All the terms you should know, all in one place.
# A B C D E F H I K M N O P R S T U V W X Z


An XML-based protocol designed to be an additional security layer for online credit and debit card transactions. It was developed by Visa with the intention of improving the security of Internet payments and offered to customers as the Verified by Visa service. Services based on the protocol have also been adopted by MasterCard, under the name MasterCard SecureCode, and by JCB International as J/Secure. American Express added SafeKey to the UK and Singapore on 8 November 2010. Analysis of the protocol by academia has shown it to have many security issues that affect the consumer, including greater surface area for phishing and a shift of liability in the case of fraudulent payments.


ACH stands for Automated Clearing House. This is a nationwide electronic funds transfer network based in the United States. The Automated Clearing House enables participating financial institutions to distribute and settle electronic credits and debits to other US bank accounts. This is a direct debit payment method, offered to US customers only. Most merchants, regardless of their location, can offer ACH to their US customer base.

A transaction through the ACH network that results in money being placed in the receiver’s account, at the destination, financial institution.

The acquiring bank is the financial institution that maintains a contractual relationship with the merchant. Acting as a “middle man,” the acquiring bank receives credit card transactions from the merchant or from the card acceptor, and then settles those transactions with the issuing banks. The acquiring bank deposits funds into the merchant depository bank account, and recoups those funds from the card issuers. The merchant must pay certain fees to the acquiring bank for handling the credit card transactions.

The processor provides credit card processing, billing, reporting and settlement and operational services to acquiring and issuing banks.

Address Verification Service (AVS) is intended to combat fraud in mail order, telephone order, and Internet transactions by including cardholder billing address information in the authorization request. This service is offered as a part of the credit card authorization procedure. The issuing bank compares the address information in the authorization request message with its database of information about the cardholder. If the address contained in the request message does not match the information in the database, the authorization may be declined. Mail, telephone, and Internet transactions that do not include cardholder AVS data are not eligible for the lowest interchange rates from the VISA and MasterCard networks.

A company that specializes in the issuance of Travel and Entertainment (T&E) credit cards. American Express competes with VISA, MasterCard, and other card issuing companies. American Express services the cards that they issue, processing their transactions via their own network.

The specific method prescribed by a computer operating system, or by another application program, by which a programmer writing an application program can make requests of the operating system or another application. The API interfaces with an operating system or a program.

API integration is designed for ecommerce businesses. So you can integrate your existing payment system directly with our gateway, ultimately saving you time and money. Our easy Integration allows merchants of all sizes to easily connect to Payment Gateway.

When a point-of-sale terminal transmits a credit card authorization request, that request will either be approved or declined. An approval response means that the amount of the sale is within the cardholder’s credit limit. When an approval code is returned, a hold will be placed on cardholder funds in the amount of the sale for 3 to 21 days, depending on the card issuing bank, and will guarantee funds to the merchant for up to 30 days.

When point-of-sale terminal transmits an authorization request, the terminal will receive a response message that either approves or declines the request. When the transaction is approved, the response message will include a number, the approval code, which confirms the authorization. This code is issued to the merchant by the authorization center or stand-in processor, and is usually recorded on the transaction receipt as proof of authorization. Approval Code is sometimes called authorization code.

An authorization response message received at the point-of-sale terminal when a transaction is approved.

The procedure used to determine responsibility for a chargeback-related dispute.

A legal document that identifies the principles of a corporation and the terms under which a corporation was created.

A transaction type in which a transaction is preauthorized and post-authorized in one step. Auth is used only to process purchases of goods or services that do not require physical shipment, e.g., donations, registrations, or “soft” goods that are delivered electronically. An Auth is sometimes referred to as a Sale.

When a customer uses a credit card to pay for goods or services, the point-of-sale terminal transmits an authorization request message to the merchant’s credit card processor. Authorization is the act of ensuring that the cardholder has adequate funds available to cover the amount of the purchase. The authorization procedure includes other safeguards. For example, during the authorization attempt, lost or stolen cards may be identified. The authorization request may be declined if the card is expired. Address Verification Service may be used to match the cardholder address with records on file in the issuer’s database. A positive authorization results in an approval code being generated. In the most typical scenario, the point-of-sale terminal dials out and transmits an authorization request message. The terminal receives a response message from the credit card network indicating whether the authorization was approved or declined. An issuer, an authorizing processor, or a stand-in processor must approve or decline the authorization request. For approved authorizations, a hold is placed against the cardholder’s credit limit for the dollar amount approved. The merchant should settle the transaction before the hold is released.

