The Payment Card Industry Data Security Standard (PCI DSS) is a worldwide information security standard framed by the Payment Card Industry Security Standards Council (PCI SSC). This standard help organizations that process card payments to prevent credit card fraud through increased controls around data and its exposure to fraud. The standard is maintained by the Payment Card Industry Security Standards Council, which maintains both the PCI DSS and a number of other standards, such as the Payment Card Industry PIN Entry Device security requirements (PCI PED) and the Payment Application Data Security Standard (PA-DSS).

It is the process of confirming whether the customer's credit card has sufficient credit to purchase goods or buy services. Moreover it also confirms whether the card is valid or not. Authorization can be obtained through a point-of-sale terminal, ecommerce Web site or over the phone.

An acquiring bank is a principal member of Visa and MasterCard that acquires data relating to transactions from a merchant or card acceptor for processing. All merchant accounts must be sponsored by a bank that is a member of the card associations. They are responsible for depositing the funds into your checking account.

It is a code that indicates approval or denial for an authorization request. The code is returned in the authorization response message and is usually recorded on the transaction receipt as a proof of authorization.

ACH is a group of processing institutions linked by a computer network to settle electronic payment transactions. They electronically process payment of funds and government securities among financial institutions and businesses.

AVS is a tool for merchants to reduce the risk associated with card not present transactions, such as mail order, telephone order or Internet transactions. It is a system built into the authorization process that enables a merchant to verify billing address of a customer with billing address in the bank file.

An adjustment is initiated by the acquirer to correct a processing error. The error could be a duplication of a transaction or the result of a cardholder dispute. The acquirer debits or credits the merchant DDA account for the amount of the adjustment.

The 6-digit code returned to the merchant upon approving a transaction.

The digit identification number assigned to both cardholder and merchant banks.

Basis points are the increments by which discount rates are calculated. 1 basis point is equivalent to .01% or .0001.

A collection of credit card transactions saved for submission at one time.

Once a batch is settled, it receives a batch ID. Each transaction in the batch shares this ID.

A transaction where the customer's card is physically present and evidenced by the action of swiping a card through a terminal or by an imprinted and signed credit card draft.

The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position.

A transaction where the card is not present at the time of the transaction such as a mail order, telephone order, or Internet order. Credit card data is manually entered into the terminal, as opposed to swiping a credit card's magnetic stripe through the terminal.

Any device that is capable of reading encoding on plastic cards. See Magnetic Stripe Reader

A unique check value encoded on the magnetic stripe of a card to validate card information during the authorization process. The card verification value is calculated from the data encoded on the magnetic stripe using a secure cryptographic process.This method is used by Master Card.

A unique check value encoded on the magnetic stripe of a card to validate card information during the authorization process. The card verification value is calculated from the data encoded on the magnetic stripe using a secure cryptographic process. This method is used by Visa.

The return of a transaction from the cardholder's bank generated from a cardholder's dispute or resulting from the authorization process.

The number of calendar days from the endorsement date of a transaction receipt (or processing date, as applicable), during which time the issuer may exercise a chargeback right.

The amount of sale transactions divided by the amount of chargebacks received in any given month. This is calculated using either the item count of both or the dollar amount of both.

The process of sending the batch for settlement.

A call which allows the merchant to inform the authorization center of a possible fraudulent transaction without alerting the cardholder.

The percentage of sales amounts that the bankcard acquirer or T&E card issuer charges the merchant for the settlement of the transactions.

Through EBT, USDA Food Stamps and certain government benefits will be converted from paper checks and coupons to secure debit cards.

Process of electronically transferring funds to or from an account. This evolved to eliminate the costly and time consuming paper method.

An individual who is not the cardholder or designee and who uses a card (or, in a mail/phone order or recurring transaction, an account number) to obtain goods or services without the cardholder's consent.

A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover, or other fraudulent conditions as defined by the card company or the member company.

A non-member company contracted by members of Visa or MasterCard to provide merchant or cardholder servicing.

The exchange of information, transaction data and money among banks. Interchange systems are managed by Visa and MasterCard associations and are very standardized so banks and merchants worldwide can use them.

The amount paid by the merchant bank (acquirer) to the cardholder institution (issuer) on each sales transaction. Interchange rates vary according to the type of merchant (retail, travel and entertainment, mail order) and the method of processing (paper, EDC).

A merchant that transacts business by mail or phone.

A batch close that must be initiated by the merchant on a daily basis, as opposed to an auto close at a pre-set time.

Any business that accepts as payment Visa and/or MasterCard bankcards.

A written agreement between a merchant and a bank containing their respective rights, duties, and warranties with respect to acceptance of the bankcard and matters related to the bankcard activity.

Four-digit classification code assigned to the merchant to identify the merchant's principal profession and type of processing, authorization, and settlement.

