Glossary of Terms
Merchant Account Glossary of Credit Card Terms
Banker's Association) Routing Number
This 9-digit ABA-assigned number identifies individual banks. This number is
used to facilitate the electronic routing of funds (ACH transfer) from one
bank account to another.
This is the telephone number dialed by the modem that lets a computer
communicate with an online service or Internet Service Provider (ISP).
ACH (Automated Clearing House)
A processing organization networked with others to exchange (clear and
settle) electronic debit/credit transactions (no physical checks).
This is the status of a Visa/Master Card member bank that establishes and
maintains the merchant relationship and processes all merchant transactions.
PAYtran is an acquiring ISO. Contrast with "Issuing
Address Verification Service (AVS)
AVS is a tool for merchants to reduce the risk associated with
non-face-to-face transactions, such as mail order or telephone order. A
merchant using AVS (must have equipment that is AVS-compatible).
Articles of Incorporation
This legal document identifies the terms under which a corporation was
created and identifies the principals.
This is the amount of money we charge the merchant each time we issue an
authorization for a transaction, and each time they "close" a batch of
The process whereby a transaction is approved by an issuing bank,
authorized agent, or Visa/MasterCard on behalf of that issuer, before the
transaction is completed by the merchant via telephone or terminal.
Average Ticket Size (AVT)
The average Visa/MasterCard dollar amount of each transaction the
merchant anticipates processing.
See "Address Verification Service."
Bank Identification Number (BIN)
Visa/MasterCard assigns unique, identifying numbers to each member
acquiring or issuing bank. These numbers identify parts of both credit card
and merchant account numbers.
A "basis point" is 1/100th of a percentage point. With regard to
merchant processing, there are 50 basis points separating the Qualified and
Mid-Qualified discount rates and 140 basis points separating the Qualified
and Non-Qualified discount rates. Example: a merchant with a Qualified
Discount Rate of 2.35% would have Mid-Qualified and Non-Qualified Discount
Rates of 2.85% and 3.75% respectively.
This occurs when a merchant transmits the "batch" of daily sales stored
in the terminal for processing. An "open" Batch is one that is not yet
"closed." To "close" a batch is to transmit the information from the
merchant's location (terminal or software) to our processor.
The three forms that are known collectively as "business financials"
are: Profit and Loss Statement, Balance Statement, and Statement of Cash
Flow. For the purposes of PAYtran merchant processing, we are only concerned
with a given merchant's Profit and Loss Statement and Balance Statement.
Business type is determined by the way in which a business processes
- Merchants selling tangible goods in a face-to-face environment who
normally use conventional terminals and swipe transactions.
- Merchants selling services like plumbing or auto repair in a face-to-face
environment, who normally use conventional terminals and may key or swipe
• Restaurant -
Merchants selling prepared foods in a face-to-face environment, who normally
use conventional terminals and swipe their transactions.
• Hotel - Merchants
selling lodging and hospitality services in a face-to-face environment, who
normally use conventional terminals and key or swipe their transactions.
- Merchants selling tangible goods or services in a non-face-to-face mail
order, Internet or telephone order environment, who normally use software or
conventional terminals and always key their transactions.
• Internet - An
Internet Merchant is one who processes transactions via the Internet.
Processing transactions via the Internet means that the cardholder types
their credit card information online and the transaction is processed
The amount of money we charge an IC/ISO for services or transactions
that are paid by the merchant. If an IC/ISO is able to sell a merchant at an
amount higher than their respective buy rate, we remit a portion (referred
to as "residuals) to the IC/ISO each month. The Buy Rate does not give the
IC/ISO free reign to charge whatever they want over their Buy Rate;
allowable amounts for fees and rates are reflected in their contract and in
the User Grid.
A dispute process initiated by the card issuer (usually in response to
the cardholder) after receipt of the initial charge or presentment from the
merchant via the acquirer.
The Checklister is the "gatekeeper" of Merchant Processing; all
applications enter the system here, are reviewed for completeness, and
summarized so the rest of the department can quickly figure out the status
of a file.
This is the term used by underwriters and sales people to identify a
situation that is created when merchants process transactions in advance of
the date cardholders can expect to receive the goods or services they
purchased. Travel agencies pose a contingent liability risk. Similarly, all
MOTO merchants pose contingent liability risks to the
bank. We limit this liability to a maximum of 90 days.
This form is used by a corporation to designate an individual(s) as a
signer(s) on behalf of the company.