A department or organization that is sometimes controlled by the processor, which electronically communicates a merchant’s authorization requests on credit card transactions to the cardholder’s bank. See processor

A code that a credit card issuing bank returns in an electronic message to the merchant’s POS equipment that indicates approval of the transaction. The code serves as proof of authorization.

A transaction type used to reserve an amount against a cardholder’s available limit for intended purchases. Auth Only transactions are most frequently used in the lodging, restaurant, and car rental industries, where the transaction amount is finalized later and entered via a Prior Authorized Sale transaction.

A transaction for a specified dollar amount used to reverse an approved authorization request.

A group of processing and financial institutions that are linked together by a computer network. Various types of electronic payment transactions, including credit card settlements, are routed across this network. The Automated Clearing House network provides a means of exchanging funds electronically. The National Automated Clearing House Association (NACHA) is responsible for maintaining the ACH rules and standards governing the exchange of ACH payments between financial institutions.

The average dollar amount of a merchant credit card/eCheck transaction that is generally used in pricing decisions and calculations. For example, the Merchant Services Provider may use the average ticket amount to determine the fee structure that will be charged to a merchant for credit card processing.


A bank account is a financial account between a bank customer and a financial institution. A bank account can be a deposit account, a credit card, or any other type of account offered by a financial institution. The financial transactions which have occurred within a given period of time on a bank account are reported to the customer on a bank statement and the balance of the account at any point in time is the financial position of the customer with the institution. A fund that a customer has entrusted with a bank, and from which the customer can make withdrawals.

A debit card transaction that has no dollar amount and that permits the cardholder to obtain the current balance of a checking or savings account.

A six-digit number assigned by VISA or MasterCard and used to identify a card issuing institution. The issuer emblazons the plastic cards with its logo. The BIN is the first six numbers embossed on the card.

The percentage fee an acquiring bank takes off the dollar amount of the ticket price as its fee for a transaction.

A debit or credit card, such as a VISA or MasterCard, issued by a bank or other financial institution.

An organization formed by a group of banks either for the purpose of sponsoring a single-identity program (such as VISA or MasterCard) or to use common processing and administrative facilities.

With reference to a participating depository financial institution, any day on which it is open to the public during any part of the day, for carrying on substantially all of its financial functions.

An accumulation of approved credit card transactions that are waiting to be settled. Typically, approved credit card transactions are accumulated throughout the business day, and then submitted to the processor at the end of the day. The batch may contain sales transactions, credits, voids, and other credit card transaction types.

A computer file containing credit card transaction data.

The process by which a batch file is electronically transmitted to a transaction processor.

The address to which a customer’s credit card billing statement is mailed. It is used to help verify that the customer is the actual owner of the credit card he/she is using.


An action in which an electronic credit card sale transaction is submitted for financial settlement. Authorized credit card sales must be captured and settled in order for a Merchant to receive credit for their sales and a cardholder’s account to be debited/credited.

An individual to whom a credit card is issued, or who is authorized to use an issued card. The cardholder is able to make purchases using the credit card.

See Issuing Bank

Refers to a sales transaction that is completed where both a valid credit card and cardholder are present. This type of transaction is also known as a (face to face transaction). Card-present transactions include traditional retail-department and grocery stores, electronics stores, boutiques, cash disbursements, and self-service situations, such as gas stations and grocery stores, where cardholders use unattended payment devices.

Any device that is capable of reading data that is magnetically encoded on plastic cards. – ALSO: 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 Code is used in fraud prevention. See Card Verification Value.

The Card Verification Value is calculated from the data encoded on the magnetic stripe – called the Card Verification Code – using a secure cryptographic process. See Card Verification Code

The bank that has issued a credit card to an individual. The term is frequently used in conjunction with interchange arrangements to identify the card-issuing bank. See Issuing Bank

This term pertains to a credit card transaction that does not require the cardholder and card to be physically present. All Internet transactions are card-not-present transactions.

A transaction returned through interchange by an issuing bank to an acquiring bank. A transaction may be returned because of rules and regulations violations, because the sale is disputed by a cardholder, or as a result of fraud. In the case of cardholder dispute, the merchant has the opportunity to appeal and prove that the sale is valid.

The percentage of chargebacks that is calculated by diving the Merchant’s total monthly chargeback items, by the number of the Merchant’s total monthly transactions.

