Acquirer, Acquiring Bank
A financial institution that is a member of Visa ® and/or MasterCard ® and maintains the merchant credit card
processing relationship. The acquirer receives all transactions from the merchant to be distributed to the issuing
Address Verification Service (AVS)
A service supported by Visa, MasterCard, Discover and American Express ® that verifies the cardholder's billing
address against the one on file with the issuer. AVS is designed to help combat fraud in non-face- to-face
Advanced Programming Interface (API)
APIs allow users to program to a pre-constructed interface, instead of individually programming a device or piece of
MasterCard International, Visa U.S.A. or Visa International, which are licensing regulatory agencies for bank card
The process by which a transaction is approved by the issuer, or by Visa/MasterCard on behalf of the issuer.
Permission is given to (or denied) the merchant, via the acquirer, to accept a specific transaction from the cardholder
account. An authorization indicates only that the card is valid and that sufficient funds are available on the
cardholder's credit limit at the time the request is made.
Authorization Approval Code
The numerical code designated by the issuer, assigned to a sales transaction as verification that the sale is
Authorization Only (Auth Only)
Used to reserve an amount against a credit card's available credit limit for intended purchases. Authorization Only is
most frequently used in the lodging (check-in), restaurant (tab) and car rental (pick-up) industries, where an approval
is received for an estimated amount prior to the finalization of the charge amount.
A merchant's request for an authorization to accept a cardholder's sales transaction. An authorization request can
occur electronically via a credit card processing terminal or via telephone as a voice authorization.
The average dollar amount of sale for credit card transactions.
The settlement provider responsible for finalizing transactions, routing payment to a merchant's account and
Bank Identification Number (BIN)
A unique series of numbers assigned by Visa/MasterCard to a member institution, which identifies that institution in
transaction processing. The BIN comprises the first six digits of a standard credit card number.
A card issued by a banking institution with a MasterCard or Visa brand.
A group of approved credit card transactions, usually accumulated during one business day.
The electronic depositing of a batch file transmitted to the transaction processor for settlement.
The authorization of transactions offline when immediate approval is not required. Transactions are collected in a
batch and sent as one transmission for authorization and/or settlement. Batch processing is generally used with mail
order/telephone order (MOTO) transactions.
Receiving and storing transaction data at the processor's host computer, to be submitted later for processing and
A type of card transaction in which the card is not present at the point of sale for the magnetic stripe to be read.
These are considered higher risk transactions.
A type of transaction in which the card is present and is swiped through an electronic device that reads the contents
of the magnetic stripe on the back of the card.
The person to whom a payment card is issued, or an additional person authorized by the original cardholder to use
A challenge to a transaction initiated by the issuer or cardholder that is returned to the acquirer for resolution.
The amount assessed by the acquirer for processing chargebacks.
Chargeback Reason Code
A numerical code that identifies the specific reason for a chargeback. MasterCard and Visa each have their own
A bank card that can be used with a PIN at an ATM or without a PIN at the point of sale, also known as an offline
debit card. When used at the point of sale, the transaction is processed through interchange as a credit card
transaction with the funds debited from the cardholder's checking account.
Sending a merchant's completed transactions to the host for processing. (See also "Settlement")
A refund or price adjustment given for a previous purchase.
Card Validation Code - MasterCard term for the three-digit code printed next to the card number in the signature
panel and used as part of the authorization process.
Card Verification Value - Visa term for the three-digit code printed next to the card number in the signature panel and
used as part of the authorization process.
The scrambling of data so only the intended users can read and understand the encrypted information.
Doing Business As - the name a business uses to operate.
A bankcard used to purchase goods and services and to obtain cash, which debits the cardholder's personal
checking account. During online debit transactions, the cardholder must enter a PIN.
A portal that transmits debit data between gateway banks and debit card issuers - also referred to as "Debit Network."
Only financial institutions may be members of debit switches.
