3D Secure encompasses both Visa's Verified by Visa and MasterCard's SecureCode security solutions for online ecommerce transactions. These solutions use personal passwords to help protect cardholders' card numbers against unauthorized use. Once activated a cardholder's card number cannot be used for online purchases on websites that are using the 3D secure technology without providing a personal password. Wikipedia article on 3D Secure.
Acquiring Bank / Merchant Bank The bank that does business with merchant accounts enabling them to accept credit cards payments. A merchant has an account with this bank and specific period (for example weekly) deposits the value of a day's credit card sales.
The processor provides credit card processing, billing, reporting and settlement, and operational services to acquiring banks. Many financial institutions do not do their own bankcard processing because it is more cost-effective to let someone invest in the equipment and people and do it for them.
Address Verification Service (AVS)
A regulation introduced in 1996 by VISA/MasterCard requiring all businesses who manually key in the majority of their credit card transactions to have a special fraud prevention feature on their credit card processing equipment. This feature is referred to as an address verification system (it checks to see that the billing address given by the customer matches the credit card).
A web-based tool allowing Merchants to track their sales from their customers.
Address Verification System (AVS)
AVS is used as an extra level of security for online credit card transactions that takes the first line of the billing address and the zip/postal code of the cardholder and checks if they are valid as compared to what is stored on file for the given credit card number. Wikipedia article on AVS.
Organizations that provide merchants (in many cases start-up companies) with an Internet merchant account. Newly established companies may have difficulty qualifying immediately for merchant services from local banks due to the company's age, lack of transaction history, etc. Aggregators will accept financial responsibility for these merchants' transactions, effectively acting as guarantor to the acquiring bank for the smaller and newly established companies that banks may not wish to accept directly due to the higher risk involved. Aggregators will combine these smaller merchants under their merchant account enabling them to participate in e-commerce.
Application Service Provider (ASP)
A third-party organization that manages and distributes software-based services and online payment solutions to customers across a wide area network from a central data center.
A confirmation code, sent by the bank to confirm the fact that the credit card of buyer exists, is suitable to the use and the inquired sum is within the limits of the permissible limit.
The process of checking that the credit card online payment being used in a transaction contains sufficient funds to cover the amount of the transaction. Note that if sufficient funds are found, the amount is held for a given period of time, waiting to be withdrawn when settlement occurs. The period of time varies based on the issuing bank of the credit card.
Authorization and Capture (Sale)
An Authorization and Capture not only checks that the credit card being used in a transaction contains sufficient funds to cover the amount of the transaction, it also flags the transaction as captured meaning it is to be sent for settlement in the next settlement period.
Automatic Clearinghouse (ACH)
The Automated Clearing House is an electronic online payment network which exchanges funds via Electronic Funds Transfer (EFT) throughout the U.S. fifty states and territories.Â
Automatic Check Handling (ACH)
ACH is a form of epayment or electronic payment. There are two ways payments can be transferred: (1) by wire transfer, or (2) through an automated clearinghouse. Wire transfer is an e-payment system that is designed to handle high-dollar, time-crucial payments, usually between large banks. ACH is designed to be an e-check or electronic check. Unlike the wire transfer, it is usually used to process higher volumes or small-dollar payments for settlement issues within 1 to 2 business days. All ACH transactions are settled in a manner similar to the way checks are settled: The clearinghouse takes all ACH files received daily from its member banks, sorts them by the originating bank (the bank where the check was cashed or deposited) and the paying bank (the bank against which the check was drawn), totals the accounts, and credits or debits appropriate accounts accordingly.
The accumulation of captured (sale) transactions waiting to be settled. Multiple batches may be settled throughout the day.
The address of the customer, who have purchased the goods and services.
A traditional business that operates by dealing with customers in a face-to-face environment, such as an office or store
A software application used to locate and display World Wide Web pages. Safari, Netscape Navigator, and Microsoft Internet Explorer are all browsers.
