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Glossaries

Learn merchant terms quickly by searching through the information available below.

Acceptor: A business that has qualified to accept credit or debit cards as payment.

Ach Network: Funds transfer system governed by the rules of the National Automated Clearing House Association, which provides for the interbank clearing of electronic entries for participating financial institutions.

Acquirer: An acquirer is an organization licensed as a member of Visa / MasterCard as an affiliated bank or bank/processor alliance that is in the business of processing credit card transactions for businesses (acceptors) and is always acquiring new merchants.

Acquiring Financial Institution: An acquiring financial institution (or "acquirer") contracts with the bank and merchants to enable credit card transactions. The acquirer deposits the daily credit card totals and debits the end-of-month processing fees from the merchants' accounts.

Address Verification Service (AVS): The process of validating a cardholder's given address against the issuer's records, to determine accuracy and deter fraud. This service is provided as part of a credit card authorization for mail order/telephone order transactions. A code is returned with the authorization result that indicates the level of accuracy of the address match and helps secure the most favorable interchange rates.

Adjustment: 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 dollar amount of the adjustment.

Associations: Any entity formed to administer and promote credit and cards. The best known examples of Associations are MasterCard and Visa.

Audio Response Unit (ARU): This is an electronic authorization and capture product where the merchant uses a touch-tone telephone to process transactions.

Authorization: The process of verifying the credit card has sufficient funds (credit) available to cover the amount of the transaction. An authorization is obtained for every sale. An approval response in the form of a code sent to a merchant's POS equipment (usually a terminal) from a card issuing financial institution that verifies availability of credit or funds in the cardholder account to make the purchase. Also see Point-Of-Sale.

Authorization Code: 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.

Authorization Response: An issuing financial institution's electronic message reply to an authorization request, which may include:
Approval -- transaction was approved
Decline -- transaction was not approved
Call Center -- response pending more information, merchant must call the toll-free authorization phone number.

Auto Close: A terminal feature that allows an end-of-day batch closing to occur automatically at a specified time, without having to be initiated by the merchant.

Automated Clearing House (ACH) File: A file with instructions for the exchange and settlement of electronic payments passed between financial institutions. It represents debits and credits to be deducted from an account automatically as they occur

Average Ticket (Average Sale): The average dollar amount of a merchant's typical sale. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

Back Office Conversion (BOC): The Back Office Conversion (BOC) application will allow retailers and billers to accept checks at the point of purchase or at manned bill payment locations and convert the checks to ACH debits during back office processing. The authorization to convert the check is obtained through receipt of the customer’s (Receiver’s) check (source document) plus notice displayed at the point of sale or manned bill payment location where the check is presented.

Bankcard: A credit card issued by a Visa or MasterCard-sponsored financial institution. (American Express, Discover, Diners Club, JCB, etc., are issued directly from their respective operations, rather than through banks.)

Batch: The accumulation of captured credit card transactions in the merchant's terminal or POS awaiting settlement..

Capture: The submission of an electronic credit card transaction for financial settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales. Also see Settlement

Card Issuing Bank: An EFT Network Member-Bank that runs a credit card or debit card "purchasing service" for their account holders. An example is CitiBank and the CitiBank Visa Card that they issue.

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

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