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

Two-digit code identifying the reason for a chargeback. See Chargeback

A cheque or check in American English is a document that orders a payment of money from a bank account. The person writing the check, the drawer, usually has a current account (most English speaking countries) or checking account (US) where their money was previously deposited. The drawer writes the various details including the monetary amount, date, and a payee on the check, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

The Check Clearing for the 21st Century Act (or Check 21 Act) is a United States federal law that was enacted on October 28, 2003 by the 108th Congress. The Check 21 Act took effect one year later on October 28, 2004. The law allows the recipient of the original paper check to create a digital version of the original check, a process known as Cheque truncation, into an electronic format called a “substitute check” thereby eliminating the need for further handling of the physical document. Consumers are most likely to see the effects of this act when they notice that certain checks (or image of) are no longer being returned to them with their monthly statement, even though other checks are still being returned. Another side effect of the law is that it is now legal for anyone to use a computer scanner or mobile phone to capture images of checks and deposit them electronically, a process known as remote deposit. Check 21 is not subject to ACH (Automated Clearing House) rules; therefore transactions are not subject to NACHA (The Electronic Payments Association) rules, regulations, fees and fines.

An eFunds check verification service and consumer credit reporting agency like Experian, Equifax and TransUnion. While most credit reporting agencies broker data about how a consumer handles credit relationships, ChexSystems provides data related to how a consumer has handled deposit accounts at banking institutions.

The conversion of physical cheque into a substitute electronic form for transmission to the paying bank. Cheque truncation eliminates cumbersome physical presentation of the cheque and saves time and processing costs.

A check verification service provides businesses or individuals with either the ability to check the validity of the actual check or draft being presented, or the ability to verify the history of the account holder, or both.

The clearing process includes all of the functions necessary for the acquiring bank to recover funds related to a transaction, in the transaction currency, from the issuing bank. Clearing is part of the settlement process. In the clearing process, the acquirer and the issuer exchange financial details so as to complete a sale. As a result of clearing, the amount of the purchase is posted to the cardholder account.

Printing daily reports, balancing, and settling a batch to the credit card network.

Bankcard compliance programs define interchange requirements. These requirements are intended to improve the quality of transaction data submitted by the point-of-sale terminal, to combat fraud, to adjust the interchange value of non-compliant transactions, to provide detailed adjustment data to the acquirer regarding any compliance adjustments, and to ensure better chargeback protection. To receive the best interchange rates, the merchant must adhere to rules set forth by the compliance programs.

A reversal of a purchase. That is, money debited from merchant account and paid back to cardholder. Credit may be issued outside of the original batch.

MasterCard, VISA or other credit cards that are issued by a bank. A credit card is a plastic card with a credit limit, which is used to purchase goods and services and to obtain cash advances on credit, for which a cardholder is subsequently billed by an issuing institution for repayment of the credit extended.

VISA and MasterCard are the two largest credit card associations. The associations do not directly issue credit cards. However, the associations develop the rules and regulations that govern how these card types are processed. In turn, how a credit card transaction is processed will determine the fees associated with the transaction. The rules are designed to eliminate fraud, promote use of credit cards in financial transactions, and to accommodate the various industries that desire to accept credit cards as payment for good and services.

A business that manages the process of transferring authorized and captured credit card funds between different financial accounts.

This is a dollar amount assigned to a cardholder as the limit of credit that they are approved to borrow. Credit card purchases are actually loans to the cardholder by the issuer. Approved transactions will deduct the dollar amount from the cardholder’s credit limit.

The individual who is purchasing the goods or services from the Merchant and using a credit card or alternative payment methods to pay.

VISA’s regulations for the information that must be submitted with each transaction. Transactions must meet CPS criteria in order to qualify for the lowest transaction processing fees available.


A response to a transaction attempt that means the card-issuing bank will not accept the charge, and the merchant must finalize the sale with another form of payment.

A list of codes issued to declined transactions with an explanation of their meaning.

A transaction type that cancels a transaction that has not been settled yet. Each declined transaction comes with a decline code.

Demand deposits get their name from the terms of agreement on the account — payable on demand. By law, financial institutions may not pay interest on demand deposit accounts.

Encoded data that is embedded in a webpage, which serves as a guaranty that all parties in a transaction (seller and buyer) are who they claim to be. Digital certificates are issued by a certification authority and works by authenticating each parties identities and creating a public key for message coding (encryption).

The dollar amount paid by the merchant to the acquirer, or other contracted party, for processing the Merchant’s credit card transactions.

The percentage rate that an acquirer charges the merchant for handling credit card transactions. The discount rate is a small percentage of the value of each credit card purchase.


The process of buying or selling goods or services via the internet. This is most commonly done though a merchant’s or service provider’s website and usually involves an online catalog and shopping cart.

Obtaining authorization for use of a credit card by electronic means, as via computer equipment and telephone line. In an electronic authorization, the merchant’s point-of-sale device connects directly to the credit card network to obtain approval for the requested transaction.

An electronic authorization in which the customer credit number is entered manually into the point-of-sale device using an attached keypad. The POS device then performs the electronic authorization using the manually keyed data.