An organization that quotes a discount rate to the merchant and handles the setup with the processors. An MSP can be a merchant bank or an independent sales organization for a merchant bank, called an ISO.

A summary of merchant transactions which is produced and sent to a merchant on a monthly basis.

The total dollar amount of MasterCard and Visa transactions approved to be processed through a merchant account in any given month.

A minimum amount the merchant must pay the Merchant Service Provider every month. It does not apply if the combination of Transaction Fees and Discount Fees exceeds the minimum amount.

Bankcard sales transactions that do not meet set Visa/MasterCard criteria for that particular merchant and are processed at a higher interchange rate. An example of this is a retail merchant card present that processes a card-not-present transaction (or manually enters the card data rather than swiping the magnetic stripe through the terminal, and does not include the AVS information.) The merchant will pay the difference between what they should have paid for if it was a card present swiped transaction and what they actually qualified for as a card not present transaction. This difference is called non-qualified interchange fees. The use of corporate cards and foreign cards also incur non-qualified interchange fees.

This refers to a debit transaction that gets treated the same as a credit card transaction. It will not debit the cardholder's account immediately, but will be processed through a normal credit card venue settlement.

This refers to a debit transaction that is authorized with the use of a PIN and a PIN pad. No signature is needed for this type of transaction. Online debit transactions are charged a flat fee instead of a combined discount rate and transaction fee.

This refers to a cardholder's account that has surpassed its credit limit with a transaction.

The transaction processing vehicle that receives encrypted transactions from the merchant server, authenticates the merchant, decrypts the payment information, and transmits the data to the authorization and settlement networks.

A PIN is a personal identification number used by a cardholder to authenticate card ownership for ATM or debit card transactions. The cardholder enters their PIN into a PIN pad. The PIN is required to complete an ATM/Debit card transaction.

A numeric key pad, which is connected to a terminal or POS, used by the cardholder to enter the PIN and/or other information.

Location in a merchant establishment at which sale is consummated by payment for goods or services received. Can also refer to the direct debit of a purchase amount to a customer's checking account.

Point-of-sale system that processes sale and other transactions, such as an electronic cash register with specialized software.

A company (often a third party) that handles credit card transactions for Merchant Banks.

A transaction where a cardholder has given a merchant permission to periodically charge the cardholder's account.

A message displayed on the POS terminal when the electronic attempt for authorization is denied and must be authorized by calling the Voice Authorization Center .

A request from the cardholder's bank to supply a copy of the sales draft usually for research of a dispute.

An online financial transaction used to negate or cancel a transaction that has been sent through interchange in error.

The process by which acquirers and issuers exchange financial information and value relative to credit card sales. As the sales transaction value moves from the merchant to the acquiring bank, and then to the issuer, each party buys and sells the sales ticket. Settlement is what occurs when the acquiring bank and the issuer exchange data or funds during that function. Settlement also means the process by which a merchant closes/balances out their terminal in order to transmit their credit card transactions.

A future industry standard that will authenticate customers and merchants to ensure the safety and confidentiality of data processed over the Internet.

Secure Payment Gateway companies help other Processors conduct secure business on the internet using Secure Socket Layer (SSL) technology. They provide a system that passes credit card data, authorization requests, and authorization responses over the Internet using encryption technology. The transaction information is sent by the Payment Gateway secure server via leased line to the credit card network where the validity of the card is checked and the availability of funds on that account is verified. An authorization code is returned via leased line to the Payment Gateway; the authorization is encrypted by the Payment Gateway and transmitted in encrypted form to the web server of the merchant, which triggers fulfillment of the order.

An initial fee charged by some Merchant Service Providers/Independent Sales Organizations for the establishment of an account and for processing and reporting tools.

This is a fee charged to the merchant by the bank or Merchant Service Providers/Independent Sales Organizations for preparing and sending out monthly statements and reports.

A hardware device equipped with a magnetic strip reading device, that is placed at the merchant location to electronically process credit cad transactions, typically used in a retail (face-face) environment. Attached to a telephone line at the merchant location, the terminal is capable of authorizing, capturing and settling credit card and ATM/Debit card transactions.

The TID is the number assigned to a credit card transaction device, that identifies the merchant's equipment to the processor and bankcard data transport networks. A TID is also used for payment gateways and other software applications.

Method where transaction data is stored in the POS terminal until the batch is settled.

An organization that is not an association member contracted by issuers and acquirers to provide authorizations, processing, merchant services, and cardholder services.

Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account, for example, a purchase, cash advance, debit or credit adjustment.

A small charge paid to the processing network (e.g., Visa/MasterCard) for use of their system, for each transaction processed.

The reversal of an approved transaction, a transaction that has been authorized but not settled. Settled transactions require processing of a credit card in order to be reversed. A void does not remove any hold on the customer's open to buy.

"An approval response obtained through interactive communication between an issuer and an acquirer, their authorizing processors, or stand-in processing, through telephone, facsimile, or telex communications."