Business to Business Commerce (B2B)
Commercial transactions between two or more businesses. B2B was originally undertaken using EDI. XML is now the preferred solution.
Business to Consumer Commerce (B2C)
The sale of Goods or Services to a Consumer where the transaction takes place over the Internet.
Converting the authorization amount into a billable transaction. Transactions cannot be captured unless previously authorized and the goods or services have been shipped or transmitted to the consumer.
Visa and MasterCard, which are the licensing and regulatory agencies for bankcard activities.
A person who opens a credit card account and makes purchases using a credit card.
Card Identification Digits (CID)
The 4-digit code found on the front of AMEX cards. The CID is used as an extra security step to help to verify that the person using the credit card is the actual cardholder.
The action of unblocking a credit card.
A credit card transaction in which the merchant has received the card number from the buyer, but is unable to physically link the card to the buyer (i.e. Mail Order/Telephone Order or online transactions). This type of transaction carries the highest interchange rate due to the risk factor.
A card transaction in which the buyer physically gives the merchant their credit card in which to pay for the purchase. This type of transaction carries the lowest interchange rate since the buyer is actually present for the transaction. Also called a face-to-face transaction.
Card Verification Value (CVV2)
The 3-digit code found on the back of Visa cards, the CVV2 is used as an extra security step to help to verify that the person using the credit card is the actual cardholder. Wikipedia article on CVV2.
Card Verification Code (CVC2)
The 3-digit code found on the back of MasterCard cards. The CVC2 is used as an extra security step to help to verify that the person using the credit card is the actual cardholder. Wikipedia article on CVC2.
When a capture is performed (either in an Sale or Capture only transaction) it is the process of flagging an already authorized transaction to be settled in the next settlement period.
Certificate Authority (CA)
A trusted third-party organization or company that issues digital certificates used to create digital signatures and public-private key pairs. The role of the CA in this process is to guarantee that the individual granted the unique certificate, is who he or she claims to be.
A reversal of a credit card transaction, typically initiated by the transaction card issuer at the cardholder's request. Chargebacks can occur for any number of reasons, including: customer disputes, potential or actual fraud (on the part of merchants, sales associates and/or customers), processing errors and authorization issues. Chargebacks are governed by a complex set of rules and time limits that can be costly to merchants and their banks if disregarded. Chargeback Reason Code- a two digit number, through which the reason of the chargeback is indicated.
The process of exchanging transaction details between an acquirer and an issuer to facilitate posting the transaction on the cardholder's account and reconciling their settlement position.
Click-and-mortar describes a store that exists both online and in the physical world, for example Barnes and Noble.
Unauthorized use of cardholder information such as attempts to purchase products or services using another person's card.
This is a type of bank card that can be widely used all around the world as a form of payment. The credit card holder must then reimburse the credit card company for the amount of the total sales the holder had charged on that particular credit card.
Credit Card Processor (Third Party Processor)
merchant services providers that handle the details of processing credit card transactions between merchants, issuing banks, and merchant account providers. Website operators usually must first establish their own merchant account before contracting for credit card online processing services.
The process of securing private information that is passed through public networks, by mathematically encrypting the information so that it is unreadable to anyone except the person(s) holding the mathematical "key" that is needed in order to decrypt the information.
End customer (buyer) performing electronic shopping from a merchant.
This is the check number, which consists of three numbers, which is printed on the reverse side of bank card. The introduction of this number helps to ascertain that the credit card is used by a real owner. CVV2 classification is used for VISA cards. CVC2 classification is used for MasterCard cards. Both credit card organisations use three digits, while American Expresses uses 4 digits.
The collection of merchant bank card sales receipts from the merchant's point-of-sale terminal or electronic cash register by an electronic means.
A financial instrument used by consumers instead of cash. Unlike a credit card, debit card purchases are deducted automatically from the cardholder's account, like a check. Visa and MasterCard now offer debit cards through banks and other financial institutions.