Most POS devices are equipped with a magnetic card reader. The card reader is able to detect and decode the magnetic bits of information stored on the credit card. When swiped in the card reader, data from the magnetic stripe on the credit card is included by the POS device in the authorization request message that is electronically transmitted into the credit card network.

A type of transaction initiated with an EBT card. This card may have a magnetic stripe or a small microprocessor on it. The card is used to replace the paper distributed by the government for programs like the Women, Infants, and Children program and food stamps. The cardholder may use this card and have the charges deducted from their available benefit dollars for the program that they are participating in. It is a card that is increasing in popularity and use throughout the United States.

In general, the sale of a good or service over the Internet. Electronic commerce is a broad term reflecting a wide range of commercial activities, and may include business-to-business transactions, online retail, and the digitalization of the financial industry.

An application for credit that is transmitted electronically to a credit evaluation company for approval recommendations.

Before the advent of electronic draft capture, credit card transactions were finalized using a paper-based system. Today, most credit card transactions are processed via dial connections, leased lines, the Internet, or other electronic means. Electronic draft capture – that is, the electronic authorization and deposit of credit card transactions – allows credit card transactions to be finalized without the submission of paper drafts to bank for payment. With this method, transactions are routed to VISA, MasterCard, American Express, Discover, third-party processors, or other card companies for processing. Transactions cannot be captured unless previously authorized. For mail order, telephone order, or Internet transactions, goods or services must also have been shipped or transmitted to the consumer before settlement takes place.

A paperless transfer of funds from one account to another that is initiated from a terminal, computer, telephone instrument, or magnetic tape.

A data file containing a list of the restricted VISA and MasterCard credit card accounts. For example, when a credit card is reported lost or stolen, the associated account number would be added to the list of restricted accounts. The Electronic Warning Bulletin is updated daily and helps processors determine which authorization requests should be declined. Before the advent of electronic authorization technology, merchants received a paper booklet containing similar information.

The scrambling of a message or file to make it unreadable except by the intended receiver, who unscrambles it. A method of coding data, using an algorithm, to protect it from unauthorized access.

A code that describes how the cardholders account information was entered into the terminal. For example, the Entry Mode may indicate whether the credit card account number in the associated transaction was manually keyed, or whether the account number was read from the magnetic stripe.

(EFA or EFAA) was enacted in 1987 by the United States Congress for the purpose of standardizing hold periods on deposits made to commercial banks and to regulate institutions’ use of deposit holds. It is also referred to as Regulation CC or Reg. CC, after the Federal Reserve regulation that implements the act.


A dollar amount limit that VISA and MasterCard has established for single transactions at specific types of merchant outlets. If the purchase amount exceeds the floor limit, then authorization is required. Many companies set their own floor limits and some merchants have agreements with their acquirers that include floor limits.

A force authorization is one that is not carried out via electronic communication. Rather, the merchant contacts the call center by voice to obtain approval. Then, the force authorization is added to the batch, along with the approval code provided by the call center, so that it can be settled along with electronic authorizations. Force authorizations may be used when an electronic authorization results in a referral message or when the electronic network is experiencing an interruption to service.

A fraudulent transaction is a transaction that takes place without the legitimate consent of the cardholder. Such transactions might be derived from the use of lost, stolen, or counterfeit cards, or other fraudulent conditions as defined by the card issuer.

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.


In a host-based system, credit card transactions are “captured” at the time they occur. In the most common scenario for a host-based system, a merchant processes credit card transactions throughout the business day using a point-of-sale device. The POS device transmits transaction data to the host processor. The host processor saves each transaction in a file. At the end of the business day, the POS device sends a “batch close” command to the host processor. The “batch close” message contains credit card totals. If the credit card totals sent by the POS device match the totals calculated by the host processor, then the batch file is closed and funds are transferred. If the POS totals do not match the host totals, then the POS device uploads the complete batch. In a host-based system, it is the host processor that is primarily responsible for storing transaction data until a batch is closed.


A device used to imprint the embossed lines of a credit card on a paper transaction sales draft. The sales draft also includes the merchant’s name and ID.

A request for an additional dollar amount on a prior authorization. An incremental authorization is used when the final amount for a transaction is greater than the dollar amount of the original authorization. Incremental authorizations are common in the lodging industry. For example, a hotel guest might register for one night, but then decide to extend the reservation for additional night. In that case, an incremental authorization might be performed in order to get approval for additional charges pertaining to the second night.

An independent sales organization sells credit card services to merchants on behalf of an acquiring bank. The ISO is a separate organization, and is typically not affiliated with a single acquiring bank.

