ABA Routing Number- a nine-digit code, used in the United States, which appears on the bottom of checks to identify the financial institution on which it was drawn.
ACH/Automated Clearing House- an electronic funds transfer system run by the National Automated Clearing House Association (NACHA). This payment system deals with payroll, direct deposit, tax refunds, consumer bills, tax payments and many more payment services.
Acquiring Bank (Acquirer)- a bank or financial institution that processes credit or debit card payments on behalf of a merchant. They are responsible for clearing the transactions after they are charged to the cardholder and making the deposit into the merchant’s bank account.
Associations/Payment Brands/Networks- The associations refer to Visa, MC, Discover and American Express. The card brands are the ones that regulate the card acceptance rules for the financial institutions and set the rates that the merchant will pay.
ATM Debit Card- Like a credit card, an ATM Debit Card has an account number, chip and magnetic strip. When used in a terminal, the card holder is prompted to enter a PIN number via a PIN pad. This will then debit the funds from the customers bank account. These cards are also used at ATMs to withdraw cash, deposit checks, and transfer funds between a customer’s accounts.
API- application programming interface.
Authorization-an approval that the customer has sufficient funds on their card to pay for the transaction. Whenever a transaction is made with a credit or debit card, the merchant sends a request to the acquirer through the credit card processor. When the authorization is approved, that means funds are available and can be withdrawn.
Authorization Code- usually a six- or seven-digit number that is provided at the Point of Sale, as well as, printed on the sales receipt. This number should always be captured if doing a phone or voice transaction, so you have it for reference.
Authorization Fee- the amount charged to the merchant each time the communication happens between your point of sale and the authorizing network. This fee can be charged on multiple forms of transactions including: the transaction, post authorizations and refunds.
Authorization Only Transaction- this is a special type of transaction that usually only occurs in some specific industries or unique sales cases. An auth only authorizes a transaction and places a hold on the consumer’s card. The transaction does not settle right away, and in some cases could be days or weeks later. This is typical in a hotel environment where you do not necessarily know what the final transaction amount will be.
Authorization response- this is the response from the issuing financial institution to the authorization request. The response will be either an approval, decline, or call center, as the transaction requires additional information.
Average Ticket Size- the average ticket size refers to the average dollar amount of the credit card transactions. This number is always asked when you set up a merchant account and is used to help determine pricing and risk for that account.
Address Verification Service/AVS- AVS is required for all card not present transactions. When a transaction is processed in this manner, the street address and the zip code should be entered with the rest of the transaction information, like card number and CVV code. This information helps reduce the cost of the transaction and provides additional security for the merchant and cardholder. It can help reduce the potential for chargebacks.
Basis Points- the percentage that the merchant is charged on a credit card transaction. One basis point equals 1/100th of a percent. When interchange rates are discussed, it is often in the form of basis points. As an example, you may hear someone say that the merchant is paying cost plus .50%, meaning they are paying 50 basis points above the interchange fees.
Batch or Batch Processing- typically at the end of every day (best practice), a merchant will “settle or batch out” their Point of Sale. This process collects all the authorized transactions that were run for that day and send the transaction to the acquirer for payment. For some business types, this process can be done automatically, if the merchant elects to do so. Some merchant providers charge a fee to batch at the time a batch is closed.
Business Type- this is something that must be defined when a new merchant is set up to accept credit cards. They usually will fit in to the following categories:
Retail- a face to face environment where tangible goods are sold, and cards are either swiped or inserted into a terminal or Point of sale device.
Restaurant- like a retail environment, most transactions are handled via a face to face environment, but there could be transactions that are key entered, for example when delivery is leveraged. A restaurant serves food and has an even lower risk of chargebacks. In restaurants, the POS will need to be enabled to accept tips.
Hotel- usually transactions will be handled in a face to face environment when a guest checks in for their stay. Holds are put on cards for reservations and incidentals, so specialized software designed for this industry is often leveraged.
Mail Order/Telephone Order- abbreviated to MOTO, these are businesses that operate in a non-face to face environment, so transactions are going to be manually keyed into a POS. The card number that is used for payment may be received in the mail or over the phone but either way it is referred to as MOTO.
Internet/Ecommerce- Both business types refer to any merchant that captures credit card information over the internet, through a virtual terminal, or web page. Some merchants may have a retail location and an ecommerce site and will need two set ups to ensure that their transactions flow through properly.
