ACH: Automated Clearing House

ACH Network: A processing and delivery system for electronic credits and debits among US financial institutions

Acquirer or Acquiring Bank: The member of a card association where a merchant has an account to process transactions and credit payments.

Bank ATM/PIN Debit Card: A debit card that is linked to your checking/savings account and is issued by your financial institution. These cards can be thought of as a “pay now” card product.

Authorization: This is the process where permission is granted by the card issuer (the financial institution) allowing the payment transaction to proceed. It is during this process that the issuing bank checks that the available money on the card is not exceeded.

Authorization Hold: In some cases a hold is put on a portion of your funds on your card. This most often happens when you make a purchase at a gas station or a restaurant. Those merchants gain an authorization (referred to as an "Auth Code") for the average amount you might spend to ensure you have available funds to pump gas or place a tip on a restaurant bill. These authorization holds will remain in place for 3-10 days, and will be removed if an associated transaction does not post to your account in that time.

Batch: A composite of captures and credits accumulated over a period of time, although generally no more than one day, which are waiting to be settled with the merchant's acquiring financial institution.

Batch Close: The process of sending a batch to the financial institution for settlement.

BIN: Stands for Bank Identification Number. Each card is issued under a BIN.

Capture: A procedure performed on a previously authorized transaction after a merchant has shipped goods or services to the customer. This transaction triggers the movement of funds from the issuer to the acquirer and then to the merchant's account.

Card Associations: Visa® and MasterCard® are card associations composed of Member institutions. To become a member of MC/Visa an organization must be a financial institution. The member bank is then licensed to issue and/or acquire cards to its members. These banks are also required to provide cash advances on MC/Visa cards at their teller windows. As a Member, banks are issued a Bank Identification Number (BIN) and pay membership dues and assessments to fund Card Associations.

Cardholder: An individual that is issued a credit card, a debit card or a stored value card.

Card to Card Transfers: The method to transfer money from one prepaid card to another prepaid card, allowing a cost effective alternative for money transmittal.

Chargeback: When an issuer wants to dispute a transaction to the acquirer (either at the request of the cardholder or for reasons of its own), the matter is handled through a chargeback or compliance case. In a chargeback, the issuer returns a transaction to the acquirer, and the acquirer returns the payment previously made in interchange. Chargebacks result either from cardholder disputes or from rules violations by the merchant or acquirer; they help enforce operating rules and correct transaction errors. The initial, or first, chargeback is always initiated by the issuer. It can result from the issuer finding an error in the transaction, or it may result from a cardholder complaint. MasterCard and Visa have developed standard procedures and time frames for submitting and processing chargebacks.

Credit: A transaction resulting in a credit to a cardholder's account.

Credit Card: Any card that may be used repeatedly to borrow money or buy products and services based on credit. Credit cards are issued by banks, savings and loans, retail stores, and other businesses. These cards can be thought of as a “pay later” card product.

EFT Network: An electronic financial services system such as STAR® which links financial institutions and their customers with automated teller machines (ATMs) and merchant point-of-sale (POS) terminals to make possible a consumer electronic financial transaction.

Gift and Loyalty Cards: These are prepaid cards that are generally only accepted at the retail location where they were purchased. These cards are quickly replacing the need for paper gift certificates and cash refunds for merchandise returns.

Interchange: MasterCard and Visa each own and operate their own international processing system. These systems connect thousands of banks around the world. Member Institutions use these networks to transmit information about card transactions. MC/Visa are at the center of the transaction process, maintaining the flow of funds between issuers and acquirers. Clearing refers to the exchange of financial information. Settlement refers to the exchange of the actual funds for the transaction and the associated fees. Clearing and Settlement occur simultaneously. The acquirer credits the merchant’s deposit account for the dollar amount of the sale (less the merchant discount). The acquirer sends the transaction, through a data transport network, to INET (for MasterCard transactions) or Base II (for Visa transactions). A financial institution can be both an issuer and an acquirer. MasterCard and Visa send the transaction to the issuer overnight and credits the acquirer and debits the issuer for the transaction. In essence, the issuer pays the acquirer for the transaction, via the MasterCard or Visa interchange system. Interchange makes it possible for the issuing banks and acquiring banks to exchange information, transactions and money in a standard format. During this exchange the issuing bank deducts fees from the amount of the transaction. The “net” amount (after fees are deducted) is then paid to the acquirer. These deductions are called interchange fees.