The domestic and global systems operated by the MasterCard and VISA associations for authorization, settlement, and routing of interchange and other fees, as well as other monetary and non-monetary information related to credit card activities.

A fee paid by the acquiring bank to the issuing bank for each transaction. The fee compensates the issuer for the time lapsing after the acquiring bank has completed settlement, but before the issuing bank has recouped the settlement value from the cardholder. MasterCard International and VISA International independently establish interchange fees for their respective networks.

An organization that provides access to the Internet in some form, usually for money.

An integrated point-of-sale system – that is, a system that combines the ability to process credit card transactions with software or hardware manages other business-related functions. For example, a restaurant management system might track menu items, server clock in and clock out, and open tickets, while also interfacing with a credit card module that would allow diners to pay for meals by credit card.

A substitute check also called an Image Replacement Document or “IRD” is a negotiable instrument used in the United States to represent the digital reproduction of an original paper check. As a negotiable instrument, a substitute check maintains the status of a “legal check” in lieu of the original paper check as authorized under the United States law Check Clearing for the 21st Century Act (Check 21 Act). Instead of presenting the original paper checks, financial institutions and payment processing centers electronically transmit data from substitute checks for settlement through the Federal Reserve System.

The bank that extends credit to customers through bankcard accounts. The bank issues the credit card and receives the cardholder’s payment at the end of the billing period. Also called the issuing bank or the cardholder bank.

Any VISA or MasterCard association member financial institution, bank, credit union, or company that issues, or causes to be issued, credit cards to cardholders. An individual desiring a credit card makes application to an issuing bank. The issuing bank undertakes a review of the individual’s credit history, current salary, and other such factors. If the application is approved, the issuing bank provides the individual with a credit card and associated account number. The issuing bank transfers funds to acquiring banks to cover purchases made by the cardholder, and receives the cardholder’s payment at the end of the billing period.


A policy that refers to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them. The term is also used to refer to the bank regulation which governs these activities. Know Your Customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents’, consultants’ or distributors’ anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity. Know your customer policies are becoming increasingly important globally to prevent identity theft, financial fraud, money laundering and terrorist financing.


The process used to read the numbers on a check. The MICR characters (0-9 and 4 special characters) are printed in special toner or ink. When the check is passed through a reader/sorter, it passes by two magnetic heads. The first one magnetizes the MICR character and the second one reads the (now) magnetic MICR character. The character does not retain its magnetic charge for a long period of time.

A stripe of magnetic information affixed to the back of a credit or debit card. The magnetic stripe contains customer and account information required to complete electronic financial transactions. The physical and magnetic characteristics of the magnetic stripe have been standardized so that the encoded data can be read by commonly available magnetic stripe reading devices.

Cardholder data is recorded on the magnetic stripe on the back of the credit card. Data includes the primary account number, the credit card expiration date, and other discretionary data.

A device that reads information from the magnetic stripe of a credit card and transmits that information to a transaction processor or computer terminal. Also referred to as card reader.

A terminal that reads the magnetic stripe on a credit card.

A merchant that transacts business by mail or phone.

A transaction where a cardholder orders goods or services from a merchant by telephone, by mail, or by other similar means, and neither the card nor the cardholder is present at the merchant outlet.

In the early days of credit card processing, all authorizations were performed manually. A merchant would use a “knuckle-buster,” or imprinter, to take a manual imprint of the credit card. The merchant would contact a representative of the issuing bank by phone to obtain voice approval for the authorization. Signed vouchers were delivered to the acquiring bank in hard copy so that the transactions could be processed. With the advent of the electronic credit card network, most authorizations are now performed electronically. However, if the credit card network is experiencing an outage, the merchant can still complete a manual authorization.

A card that bears the MasterCard symbol, enabling a MasterCard cardholder to obtain goods, services, or cash from a MasterCard merchant or an acquirer.

A member of MasterCard International, Inc., that issues MasterCard cards.

An entity or financial organization that is a member of VISA or MasterCard. Acquirers and issuers may be members.

Any business that accepts credit or debit cards as a form of payment. The party which offers a good for sale or provides services in exchange for payment.

A written agreement between a merchant and a bank or other organization containing their respective rights, duties, and warranties with respect to acceptance of credit cards and eChecks as a form of payment.

A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to. See Acquiring Bank.

Four-digit classification codes used to identify the type of merchant business in various stages of transaction processing. For example 5999 is the code given to miscellaneous and specialty retail stores.

Demand deposit account, or other bank account, established by a merchant to receive payment for credit card transactions submitted to the acquirer. The merchant depository account may be established with the acquiring bank, but this is not required. See also Demand Deposit Account.