A credit report is ordered for every signing principal on the
application, and is used by underwriters to make approval decisions.
PAYtran purchases Experian Reports.
CVV2 is a three-digit security code that is printed on the back of most
credit cards. The CVV2 program is designed to reduce fraud in the
card-not-present environment by validating that a genuine Visa/MasterCard
credit card is being used during a transaction.
The host of companies that honor card transactions and at the same time
debit the card-holder's checking account for the amount of the purchase.
They are smaller, more numerous, and more likely to be only regionally
accepted than their credit-based counterparts.
The method by which a merchant solicits business to a population that
did not ask to be solicited (i.e. "junk mail"). It is often mistakenly
confused with terms like, "mail order" and "telephone order." A merchant
that sends catalogs or brochures to a mailing list of past customers is not
a direct marketer, but a merchant who sends catalogs or brochures to
everyone in a geographic area is a direct marketer.
This is percentage fee a merchant pays PAYtran Merchant Services to
process a trans-action. (See "Qualified
Doing Business As (DBA)
The DBA is the name the public sees, whether on a physical storefront or
on the web. If the merchant has another business, then we would need a
separate application for both.
This is a generic term denoting business done over the web and/or
Electronic Ticket Capture (ETC)
An ETC system reaches out and "grabs" sales ticket information
electronically. Buyer information is contained on the magnetic strip on the
back of the credit card. The merchant "swipes" the card through a terminal,
and the buyer information is "read" by the computer system and merged with
the sales information. It then processes the ticket just as if the merchant
was making a manual deposit at a bank. This action is normally done in
"batches" of tickets, such as at the end of the day.
A face-to-face transaction is one at which the cardholder was present.
This is usually evidenced by the action of swiping a card through a terminal
but may also be evidenced with a signed, imprinted draft. (See "Imprinter.")
Federal Tax ID Number
This 9-digit number is assigned by the IRS for tracking business taxes.
We absolutely require a Federal Tax ID number from all applicants. Some
smaller merchants that are sole-proprietors may use their personal Social
Security Number in place of a Federal Tax ID number.
Full Business Name
A merchant may only apply for credit card processing under a business
name that corresponds to the tax ID number written on the application.
Just as a customer must walk through a door or gate to enter a business
establishment, so must customers enter electronic "gateways" before they can
do business electronically.
We require that a personal guarantor sign almost every merchant
application. By signing, this person agrees to personally guarantee (make
good on) any processing losses PAYtran incurs as a result of our business
relationship with this merchant. This is the person or persons for whom we
order a personal credit report for review by our underwriters. It is
appropriate to think of a personal guarantor as akin to a co-signer.
This is the computer on which a web site is physically located, normally
the Internet Service Provider (ISP).
This company manufactures conventional processing terminals. Models
include the T77 and T7P terminal/printer combinations and the S8 PinPad.
Hypertext Transfer Protocol, Secure Connection (https)
This allows for secure communication between computers. One must have the
proper password(s) to get into a secure site.
This an ETC type 7 software that is widely used and marketed by CyberCash.
The now old-fashioned manual, slide-type device used to produce an image
of the raised (embossed) characters on a credit card, to a transaction slip.
All merchants should have a manual imprinter for cases that demand a
Independent Contractor/Independent Sales Organization
These acronyms are usually attached to refer collectively to all of our
registered sales representatives. These are the people we've contracted to
sell our merchant processing services nationwide.
Integrated Point of Sale (IPOS)
This acronym refers to conventional terminals that are "smarter" and
more sophisticated in that they may be set-up to communicate with like
terminals owned by the same merchant even if they are located at different
locations and with different merchant numbers.
See "Business Type."
An Issuing Bank is any Visa/MasterCard member bank that enters into
contractual relationships with cardholders for the issuance of cards.
A transaction is "keyed" when the information from a credit card is
manually typed into a terminal or computer (utilizing credit card processing
software like Tellan). A transaction is keyed because either the card is not
present at the time the transaction is entered or the equipment being used
to process the transaction can't read the card.
Mail Order/Telephone Order (MOTO)
See "Business Type."
Member Alert To Control High-Risk Merchants (MATCH)
MATCH is an electronic bulletin board used to track people and businesses
whose merchant processing accounts are reported "terminated" by acquiring
Merchant Category Code (MCC)
See "SIC Code."