The decline of a credit card transaction.
An attachment to an electronic message used for security purposes. The most common use of a digital certificate is to verify that a user sending a message is who he or she claims to be, and to provide the receiver with the means to encode a reply.
A digital code, attached to an electronic message that verifies the sender. Digital signatures are especially important for electronic commerce and are a key component of most authentication schemes. To be effective, digital signatures must not be open to forgery. A number of different encryption techniques use digital signatures.
A consumer account set up to allow e-commerce transactions through a particular credit card processing system. Before the consumer can make a purchase, he or she must first establish an account with the credit card processor, who provides an ID and password. These can then be used to make purchases at any Web site that supports that transaction system.
The fee a merchant pays its acquiring bank/merchant bank for the privilege to deposit the value of each day's credit purchases. The fee is usually a small percentage of the purchase value.
Removing the middleman. This term is used to describe the function of many Internet-based businesses that use the World Wide Web to sell products directly to customers rather than going through traditional retail channels. By eliminating the middlemen, companies can sell their products cheaper and faster.
An organization's Internet address. For example, firstecom.com is the domain name of First Ecom, the payment processor. The '.com' designation indicates the site is for a company. Other popular suffixes are '.org' for non-profit organizations and '.net' which is used by organizations and businesses connected with Internet services. Organizations may add two letter endings to these addresses (e.g. www.microsoft.com.hk) to indicate they are in a specific country. The '.edu', '.mil', and '.gov' domains are traditionally reserved for government organizations.
Electronic Banking (E-banking)
A form of banking that allows individuals access to personal or business banking services over a public network such as the Internet. E-banking usually allows 24 hour access to basic banking services, including the ability to transfer funds through personal computers via telephone lines between financial institutions. E-banking uses computer and electronic technology as a substitute for paper transactions such as checks.
Electronic Commerce (E-Commerce)
The buying and selling of goods and services on the Internet, especially the World Wide Web. In practice, this term and a new term, 'e-business', are often used interchangeably. For online retail selling, the term 'e-tailing' is sometimes used.
Electronic Merchant (E-merchant)
A merchant that runs his/her business electronically via the Internet.
Electronic Money (E-money)
Digital available amount of money. It is stored in electronic form on a computer or a microprocessor. Digital available amounts can be purchased and remain on a special storage device.
Electronic Payment (E-payment)
The ability to effect payment online without the physical transfer of cash or documents, regardless of time or location. E-payment methods include credit cards, debit cards, smart cards, e-checks,etc
A digital card or account on which electronic money can be stored.
Electronic Wallet (E-wallet)
Software that enables a cardholder to conduct online transactions, manage payment receipts and store digital certificates.
A way of coding the information in a file or e-mail message so that if a third party intercepts it as it travels over a network it cannot be read. Only the person or persons that have the right type of decoding software (i.e. key) can decrypt the message.
Electronic Software Distribution, a system for selling software over a network. ESD systems provide secure communications that customers use to download and pay for software. These systems can operate over the Internet or on a direct modem-to-modem connection. ESD systems can also allow users to use software for a trial period before purchasing.
A system designed to prevent unauthorized access to or from a private network, usually unauthorized access from the Internet into a private network.
The purchase of debts owed, or "accounts receivable," in exchange for immediate online payment at a discount. In e-commerce, the term is often applied to ISO's that offer to process credit card transactions through their own merchant account rather than through an account established by the merchant, in exchange for a percentage of the transaction or other fee. Factoring of credit card debts is illegal.
All procedures intended to prevent customers from using of fake or stolen credit cards.
Information, which the buyer sees on the website of the merchant. Front-End makes it possible for buyers to interact with the electronic basket, the data base, and to also pay purchases.
A portion of the revenue from a merchant's credit card transactions, held in reserve by the merchant account provider to cover possible disputed charges, chargeback fees, and other expenses. After a predetermined time, holdbacks are turned over to the merchant.