Fraud perpetrated by a card acceptor against other parties in a payment system.

A unique number issued by the acquiring bank to identify a merchant and the merchant’s terminal(s) to a host computer in the credit card processing network.

Displays settlement information as indicated by activity through the Payment Gateway.

A merchant service provider is a business entity that provides transaction processing services between merchants and settlement banks. The MSP contracts to sell transaction processing services for one or several acquiring institutions. The MSP signs up merchants with processing agreements as provided by the acquirer. The MSP also relays to the merchant quote rates as provided by the acquirer, and can sell or lease POS hardware to the merchant. In some cases, the MSP will continue to service the merchant account on behalf of the acquiring bank. See also Independent Sales Organization.

The department within an acquiring bank that assists merchants with their questions.

A character recognition technology used primarily by the banking industry to facilitate the processing and clearance of checks and other documents. The MICR encoding, called the MICR line, is located at the bottom of a check or other voucher and typically includes the document type indicator, bank code, bank account number, check number and the amount, plus some control indicator. The technology allows MICR readers to scan and read the information directly into a data collection device. Unlike barcodes or similar technologies, MICR characters can be easily read by humans. The MICR E-13B font has been adopted as the global standard in ISO 1004:1995, but the CMC-7 font is widely used in Europe.


The National Automated Clearing House Association manages the development, administration, and governance of the ACH Network. NACHA is the backbone for the electronic movement of money and data in the United States. It is funded by the financial institutions it governs. The ACH Network serves as a network for direct consumer, business, and government payments, and annually facilitates billions of payments such as Direct Deposit and Direct Payment. Utilized by all types of financial institutions, the ACH Network is governed by the NACHA Operating Rules, a set of rules that guide risk management and create certainty for all participants.

A file used for stand-in purposes that identifies those cardholders and accounts for which charge privileges have been revoked or restricted by the issuer.

A term used in the banking industry to indicate that a demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified terms, a check has been presented for clearance, but the amount written on the check exceeds the available balance in the account. An NSF check is often referred to as a bad check or dishonored check, or more colloquially, a bounced check, cold check, rubber check, returned item, or hot check.


An agency of the United States Department of the Treasury under the auspices of the Under Secretary of the Treasury for Terrorism and Financial Intelligence. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations, and individuals.

The online business accepting credit card payments for the goods or services they provide.

A record of a request for goods or services initiated by a customer.


Sales slips, credit slips, cash disbursement slips, drafts, vouchers, and other paper documents indicating use of a credit card or a card account.

A process in which a store ships/provides only some of the goods/services in a single order. Therefore, the PostAuth amount would be less than the amount of the approved PreAuth for the order.

A payment gateway is a separate service and facilitates the authorization and settlement or funding for an eCheck transaction. You submit an eCheck transaction on behalf of your customer via the gateway to the processor; the processor submits the transaction to the eCheck network; the eCheck network routes the transaction to the customer’s eCheck issuing bank; the customer’s bank approves or declines the purchase and passes the transaction results back to the eCheck network; the eCheck network relays the results to the processor; the processor relays the results to the gateway and the gateway stores the results and sends them to the merchant and/or customer.

An electronic (email) acknowledgement of an order placed from an e-commerce-enabled web site sent to the customer placing the order. It is merely for the convenience and assurance of the customer. It has no legal standing since email can be lost or forged.

Offers (web) shops online services for accepting electronic payments by a variety of payment methods including credit card, eCheck, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking. Typically, they use a software as a service model and form a single technical gateway for their clients (merchants) to multiple payment methods.

Fees paid by the merchant to the acquirer on a per transaction basis.

A server-side scripting language designed for web development but also used as a general-purpose programming language. PHP is now installed on more than 244 million websites and 2.1 million web servers. Originally created by Rasmus Lerdorf in 1995, the reference implementation of PHP is now produced by The PHP Group. While PHP originally stood for Personal Home Page, it now stands for PHP: Hypertext Preprocessor, a recursive acronym. PHP code is interpreted by a web server with a PHP processor module which generates the resulting web page: PHP commands can be embedded directly into an HTML source document rather than calling an external file to process data. It has also evolved to include a command-line interface capability and can be used in standalone graphical applications.

An issuer’s response to an authorization request stipulating that the card be confiscated by the merchant and returned to the issuer.

Location in a merchant establishment where a credit card transaction takes place. For retail businesses, the point-of-sale typically refers to the cashier or check-out desk. For mail and phone order businesses, the point-of-sale has a broader reference, encompassing the customer’s telephone, personal computer, or order form, as well as the catalog, advertisement, or other “storefront” material.

