Glossary
ACH
Automated
Clearing House - a
process whereby funds are directly transferred through the
Federal Reserve system to a specified checking account Acquiring
Bank
The bank who acquires
the credit drafts from a merchant at a discount
AID
Acquirers Interchange
Discount - similar to TIRF (see TIRF) but through MasterCard
Annual Fee
This fee is hard to spot because it will only appear once a year. For low volume
merchants, this fee can be used to lower your percentage rate.
ARU
Audio Response Unit Authorization Code
A code received, either verbally or electronically, from an Authorization center
verifying that a credit card is not listed on a warning bulletin and has the
available open-to-buy for the transaction submitted Average
Ticket
The most important element driving price is your average ticket.
Your average ticket history will need to be verified if you require
a customized bundled
pricing structure. For example: If you are a restaurant, your average
credit card transaction or ticket would be two meals, drinks, tax and tip,
not just
the price of an entree. Bankcard
The term refers to MasterCard and Visa because banks issue them. Cards issued
by American Express, Discover (Novus), Diners Club, and JCB have their own
rates and rules. Merchants choose to accept these card types separately
from their decision to accept bankcards.
Banknet
International's authorization/settlement
network
Batch
A grouping of credit
card transactions as captured by a merchant - usually an entire day's
activity Basis Point (BP)
1% is 100 Basis Points. A Basis Point is used to express a fraction of
a percent. 50 BPs is a half a percent. When working with merchants
processing several hundreds of thousands of dollars on credit cards, just a
few BPs can mean big annual savings in processing fees. Bill on Sales
Gross sales before credit/returns or Net sales after credit/returns. With Net
sales billing, qualified discount paid is returned when you issue a credit. Bundled vs. Unbundled rates
Bundled rates mean that transaction cost and monthly statement cost are expressed
as basis points and added to the discount rate. Unbundled rates list each
cost separately. Capture
To read and maintain
applicable information as to a sale for use in the settlement
of funds for the transaction Chargeback
A transaction returned from an issuing bank to a merchant and charged to his
account Check Card & Debit Card
This can be confusing because a check card can be used like a debit card
but a pure debit card can't be used like a check card. A check
card has a MasterCard or Visa logo on it. A pure debit card does
not. From
the consumer perspective, these two products do the same thing - use available
funds in their checking account. The method by which the merchant accepts
and processes the card however does carry differences. A check card can
be swiped just as a credit card would and be processed over the credit card networks;
or the transaction could be handled as a debit card using a PIN pad to capture
the cardholders PIN (personal identification number) and process the transaction
over the debit networks. There are also cost differences between the
two processing methods for the merchant in addition to the necessary equipment.
CPS
Certified Payment Systems. CPU
Central Processing Unit
DBA
Doing Business As - common
name of a company
DDA
Demand Deposit Account - a
checking account where funds are payable upon demand
Discount
A fee assessed to a merchant
for services and payment of credit drafts
Down Time
The period of time during
which a computer or authorization terminal is not functioning ECR
Electronic Cash Register
EFT
Electronic Funds Transfer
Equipment
Your point of sale system plays an important role in functionality, transaction
capacity, and transaction qualification. Categories include stand-alone terminal
equipment from makers like Verifone, Hypercom, Lipman and others, and computer
register systems integrated with certified software.
Embossed
The raised numbering/lettering
on a credit card used to make an imprint on a sales
draft
Float
The period of time between
the purchase and the billing for goods or services
Floor Limit
The transaction value
above which a merchant must obtain an authorization
Front-end Networks Examples
Global Payments - formerly NDC (National Data Corporation),
the payment systems division was spun off to create its own separate
company. Global has multiple platforms and a wide range of available
applications. Paymentech Network - formerly Gensar and before that
Transnet. This network has changed ownership over the years and
is now owned by Paymentech Merchant Services. Vital - also referred
to in the trade as VisaNet. Visanet is Visa International's authorization/settlement
network but changed names with the alliance with Total Systems. Grace Period
The period of time between
the billing for goods or services and the time
at which payment is due or interest is assessed Host
A mainframe computer
that acts identically to an IBM-PC
IBM-PC/Clone
A personal computer that
acts identically to an IBM-PC
Industry
This is important because, not only do the rules and regulations differ by industry,
but so does card association Interchange pricing.
Interchange
A fee assessed by the
issuing bank to the acquiring bank to cover the costs of
float time before recovering their funds, credit and fraud losses
incurred due
to the float of funds and the cost of processing and posting
the credit transaction to a cardholder account
ISO
Independent Sales/Service
Organization (VISA)
Issuing Bank
The bank who issues a
bank card
LAN
Local Area Network
Magnetic Stripe
The magnetic tape on
the back of a credit card containing encoded information regarding
the cardholder
Merchant
Any person, firm or corporation
which has contracted with a Visa or MasterCard member bank
to originate paper through the acceptance of cards and displays
the Visa or MasterCard
decal
Mainframe
Main computer system
or Central Processing Unit (CPU)
MERIT
MasterCard Electronically
Reduced Interchange (similar to Visa's TMP)
MasterCard/Visa Transaction Fee
Card association interchange has an item fee as does the network that handles
the authorization and settlement communication. A bundled rate without an item
fee incorporates this cost into the percentage rate. Transaction cost can also
appear as an authorization fee, a per item fee, or a communication fee. Monthly
Minimum Billing
If your discount billing at the end of the month doesn't meet this minimum,
then you will be charged the difference between your actual discount and
the minimum.
If your billing exceeds the minimum, then this fee doesn't come into play. Monthly Statement
Also sometimes termed as a monthly service fee, it represents the small fee
that is required to provide account maintenance, statement mailings, ACH
transfers, 24-hour help desk, etc.
MSP
Member Service Provider
Non-Qualified Billing
This is a complex part of pricing based on downgrade pricing for transactions
like "card-not-present" or when the magnetic stripe contents are not fully
read. Other Interchange categories for business, commercial, international
card types
as well as those not settled in the allotted time. There are several pricing
structures to consider: 1. Bill Back Interchange will pass through the exact
Interchange increase imposed by the card association. 2. One Rate pricing with
no increases for non-qualified pricing, but instead all costs are bundled into
your qualified rate. 3. Tiered pricing in which you have a mid-qualified rate
and a non-qualified rate designed to simplify billing. Open-to-buy
The unused credit available
on a credit card
PC
Personal Computer
POS.
Point of Sale refers
to the location where goods or devices are purchased
Revolving Account
A credit account in which
one pays a minimum due, usually $10, or 1/365 of the balance,
monthly and incurs interest on the remaining revolved balance
Sales Draft
Paper evidencing a purchase
of goods or services by a cardholder from a merchant through
the use of a credit card
Settlement
The process of settling
funds between an issuing bank and an acquiring bank by Visa/MasterCard
for funds due on submitted bank card sales
Swipe
The action of sliding
a credit card through the cardreader portion of an authorization
terminal
T&E
Travel and Entertainment
TIRF
Terminal Issuers Reimbursement
Fee - a reduced Interchange fee for authorizing a credit card
transaction electronically through Visa
TMP
Technology Migration
Program - a reduced Interchange fee from Visa for the use of
advanced authorization systems
Voice Grade
Common telephone lines
Voucher
A bank draft or credit
slip that is imprinted with a credit card number and expiration
date and signed by a customer as proof of purchase
Warning Bulletin
A bulletin issued by
Visa and MasterCard combined that contains listings of invalid
bank cards
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