Web sites that are stored on a server by an Internet Service Provider (ISP)
the automatic composition of a batch- file for the processor of online payments or the gateway payment.
Hyper Text Transfer Protocol, the underlying protocol used by the World Wide Web. HTTP defines how messages are formatted and transmitted, and what actions Web servers and browsers should take in response to various commands. For example, when you enter a URL in your browser, this actually sends an HTTP command to the Web server directing it to fetch and transmit the requested Web page.
Hyper Text Markup Language, the language used to create documents on the World Wide Web and which governs how Web pages are formatted and displayed. HTML defines the structure and layout of a Web document by using a variety of tags and attributes.
Internet Access Provider (IAP)
An organization that provides access to the Internet, whether through dial-up, cable modem or wireless. Often considered to be a subset of Internet Service Providers.
Internet Point-of-Sale (IPOS)
Allows merchants to safely channel and process traditional card-based transaction data over the Internet in real-time. The transaction is classified as a person present transaction, rather than an Internet (i.e. person not present) sale.
Internet Service Provider (ISP)
An organization that provides a range of Internet services such as access, Web development, and/or Web site hosting.
An identifier for a computer or device on a TCP/IP network. Networks using the TCP/IP protocol route messages according to the IP address of the destination. The format of an IP address is a 32-bit numeric address written as four numbers separated by periods. Each number can be from zero to 255. For example, 18.104.22.168 could be an IP address. Within an isolated network, IP addresses can be assigned at random as long as each one is unique. However, connecting a private network to the Internet requires using registered IP addresses (called Internet addresses) to avoid duplicates.
Issuing Bank / Issuer
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 issuer or the cardholder bank.
A password or table needed to decipher encoded data.
The length of a key, expressed in bytes.
The activity to load digital available amount of money into the digital purse.
Mail Order/Telephone Order (MO/TO)
A credit card transaction where the order and payment information are transmitted to the merchant via the mail or telephone.
The company that offers goods or services in exchange for online payment. Merchant credit card processing accounts that accept payment by card must have a relationship with an Acquiring Bank.
A bank account established by a merchant to receive the proceeds of credit card purchases. By establishing a merchant account for merchant credit card processing, the merchant bank agrees to pay the merchant for valid credit card purchases in exchange for the right to collect on the debt owed by the consumer.
Merchant Account Provider (MAP)
An institution that hosts internet merchant accounts and processes online credit card transactions. The term is also often used broadly to include any credit card processing service, including ISOs.
The written agreement between the salesman and the bank (is possible, between the salesman, the bank and ISO), that establishes rights, responsibilities and guarantees of sides in the process of the card payments methods.
The bank, which offers online merchant accounts.
Merchant Category Code (MCC)
The code which indicates the type of activities of the Merchant accounts. For example Gambling;7995.
Fraud perpetrated against other parties, usually the cardholder or the bank, typically through the use of the card acceptor's online payment system.
Merchant Identification Number (MID)
A Unique identifier issued by Acquirer Bank in order to track and collect Merchant online payments.
This is the amount of fees you must meet each and every month. If month sales do not make the monthly minimum the merchant account holder must make up the difference.
Any electronic banking transaction in which the acquiring member and the issuing member are the same institution or are within the same network facility.
Payment form (payment page)
A web-based electronic form provided by the IPSP to merhcnats where Customers have to enter their personal and credit card data in order to perform online payment using Credit Card.
An electronic application that integrates with a merchant Web sites in order to transmit transaction data to the payment card acquirer for both authorization and settlement purposes. A online payment gateway accepts transactions from online merchant accounts storefronts and routes them to a financial institution's processing system.
The process of attempting to charge some value from customer's credit card.
The switch routes payment card transaction data to the respective financial institution for the purposes of approving, processing, and settling electronic online payment transactions
The financial organization (or association of financial organizations) providing financial services to customers and allowing them to use credit cards that are identified by its number and some supplementary information.