Issuing Bank: The member of a card association that issues credit, debit and stored value cards to individuals. These cards are issued under the issuers BIN.

IVR: Stands for interactive voice response. Also referred to as a VRU, or voice response unit, this is the automated phone line for the cardholder.

OFAC: The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons and organizations are generally prohibited from dealing with them.

MasterCard: MasterCard Incorporated is a card association owned by the member financial institutions of MasterCard International. The members can issue cards (credit, debit, and stored value card) with the MasterCard®, Cirrus® and Maestro® brands, as well as allow merchants to accept these forms of payments.

Merchant: A business that has a relationship with a merchant acquiring bank to accept credit, debit and stored value cards as payments.

NACHA: Stands for the National ACH Association, which coordinates the ACH movement nationwide.

Network Brands: The brands that appear on the back of a card that specify where a card is accepted.

Non-repudiation: Process by which a customer cannot deny having paid for an order after it is conducted.

Open To Buy: This specifies how much money is available to spend. It doesn't necessarily specify the balance on your SVC. In some cases a hold is put on a portion of your funds. This most often happens when you make a purchase at a gas station or a restaurant. Those merchants gain an authorization (referred to as an "Auth Code") for the average amount you might spend to ensure you have available funds to pump gas or place a tip on a restaurant bill.

Prepaid Card: A Prepaid Card is also known as a Stored Value Card. It does not have a line of credit, rather the cardholder controls the available balance by depositing money onto the card, which eliminates expensive interest rate fees. A prepaid card offers cardholders the convenience and security of a traditional debit card, without the hassle of establishing a bank account or verifying employment. Depending on the type of card, prepaid cards can be used worldwide to get cash back or make point-of-sale (POS) transactions at any location that accepts Maestro and/or MasterCard and other network brands located on the back of the card. These cards can be thought of as a “pay before” card product.

Point-of-Sale: In the physical world, this is the point at which a product is paid for and delivered. On the Internet, this is the software that enables the merchant to accept transactions on their online storefronts, and conduct follow-on transactions with their financial institution.

Regulation E: The Federal Reserve regulation pertaining to electronic funds transfers, which establishes the rights, liabilities, and responsibilities of parties in electronic funds transfers and protects consumers when they use such systems.

Settlement: The step in the clearing process when the acquirer credits the merchant account with the amount of a stored value card purchase, and the card association (such as Visa and MasterCard) credits the acquirer and debits the card issuer for the transaction.

Stored Value Card: A Stored Value Card is also known as a prepaid debit card. It does not have a line of credit, rather the cardholder controls the available balance by depositing money onto the card, which eliminates expensive interest rate fees. A prepaid card offers cardholders the convenience and security of a traditional debit card, without the hassle of establishing a bank account or verifying employment. Depending on the type of card, prepaid cards can be used worldwide to get cash back or make point-of-sale (POS) transactions at any location that accepts Maestro and/or MasterCard and other network brands located on the back of the card. These cards can be thought of as a “pay before” card product.

Transaction: 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' account, such as a capture and credit.

USA PATRIOT Act: The USA PATRIOT Act was issued shortly after the 9/11 terrorist attacks. It authorizes bold, new measures to protect our financial system from money laundering and terrorism by reducing the barriers to the sharing of financial information among governmental entities as well as financial institutions, systematically targeting known risks to the financial system, and providing Treasury with the ability to identify new risks as they develop and take appropriate action to counter them. The official title of the USA PATRIOT Act is "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001."

Visa: Visa is a card association that is jointly owned by its 21,000 member financial institutions around the globe. The members can issue cards (credit, debit, and stored value card) with the Visa and PLUS brands, as well as allow merchants to accept these forms of payments.

VRU: Stands for voice response unit. Also referred to as an IVR, or interactive voice response, this is the automated phone line for the cardholder.