Merchant Identification Number (MID)
Do not confuse the MID with PAYtran merchant processing account number
(the 16-digit number prefixed by "419404"). This acronym refers to the FDC-assigned
number that identifies the merchant to the equipment they use to process
transactions. A merchant with a PAYtran merchant processing account number
who uses several terminals at his location would have one MID and several
TID's (See "Terminal
Monthly Volume (MV)
The maximum monthly dollar volume a merchant is approved to process in
Visa and Master-Card transactions. The MV is important for underwriter
consideration of the file and also helps to determine what type of
documentation will be required with the file. (American Ex-press, Discover
or any other card processing volume is never included in the calculated
Personal Identification Number (PIN)
For identification purposes, PIN numbers are assigned by banks to
cardholders. In this way, ATM transactions and debit card transactions may
take place without a cardholder's signature.
Pinpads are small boxes with a 10-key pad on them. Connected to a
processing terminal, they are used by cardholders to enter PIN numbers and
debit card transactions.
Point of Sale (POS)
The physical location where a sale is completed. Usually used as "POS
terminal" to refer to the credit card terminal (equipment).
This is an ETC type 7 software product.
Purchase Cards are credit cards for use by employees of government
agencies or corporations. What makes Purchase Cards different from ordinary
credit cards is that they may only be used at certain types of merchant
Discount rates are tiered. Following is a breakdown of these tiers and
examples of corresponding situations. A Qualified Discount Rate is the rate
a merchant is charged when all conditions are optimum - that is, when a
retail transaction is card-swiped and the merchant batches-out
electronically at the end of the day. (Keyed/Internet merchants can still
archive Qualified Rates by obtaining an AVS response plus
order number, plus batching out.) A Mid-Qualified Discount Rate is charged
when a retail merchant keys a transaction or does not batch-out at the end
of the day. A Non-Qualified Discount Rate is charged when a merchant keys a
transaction and does not batch-out at the end of the day.
This is straightforward: how will the merchant - and to what extent will
the merchant - guarantee products or services sold to a cardholder? We
require a refund policy of each applicant, as a liberal refund/return policy
may go a long ways towards reducing the number of charge-backs that a
merchant receives. A separate field on the PAYtran Bankcard Application/
Agreement is labeled, "Refund Policy." When filled in, this requirement is
See "Business Type."
See "ABA Routing Number."
As used on the Internet, a shopping cart is analogous to choosing items in a
grocery store and placing them in a shopping cart for eventual purchase.
Chosen items are grouped into a single purchase (Shopping Cart) so that only
one electronic purchase need be completed.
Standard Industry Code/Merchant Category Code (SIC/MCC
The SIC code is a four-digit, numeric identifier of merchant business types.
There are thousands of these codes, all of them defined by VISA
International in the VISA USA Merchant Data Manual.
This is the action of physically sliding a credit card through a terminal or
magnetic stripe reader that "reads" the magnetic strip on the back of all
credit and debit cards. The alternate method of getting this information
into the terminal is by manually keying it in. The value of swiping cannot
be overstated in that it documents the physical presence of the card at the
point-of-sale. By definition, all swiped transactions are face-to-face
See "Travel and Entertainment."
T77 - T7P
Identification Number (TID)
A Terminal Identification Number is used to identify a specific
serial-numbered piece of equipment.
A test transaction is a means for the merchant to test a terminal that has
been freshly down-loaded or changed in some way. When asking a merchant to
complete a test transaction, remember the following points:
• The amount of a test transaction should never exceed $0.10.
• The transaction should be voided (as opposed to credited) immediately
after it is completed (or at the very latest, before the merchant batches
• The merchant should be advised that this is the only condition/time in
which they are permitted to use their own credit card in their terminal.
A trade reference is a business that extends credit or otherwise has a
business relationship with the applicant. Put bluntly, we need to know that
the applicant pays bills on time and does indeed purchase goods or services
from an outside source. A trade reference is requested of all applicants.
Properly used, this phrase refers to American Express (Amex) and Diners Club
cards where a cardholder normally pays off the card each month. This is to
differentiate these programs from pure credit cards. Discover is commonly
lumped-in with the other T&E card types, although it is not technically a
T&E card type.
This company manufactures conventional processing terminals. Model names
include: Tranz 380, Tranz 330, Tranz 460, the P250 Printer and the PinPad
For more information, please call 1-877-PAYtran or contact us at info@PAYtran.com.