Per Transaction Fee
A transaction is the process that takes place when a cardholder makes a purchase with an online payment card. A fee is then charged on these authorized transactions to cover necessary costs associated with processing the transaction.
Personal Identification Number (PIN)
A number that must be entered along with a online payment card number for certain credit or debit cards to make a transaction. The PIN functions as a password in that it does not allow the holder to use the card without first providing the PIN.
Public Key Infrastructure, an entire system of digital certificates, Certificate Authorities, and other registration authorities that verify and authenticate the validity of each party involved in an Internet transaction. PKIs are currently evolving and there is no single PKI or even a single agreed-upon standard for setting up a PKI.
A software module designed to add functionality to an existing software application.
The location at of the merchant 's physical place of business where consumers make face-to-face purchases.
Point-of-Sale (POS) Terminal
A server that is placed in the merchant's location and connected to the banks' systems, interfacing cardholder software and acquirer payment systems. It is used to electronically read, authorize, record, and transfer data to and from the merchant for each sale. Also called a swipe box.
Public Key Cryptography
An encryption method that uses two Keys: one key to encrypt the message and another key to decrypt the message. The two keys are mathematically related so that data encrypted with either key can only be decrypted using the other. Each user has a public and a private key, and only the public key is distributed to parties with whom the user exchanges encrypted messages.
Pre Paid Card
A smart card on which electronic money is stored.
A combination of credit card (Account) number with customer's name and some other private data.
The processor of the payments, a computer centre, which generates master operations of payments.
The Payment Processing Provider.
The open key, the non-secret part of the pair of two keys in asymmetric cryptography.
Public Key Certificate
The certificate of the open key. Information about the open key, as a rule, which includes the key itself, signed by a digital signature of physical face or organization. Certificate protects the integrity of the key, if person or organization, that signed him, is well known, and their open keys are widespread.
Public Key Cryptography
The diagram of coding, which does not require confidential channel for establishing the confidential connection.
Public Key Encryption
The method of coding, developed for the purpose of overcoming the main disadvantage in symmetrical cryptography - the need for having reliable channel for the transfer of key to addressee.
Real Time Processing
The verification and processing of credit card transactions immediately following a purchase. Real-time verification on the Web usually takes less than five minutes. Real-time verification is especially important for websites that sell products and services that consumers expect immediately, such as memberships to the site or software downloads.
The check, which contains the description of the purchase with the credit card, usually includes the following information: date, name and the address of salesman, sum, unique number and the code of authorization.
Regular, usually monthly, charges for maintaining a merchant account. Recurring fees include the discount rate, transaction fees, statement fee, and monthly minimum.
A type of transaction that allows the merchant to process multiple authorizations for the same buyer. Recurring payment can be either multiple payments for a fixed amount or repeated billings.
The periodic removal of money from the account of buyer, proceeding on the basis of agreement.
A refund is the process of refunding a previously settled transaction. This will appear as a credit on the cardholder's credit card statement.
Retrieval Request (Copy Request)
The requirement to a salesman to present documentation about the concrete transaction. Usually it comes from bank, when the holder of the card disputes a transaction.
A reversal is the process of reversing a previously captured, but not yet settled transaction. It means that the transaction will never appear on the cardholder's credit card statement.
A sale is Authorization and Capture. See Authorization and Capture fro more details.
A secure Web server that encrypts and decrypts messages to protect them against third party tampering. Purchases made from a secure Web server ensure that a user's online payment or personal information is encrypted and not accessible to unauthorized persons
The key for the symmetrical coding, which is used for a limited time, is more frequent used for a protected connection, for example, on protocol SSL.
Secure Electronic Transaction (SET)
The system of providing safety of online payments for bank cards, developed by the companies VISA, MasterCard, Microsoft and by several leading banks, based on the coding with the open key of the information, connected with the parameters of the card, and with the separation of information between participants in the transaction in such a way that none of the participants in the calculations possesses information wholly. With the aid of standard SET, the buyer and salesman can unambiguously identify each other, after exchanging the digital SET- certificates
The process of settling a transaction is when the money is taken from the cardholder accounts and put into the merchant accounts. Once a transaction is settled, it will appear as a charge on the cardholder's credit card statement.
