glossary

Term	Description
ACH	Automated Clearing House is a payment network for inter-bank clearing and settlement. The ACH system is governed by the National Automated Clearing House Association (NACHA).
Address Verification	A service associated with credit card authorization which verifies the cardholder's address. Primarily used for non-face-to-face transactions.
Authorization	The process which verifies that a cardholder account is valid, that they are not above any credit limit, and which reserves the credit amount on the account. A number is provided confirming the authorization for the transaction.
Batch Processing	A group of credit card transactions made by a merchant during a specific period of time, usually one business day. Batches may include transactions awaiting settlement or authorization and settlement.
Business Funders/ Funding Fees	Merchant business funding is the process by which a lender or funder purchases your future accounts receivables also known as factoring or split funding. Entrust MCA is an example of a "split funder". This source is a good example of a Business Cash Advance.
Blended Rates/ Bundled Fees	Credit card processing fees that combine Visa and MasterCard interchange and assessment rates (Blended Rates) and financial services provider's fees (Bundled Fees) into a single rate.
Card Present Transactions	Face-to-face transactions in which the credit card is present and the card information is captured from the magnetic strip by swiping the card into a point-of-sale device (credit card terminal).
Card Not Present Transactions	A transaction made without the presence of a credit card. Examples include: telephone order, mail order, or Internet order where the merchant ‘keys’ the information into the point-of-sale device (credit card terminal).
Chargeback	Dispute procedure that occurs when a cardholder or card issuer questions the validity of a previously settled transaction. When the dispute is found in favor of the cardholder or card issuer, Chargeback also refers to the reversal of a charge by which the cardholder is credited for the amount of the disputed transactions and the merchant is invoiced for the amount.
Credit	A refund or price adjustment given for a previous credit card transaction.
CVC2	Card Validation Code matches a three digit code which is printed on a credit card, but which is not a part of the account number. See CVV2 below.
CVV2	Credit Card Verification Value 2 matches a three or four digit code which is printed on a credit card, but which is not a part of the account number, against values on file with Visa and American Express' and Discover's processing system. See CVC2 above.
Dial-Up Terminal	Processing equipment which dials a financial services provider for authorization and settlement of credit and debit cards (e.g., point-of-sale terminal).
Discount Rate	The percentage rate charged on the dollar amount of the transaction (s).
Electronic Funds Transfer	Any transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape. The term includes, but is not limited to, credit card payments and Automated Clearing House transfers.
Encryption	A process used in Internet transactions whereby credit card information and transaction information is encoded so that the information has no logical meaning making it difficult or impossible to steal.
Face-to-Face Transaction	A transaction where the cardholder is physically present for a card-swiped transaction; conversely a “Non-Face-to-Face” transaction is when a cardholder is not physically present for a transaction so the card is not swiped.
Manual Imprinter	A manual device, sometimes referred to as a ‘knuckle-buster’, used to physically imprint the merchant’s name and ID number as well as the cardholder's name and card number on a sales draft.
Merchant Number	A number that numerically identifies each merchant to the financial services provider for accounting and billing purposes.
Monthly Minimum	A set amount charged to the merchant regardless if cards are processed. The dollar amount of the monthly minimum is the amount in which the processing fees must total in a month. (i.e., a $25 monthly minimum would mean that a merchant having a 1.60% discount rate would need to process ~$1,600.00 in credit cards in a month. Example: $1,600.00 x 1.60% = $25.60)
Non-Face-to-Face Transaction (Key-Enter)	A transaction where the cardholder is not physically present and the card is not swiped during the transaction (e.g. Interactive Voice Response, Internet transactions, etc.); conversely a “Face-to-Face Transaction” is where the cardholder is physically present for a card-swiped transaction. Non-Face-to-Face transactions have a high interchange rates due to a higher associated risk factor.
Payment Gateway	An entity logically located between a merchant’s Internet payment application and their financial services provider which supports the encryption of data transmitted over the Internet.
Peripheral Devices	Devices such as PIN pads or printers that attach to point-of-sale terminals.
Point-of-Sale Terminals	Processing equipment placed in a merchant’s location which is connected to their financial services provider's system via telephone lines for authorizing and settling credit and debit card transactions.
Processing Fee	A fee charged by financial services providers to agencies for processing services.
Rebuttal	A written reply to a chargeback that provides documentation proving that the transaction was valid and the proper procedures were followed.
Recurring Payments	An arrangement in which a customers agrees to allow a merchant to bill against a specific account at predetermined time intervals for a predetermined amount using credit cards or ACH Debit transactions.
Real-time (On-line) Authorization	A process of transmitting credit card information on-line to the merchant’s financial services provider to receive approval that the cardholder's account is open, and has the appropriate credit limit to allow authorization of the transaction.
Routing Number	A nine digit number (eight digits and one check digit) that uniquely identifies a financial institution. The routing number is printed on checks, deposit slips, etc. and is used to route all financial transactions (e.g., ACH Debits) to the appropriate bank.
Settlement	A process in which an electronic sale transaction is settled financially between the merchant, their financial services provider, and the customer and their card issuing entity.
Smart Cards	Credit card sized micro-processors, which can be programmed to perform multiple functions. Many of the smart card based systems currently being developed will use smart cards as "stored value" cards or "electronic purses". These cards will carry electronic money as a substitute for cash, which can be used for small retail purchases, telephone calls, travel on public transport and a host of other small value transactions. Smart cards can store identification information about the owners (e.g., health care information).
Statement Fee	A monthly fee charged for the maintenance and generation of a detailed, itemized summary of the merchant account.
Transaction Fee	The fixed amount (usually ranging from $0.15 to $1.00) charged to the merchant for each credit card transaction processed. This amount does not vary based on the dollar amount of the transaction.
Voice Authorization	Credit card authorization obtained by telephoning an operator.

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