A device located at a merchant establishment that is connected to the credit card network via telephone lines or other means. The POS terminal is designed to authorize, record, and forward credit card data by electronic means for each purchase made by credit card.

A transaction that puts a PreAuth transaction into a Captured state for settlement. In the case of partial shipments, the PostAuth amount may be less than the PreAuth amount. By law, PostAuths can be initiated only after the purchased goods have been shipped.

The process of recording debits and credits to individual cardholder account balances.

A pre-approval for future transaction(s). The pre-authorization is usually followed, within a specific time interval, by the actual financial transaction that will be settled by the merchant. Pre-authorizations are used primarily in situations where the cardholder wishes to obtain “advance approval” or “verification” that sufficient funds are available to make a subsequent purchase using a credit card.

A previously authorized transaction that is manually entered into the terminal’s open batch for later settlement. For example, voice-authorized transactions need to be entered into the terminal for payment to take place. This transaction type is also known as a force sale.

The processor is an organization that furnishes credit card processing, billing, reporting, settlement, and operational services to acquiring banks. The processor provides the computing facilities for routing credit card transactions over a network to the appropriate issuer for authorization or settlement. Some acquiring banks process their own credit card transactions. Merchant point-of-sale terminals connect directly to computer systems owned and managed by the acquiring bank. Other acquiring banks outsource the processing of their credit card transactions to a third-party processor. The third-party processor then owns and maintains the hardware and software needed to process credit card transactions. In that case, merchant point-of-sale terminals connect to the third-party processor to transmit credit card requests. The third-party processor provides transaction reporting to the acquiring bank.


When a credit card purchase is “authorized” while a shopper is on-line. If the credit card is denied, the shopper has another opportunity to enter in another credit card number to be authorized.

An online transaction, such as an ATM withdrawal, that is usually settled immediately.

When a credit card processor receives an authorization request from a point-of-sale terminal, the processor can either approve the request, decline the request, or issue a referral. With a referral, the processor has declined the transaction, but the merchant can contact the voice authorization center. If the voice authorization accepts the transaction, then the merchant will be given an approval code.

The ability to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank. This is typically accomplished by scanning a digital image of a check into a computer, then transmitting that image to the bank, a practice that became legal in the United States in 2004 when the Check Clearing for the 21st Century Act (or Check 21 Act) took effect. This service is typically used by businesses, though a remote deposit application for consumers has been developed and has begun to be implemented by a handful of banks.

Automate timely and multiple billings for new and existing accounts.

The merchant’s opportunity to dispute a chargeback to the card issuer if the merchant believes that there is sufficient documentation to refute the reason for the chargeback.

A merchant that provides goods or services in the retail industry, but is not a mail/phone merchant, a recurring services merchant, or a T&E merchant.

A written request to a merchant from a card issuing bank, or from a cardholder, for a copy of a particular sales draft or proof of sale. The merchant may provide the issuing bank with a paper copy or facsimile of the sales draft, or an electronic version of the voucher.

A financial institution qualified to receive ACH (Automated Clearing House) entries. These institutions should abide by the NACHA (National Automated Clearing House Association) Rules. This is the depository institution that receives the ACH transaction from the ACH Operators and credits or debits funds from their receivers’ accounts.

A rolling reserve is a percentage of your overall online processing volume which is held in a secure account by TheECheck before being released to your business. Rolling reserves or ‘holdbacks’ are common practice across the online processing industry, as they provide security for both the online merchant and payment processing company.

A routing transit number (RTN) is a nine digit bank code, used in the United States, which appears on the bottom of negotiable instruments such as checks identifying the financial institution on which it was drawn. This code was designed to facilitate the sorting, bundling, and shipment of paper checks back to the drawer’s (check writer’s) account.


A completed purchase transaction, composed of two parts—an authorization and a capture. An authorization validates the card and a capture actually debits funds from the cardholder’s account.

A flat fee, assessed in combination with the Merchant Discount Rate for each successful transaction.

Involves the process of conducting a due diligence assessment of applications for merchant accounts. It also refers to the detection and rejection of fraudulent transactions by TheECheck’s fraud and investigations specialists through automated screening and manual analysis.

A unique identifier which can be found under the API Info option in your Back Office.

Settlement is the procedure that results in the dollar value of credit card transactions being deposited in the merchant’s depository account by the acquirer. Most merchants will “settle” credit card transactions on a daily basis by transmitting a credit card batch file to the credit card processor.

A document issued to the merchant, indicating the sales and credit activity, billing information, fees and chargebacks occurring during a particular time period.

A declined response in which authorization is not granted on a valid card not because it has been lost or stolen, but because the credit card account already exceeds the credit limit.

