hardcopy document that records when a transaction took place at the POS; the receipt contains a description of the transaction, which usually includes the date, the
merchant name/location, a portion of the primary account number, the amount, and the reference number.
Recurring transaction
Charge to the cardholder (with prior permission) on a periodic basis for goods and services (health club memberships, book of the month clubs, etc.).
Refund
The creation of a credit to a cardholder account, usually due to a product return or to correct an error.
Remote transaction
A non-face-to-face transaction performed partially or wholly by means of electronic communication (phone, internet, text messaging, facsimile, etc.).
Sale
Transaction of products or services made by a merchant to a customer that is facilitated by the use of a supported payment type; a sale relating to the shipment of goods does not occur until the product is shipped to the account holder; the merchant is solely responsible for the accuracy of the information presented for processing.
Sale date
The date that: i) goods are shipped for a sale that
requires the shipment of goods, or ii) the card account holder expects to be charged based on the terms of a service sale; an installment or recurring payment occurs on a sale date (after an interval of time from a prior sale date) where the interval is understood and agreed to by the account holder.
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