Capture- this is the process of collecting the account information that will be necessary to process the payment. It can occur through the swiping of the card through the POS, inserting the card (if a chip card), or by manually keying the information in.
Card Not Present (CNP)- like MOTO- this refers to a transaction that occurs when the cardholder or card are not physically present for the transaction.
Channel Partner- a member of the Ziosk program that works to sell the Ziosk solutions and payments tools and receives a revenue share.
Chargeback-the return of funds to a consumer, initiated by the issuing bank of the instrument, used by a consumer to settle a debt. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account, line of credit, or credit card.
Chip Card- a credit card that has a physical electronic authorization device which is used to help prevent fraudulent transactions. Chip cards are typically inserted in to the terminal or card reader vs swiped.
Cost Plus- a pricing methodology used in merchant services where a merchant is set up with paying the interchange fees plus basis points or a transaction fee. In some cases, they may be paying cost plus, where they are paying interchange plus basis points and a transaction fee.
Credit Card- a plastic card issued by a bank or issuing institution that allows a consumer to purchase goods and services on credit.
Credit Card Processor- a company appointed by a merchant to handle transactions from various channels such as credit cards and debit cards.
Credit Card Reader- a device used to read the information on the credit card to authorize the transaction. Could be swiped, inserted or dipped into the reader.
Daily Discounting- a billing model where the processor will debit the interchange and fees from the merchant’s deposit daily. This business will receive the net deposit from that day’s settlement.
Debit Card- a card that can be used similarly to the way a credit card is used but it is linked to a checking account and automatically debits those funds vs applied to a line of credit.
Discount rate- this is the fee paid by merchants to the credit card processor for accepting credit cards. It can range between 1-4% depending on the type of transaction.
EBT- Electronic Benefits Transfer- the electronic system that allows state welfare departments to issue cards for their food stamp benefits.
Effective Rate- the overall rate that a merchant pays on their processing fees and other billed fees by the credit card processor. To determine the calculation, you would divide gross fees by gross sales volume.
Electronic Funds Transfer (EFT)- refers to the transfer of funds initiated through an electronic terminal.
Electronic Wallet/Digital Wallet- an electronic device or service that allows individuals to make electronic transactions. Items can be purchased online or in a face to face environment typically with the use of a smart phone. A bank account will be linked to the digital wallet.
EMV-which stands for Europay, Mastercard and Visa -- is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.
E2E- End to End encryption- refers to the process of scrambling the transaction data through the transmission process to ensure secure delivery to the host, who is the only entity that can “decode or unscramble” the data.
ETF- Early termination fee- a fee charged for cancelling a contract early.
Flat Rate- this is a pricing methodology that a merchant may have through their merchant services provider. Typically, in a scenario that this is the way a merchant is priced, their interchange, dues and assessments, and the providers fees, will be rolled into one discount rate and item fee. Square is an example of this pricing methodology, where many of their fees are rolled in to the 2.75% + $.15 that they charge for typical transactions.
Interchange- the fees that are charged during a credit card transaction and are paid to the issuing bank. These rated are determined by the card brands and differ based on the card type used during the transaction. Simply stated this is the “cost of doing business” the merchant pays to accept credit cards at their business.
Interchange Plus- a pricing methodology used within merchant services that means a merchant pays the interchange rates “plus” a transaction fee or basis point fee. In some cases, they may pay both.
Issuing Bank- the entity that assumes the risk or has the checking account and offers the branded payment card to the consumer.
ISV- Integrated Software Vendor, an organization specializing in making and selling software.
ISO- Independent Sales Organization- formal designation that a company must have in order to sell Visa credit card processing services under its own company name.
MCC- Merchant Category Code- a four-digit number that classifies the business type and the type of goods or service it provides.
Merchant Account- an agreement between a retailer and a merchant bank or payment processor to enable the settlement of debit/credit card transactions.
Merchant Account Provider/Merchant Services Provider/Merchant Acquirer- a bank or financial institution that processes credit or debit cards on behalf of a merchant.
MID- Merchant Identification Number- the number associated to the merchant account.
Merchant Processing Agreement- a contract governing the entire relationship between a business and a merchant acquiring bank. The merchant agreement documents the full range of services that the merchant acquiring bank will provide. Can also be referred to as an MSA- merchant sales agreement.