A response from the card issuer denying the use of the card for the attempted transaction. If a request for approval is
declined, the merchant must ask the cardholder for another form of payment.
An authorization terminal that uses a telephone line to communicate with the authorization center.
The fees charged by the card acquirer to the merchant for processing payment card transactions.
Electronic Benefits Transfer (EBT)
The automation of government benefits through electronic authorization, data capture and settlement processes.
Plastic cards with magnetic stripes are used, eliminating paper benefits and coupon distribution.
Method of scrambling data to protect a cardholder's personal information.
Payment card designed mainly for fueling, maintenance and repairs of corporate motor vehicles. Fleet cards are
normally used to provide specialized reporting.
A number assigned by a lodging merchant for tracking a guest's charges.
The process of identifying suspicious merchant or cardholder activity.
Network provider responsible for authorizing and capturing transactions and forwarding the information to the back-
Manages the electronic connection between consumers and their financial institutions and transmits data.
A reusable, stored-value card that enables merchants to have an electronic alternative to paper gift certificates.
The exchange of transaction data between acquiring and issuing institutions.
Fees paid by the acquirer to the issuer to compensate for transaction-related costs. MasterCard and Visa establish
interchange fee rates.
Issuer, Issuing Bank
The financial institution and member of Visa or MasterCard that holds contractual agreements with, and issues cards
A panel located on the back of a payment card containing magnetically encoded cardholder account information.
Magnetic Stripe Reader
A point-of- sale device that reads the encoded information from the magnetic stripe when the card is passed through
the reader. Readers may read Track Two, which contains the cardholder account number and expiration date, or both
Track Two and Track One, which contains the cardholder name.
The written contract between the merchant and acquirer that details their respective rights, responsibilities and
Merchant Category Code (MCC)
A universal four-digit merchant classification code that identifies the merchant by type of processing, authorization
and settlement. Similar to a Standard Industrial Classification (SIC), but more defined.
The fee an acquiring member charges the merchant to cover the costs of providing deposit credit and handling credit
card sales transactions.
Merchant Identification (MID) Number
The identification number or account number assigned to a merchant by the credit card processing company.
Debit transaction that occurs when a Visa/MasterCard check card is authorized through the credit card system and
the amount is debited from the cardholder's checking (DDA) account.
A transaction that is authorized through a voice authorization and later keyed into a POS terminal prior to settlement.
Point-of- Sale (POS)
The location at which a payment card transaction occurs, usually by way of a device such as a credit card terminal or
The process of recording debits and credits to an account.
The fees associated with the processing of credit card transactions.
A company responsible for processing interchange transactions - operated by an acquirer or acting on the acquirer's
A transaction charged to a cardholder's account (with prior permission) on a periodic basis for recurring goods and
services, i.e., health club memberships.
A refund occurs when the merchant rebates all, or a portion, of an original transaction amount to the cardholder.
Refunds are made to the same card that was used for the original transaction. Similar to a Credit.
A face-to- face transaction in which the cardholder presents a card to the merchant to pay for goods or services.
A request by the issuer to the acquirer for a copy of the original sales ticket.
When an acquirer successfully represents a chargeback to the issuer, the chargeback is reversed and the funds are
returned to the merchant.
Sales Transaction Fee
The amount the financial institution charges a merchant for each sales transaction.
The process in which a merchant transmits batches of transactions to the acquirer. In interchange, it is the process by
which acquirers and issuers exchange financial data resulting from sales transactions, cash advances, merchandise
A payment card with a built-in microprocessor (chip) that stores information. Smart cards can be used for stored-
value cards, credit cards, loyalty programs and security access.
Any action between a cardholder and a merchant or member that results in activity on the account, such as a
purchase, cash advance or credit.
The actual date on which a transaction occurs.
The amount a merchant pays per transaction for processing.
Transactions authorized by a voice operator. Voice-approved transactions must be "forced" into a terminal batch for
Zero Floor Limit
Requires that all transactions receive authorization.