One-time pay, collected for the creation of the Online Merchant Account.
Software that handles an online store's catalog and ordering process. A shopping cart is the interface between a business's Web site and its internal infrastructure. Shopping carts allow consumers to select merchandise from a Web page, review what they have selected, make changes or additions, and purchase the merchandise.
A smart card is a credit card with a built-in microprocessor and memory used for identification and financial transactions. It allows electronic money to be stored in a secure, but portable medium and when inserted into a reader, it transfers data to and from a central computer.
Secure Sockets Layer, a standard that enables secure credit card transactions on the Internet. SSL is the leading security protocol developed by Netscape for transmitting private documents via the Internet. SSL uses a private key to encrypt data and then sends this over the SSL connection. Netscape Navigator, Internet Explorer, and most commercially available Web browsers support SSL. Many Web sites use the protocol to obtain confidential user information. By convention, Web pages that require an SSL connection start with https instead of http.
The fixed periodic pay for the use of a Online Merchant Account.
Stored Value Card
A card that contains either a computer chip of magnetic strip and is used to store or debit money electronically.
Transmission Control Protocol/Internet Protocol, the suite of communications protocols used to connect hosts on the Internet. TCP/IP uses several protocols, principally TCP and IP. TCP/IP is built into the UNIX operating system and is used by the Internet, making it the de facto standard for transmitting data over networks.
Unauthorized use of online payment card information by individuals, such as hackers who have illegally obtained the card information.
A company that contracts with banks and financial institutions to perform some or all of the tasks necessary to online process payment cards, including authorization and settlement.
Terminated Merchant File (TMF)
Merchants with excessive chargebacks are stripped of their online merchant account and the ability to accept credit card orders. The merchant is then placed on the TMF match list that all Merchant Service Providers have access to. Being placed on this file can keep you from obtaining another >strong>online merchant account for several years.
This is any action between a cardholder and a merchant that results in activity on the account, such as an authorization and settlement. Merchants and financial institutions also conduct follow-on transactions that affect the cardholders accounts, such as a capture and credit.
A fee charged by a online merchant account provider for each credit card transaction completed.
Transaction File (Vendor File)
The file, into which the processor of internet payments places all transactions, carry out in the previous day.
The transactions, recorded by the state of accomplishment.
A solution a firm offers in which they provide an individual with a fully e-commerce enabled web site. Usually complete with shopping cart, web design, hosting and merchant account
Uniform Resource Locator, the global address of documents and other resources on the World Wide Web. The first part of the address indicates what protocol to use, and the second part specifies the IP address or the domain name where the resource is located.
This tool allows a merchant to manually process credit card numbers received by telephone, fax or mail order. You can use the Virtual Terminal in addition to (or instead of) accepting credit card transactions from your website.
A vocal authorization. It applies, when there is no suitable device for conducting the authorization, for example, of POS- terminal.
The refusal of the buyer's payment after successfully passed authorization. The transactions, marked as Void, are not included into the batch and are not presented to further payment.
XML (Extensible Markup Language)
A meta language containing a set of rules for constructing other markup languages. With XML, people can make up their own tags, which expands the amount and kinds of information that can be provided about the data held in documents. It enables designers to create their own customized tags to provide functionality not available with HTML. For example, XML supports links that point to multiple documents, as opposed to HTML links, which can reference just one destination each
Web or World Wide Web (WWW)
A system of inter-connected Internet servers that supports specially formatted documents. The documents are formatted in HTML, which supports links to other documents, as well as graphics, audio, and video files. Internet users can jump from one HTML document to another simply by clicking on designated hot spots. Not all Internet servers are part of the World Wide Web.