Monthly Discounting- when a merchant is set up to receive monthly discounting, they will receive the gross deposit from their settlement and then all interchange and fees will be debited from their account at one time. The fees for the previous month are usually debited between the 5th-10th of the month dependent on processor. This method of billing is sometimes referred to as an “unsecured loan” since the fees for interchange are paid by the processor and then repaid by the merchant when the monthly debit occurs.
Monthly minimum- the minimum volume of fees that are set on the merchant account to ensure that transaction volume is processed through the account. Typically, the acquirer will charge fees per card brand.
Monthly processing limit- a limit that may be set on an account by the merchant service provider on how much volume can be processed in a merchant account on a monthly basis.
Monthly Processing Volume- the gross monthly sales volume that is processed in credit/debit cards within your merchant agreement. This number along with average ticket is information that is collected to set up a merchant account.
MOTO- Mail Order/Telephone Order- abbreviated to MOTO, these are businesses that operate in a non-face to face environment, so transactions are going to be manually keyed in to a POS. The card number that is used for payment may be received in the mail or over the phone, but either way, it is referred to as MOTO.
NFC- Near-field communication- is a set of communication protocols that enables two electronic devices, one of which is usually a portable device, such as a smartphone, to establish communication, by bringing them within 4 cm of each other.
Over-Limit Fee- a fee that may be incurred when a merchant processes over the pre-determined volumes that were set in the contract.
Payment Cards- the universal reference for VISA, MC, Discover, American Express credit or debit cards.
Payment Facilitator- merchant service provider that simplifies the merchant account enrollment process. The software provider acts as a “master” merchant account provider, boarding sub-merchants under their own account in order to facilitate payment transactions for them.
Payment Gateway- the front-end technology that reads payment cards and sends customer information to the merchant acquiring bank for processing.
PCI-DSS- Payment Card Industry- Data Security Standard- an information security standard for organizations that handle branded credit cards from the major card schemes. The PCI Standard is mandated by the card brands and administered by the Payment Card Industry Security Standards Council.
PCI-Non-Validation Fee- a fee that is charged by the merchant services provider when a merchant has not completed their validations for PCI compliance.
PIN- Personal Identification number- a numeric number comprised of 4 digits that is set by the card holder and used when a debit transaction occurs or a withdrawal from an ATM.
PIN Pad- an electronic device used in a debit, credit or smart card-based transaction, to accept and encrypt the cardholder's personal identification number (PIN).
P2PE- Point to Point Encryption- a combination of secure devices, applications and processes that encrypt data from the point of interaction (for example: at the point of swipe or dip) until the data reaches the solution provider's secure decryption.
POS- Point of Sale- the time and place where a retail transaction is completed.
POS Terminal- Point of Sale- an electronic device used to process card payments at retail locations.
QSR- Quick Service Restaurant- an acronym that refers to fast food restaurants.
Recurring Billing- when a merchant automatically charges a cardholder for specified goods or services on a prearranged schedule.
Real-time Processing- the execution of data in a short time period, providing near-instantaneous output.
Retrieval- a request that occurs when a credit card issuer or the cardholder asks a merchant for a copy of a transaction ticket. This usually happens when a transaction is being disputed.
SIC- a four-digit code used to classify a business and the industry it serves, primarily used by government agencies.
SSL- Secure Sockets Layer- is the standard security technology for establishing an encrypted link between a web server and a browser.
Sub merchant - a merchant that process their transactions under a payment service provider such as a third-party payments provider or merchant aggregator. CE Payments merchants are sub-merchants of ZIPS.
Terminated Merchant File- TMF- also known as the MATCH list-a tool used by the credit card processing companies and card brands. It is a “blacklist” of merchants that are high risk or have excessive chargebacks and are prevented from opening a merchant account with different credit card processors.
TID- Terminal Identification Number- the term that identifies the specific terminal or POS location within one merchant location. For example, I may have 3 processing stations within my movie theatre. Each one of those stations could be assigned a unique TID.
Underwrite- sign and accept liability, thus guaranteeing payment in case loss or damage occurs. The entity that underwrites the merchant account assumes the risk for that merchant.
VAR- Value Added Reseller- a company that adds features or services to an existing product, then resells it (usually to end-users) as an integrated product or complete "turn-key" solution.
Virtual Shopping Cart- a piece of ecommerce software on a web server that allows consumers on an internet site to select items for purchase.
Virtual Terminal- a web-based application that allows merchants to accept credit card payments using their internet-connected computers.
Voice Authorization- a security measure used by the credit card industry to ensure that a purchase is being authorized by the actual card-holding customer and not someone else.
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