The SSL (Secure Sockets Layer) Protocol is a protocol which provides secure communications between the server and client, preventing others from capturing or viewing the data being exchanged. In effect, data is encrypted for transmission through the internet and unencrypted by the recipient. Digital certificated are required to provide SSL protection and can be seen where a URL begins with https.

A floor limit that varies by merchant type. This refers to a dollar limit on transactions above which authorization requests are required.

A backup system that provides authorization services on behalf of an issuer when the issuer or its authorizing processor is unavailable.


In a terminal-based system, transactions are not “captured” at the time that they occur. Rather, the point-of-sale device retains all transaction data in a batch file. When the merchant is ready to close a batch, the batch settlement procedure is initiated. The POS device communicates with the host processor, uploading the complete batch file. Only when the batch file is successfully uploaded to the host is the settlement considered complete. The host returns a message to the POS device, indicating whether the batch was accepted or rejected. Batches that are accepted by the host are processed and funds are transferred to the merchant.

Another name for the sales slip, or its monetary value, that results when a credit card purchase is made.

A protocol that provides communication security over the Internet and allows client-server applications to communicate across a secure network in a way designed to prevent eavesdropping and tampering.

The most common example of a transaction is the process that takes place when a cardholder makes a purchase with a credit card. The credit card is swiped at the POS terminal. The terminal makes a dial connection to the credit card network, transmitting information related to the sale as well as cardholder account information. Finally, the credit card processor returns a response message indicating approval or denial of the request.

The date a cardholder affects a credit card purchase of goods, services, or other things of value.

A unique 15 character value that VISA assigns to each transaction. The Transaction Identifier is returned in the authorization response message. VISA uses this value to maintain an audit trail throughout the life cycle of the transaction and all related transactions, such as reversals, adjustments, confirmations, and chargebacks.

A label identifying the nature of the transaction and determines how the transaction will be handled. For example, a PreAuth transaction reserves funds. The most common Transaction Types are Auth, PreAuth, PostAuth, Credit, and Decline.

Travel & Entertainment cards typically require payment in full each month by the cardholder. Examples are American Express, Carte Blanche, and Diner’s Club cards.

An airline, car rental company, hotel or other similar business establishment whose primary function is to provide travel-related services.


Other fees paid by the merchant to the merchant bank, acquirer, or other contracted party for credit card transaction processing.

The Director of Risk looks at all of the facts and documents and determines if there are any inaccuracies. The Risk department will also double check for errors and make sure the application meets all requirements prior to approving your merchant account.

URL is also known as web address. It is a specific character string that constitutes a reference to a resource. In most web browsers, the URL of a web page is displayed on top inside an address bar. An example of a typical URL would be “ Page”. A URL is technically a type of uniform resource identifier (URI), but in many technical documents and verbal discussions, URL is often used as a synonym for URI.


An active scripting language developed by Microsoft that is modeled on Visual Basic. It is designed as a “lightweight” language with a fast interpreter for use in a wide variety of Microsoft environments. VBScript uses the Component Object Model to access elements of the environment within which it is running; for example, the File System Object (FSO) is used to create, read, update and delete files. VBScript has been installed by default in every desktop release of Microsoft Windows since Windows 98; in Windows Server since Windows NT 4.0 Option Pack; and optionally with Windows CE (depending on the device it is installed on). A VBScript script must be executed within a host environment, of which there are several provided with Microsoft Windows, including: Windows Script Host (WSH), Internet Explorer (IE), and Internet Information Services (IIS). Additionally, the VBScript hosting environment is embeddable in other programs, through technologies such as the Microsoft Script Control.

VISA International Service Association and all of its subsidiaries and affiliates.

A credit card that bears the VISA symbol, enabling a VISA cardholder to obtain goods, services, or cash from a VISA merchant or an acquirer.

A financial institution that is a member of VISA International Service Association and that issues VISA cards.

A merchant that displays the VISA symbol and accepts all VISA cards.

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. Most commonly, a voice authorization is obtained by a merchant from the authorization center via telephone.

A transaction that nullifies a previous sale, that has not yet been settled. This transaction can typically be completed only within the same batch. The original sale transaction is effectively removed from the batch of transactions to be settled.


An electronic transfer of funds.


A markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. The design goals of XML emphasize simplicity, generality, and usability over the Internet. It is a textual data format with strong support via Unicode for the languages of the world. Although the design of XML focuses on documents, it is widely used for the representation of arbitrary data structures, for example in web services).


A floor limit with a currency amount of zero, effectively meaning that authorization is required for all credit card transactions. partnership with shop where you can buy fullz and cvv for your credit cards merchant account.