ABA Routing Number
The American Banking Association (ABA) routing number is a unique, bank-identifying number that directs electronic ACH deposits to the proper bank. This number consists of 9 digits and precedes the account number printed at the bottom of a check.
Address Verification Service (AVS)
A service that verifies the cardholders billing address in order to help combat fraud in card-not- present transactions (e.g. mail order, telephone order, internet, etc.). Used only in the United States.
Associations – Bank
The organizations like Visa, MasterCard, Discover, etc.
Approval
Any transaction that is approved by the cardholder or check writer’s bank. Approvals are requested via an authorization. An approval is the opposite of a declined transaction.
Authorization
An authorization is a request to charge a cardholder. It reduces the cardholder’s open-to- buy but does not actually capture the funds. The authorization must be settled in order to charge the account. If it is not used within a certain time period, it will drop off. The issuing bank determines the time period for drop off. Authorizations can only be used for credit card transactions. Approved sale and authorization transactions always receive a numeric or alphanumeric authorization code that references the transaction for processing purposes.
Authorization Code (AUTHCODE)
Approved sale and authorization transactions always receive a numeric or alphanumeric authorization code that references the transaction for processing purposes.
Automated Clearing House (ACH)
The Automated Clearing House network is a nationwide, wholesale electronic payment and collection system. It is a method of transferring funds between banks via the Federal Reserve System.
Average Ticket
The average dollar amount of merchant credit transactions.
Basis Point
One one-hundredth of a percent. Discount rates are expressed as basis points.
Batch
A collection of transactions submitted for settlement. Usually a merchant has one batch per day or per shift.
Batch Processing
A type of data processing where related transactions are transmitted as a group for processing.
Batch Settlement
A procedure that causes all funds from captured transactions to be routed to the merchant’s acquiring bank for deposit. Payment gateways automatically submit all captured transactions for settlement on a daily basis. Some retail swipe terminals can also be programmed to perform automatic daily batch settlements.
Capture
The process of capturing funds from an authorization.
Card-not-present
A situation where the cardholder (and the card) is not physically present at the time of purchase. Typical card-not-present transactions take place in businesses focused on mail order/telephone order, business-to-business, and Internet-based transactions.
Card-present
A situation where the cardholder (and the card) is physically present at the time of purchase. Card-present transactions account for the majority of credit card transactions in the world and are accounted for by traditional retailers (e.g. gas station or restaurant) and all other situations where the cardholder is present at the time of purchase.
Card Verification Value Code (CVV)
The Card Verification Value Code is used to help authenticate transactions in card-not-present transactions (e.g. MO/TO and Internet). For Visa™ and MasterCard®, the code will be the last three digits printed on the signature strip on the back of the credit card. For American Express, the code will be the four digit number on the front of the card above the account number. (Visa™ refers to this code as CVV2, MasterCard® refers to it as CVC2, and American Express refers to it as CID)
Chargeback
The act of taking back funds that have been paid to a merchant for a disputed or improper credit card transaction. Merchants are generally assessed a fee for each chargeback. An excessive amount of chargebacks may result in the loss of the merchant account.
Debit Card
An ATM bankcard used to purchase goods and services and to obtain cash. A debit card debits the cardholder’s personal deposit account and requires a Personal Identification Number (PIN) for use. Debit cards branded with a bankcard logo (e.g. Visa™) can be accepted without a PIN.
Decline
A transaction in which the issuing bank will not authorize the transaction.
Demand Deposit Account (DDA)
A standard checking or savings account into which electronic funds can be transferred.
Discount Rate
Amount charged to a merchant for processing a transaction. It is usually a percentage of the transaction amount. The rate is typically based on business type, monthly transaction volume, and average ticket.
Electronic Funds Transfer (EFT)
The paperless act of transmitting money through a computer network.