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Merchant Account - Glossary of Terms
ABA (American 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.
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Access
Number
This is the telephone number dialed by the modem that lets a computer
communicate with an online service or Internet Service Provider (ISP).
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ACH
(Automated Clearing House)
A processing organization networked with others to exchange (clear and
settle) electronic debit/credit transactions (no physical checks).
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Acquiring
Bank
This is the status of a Visa/Master Card member bank that establishes
and maintains the merchant relationship and processes all merchant transactions.
Humboldt Bank is an acquiring bank. Contrast with "Issuing Bank."
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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).
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Articles
of Incorporation
This legal document identifies the terms under which a corporation was
created and identifies the principals.
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Auth/Batch
Fee
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 transactions.
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Authorization
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.
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Authorize.Net,
Inc.
Authorize.Net, Inc. is the Utah-based vendor of Authorize.Net, a popular
Internet protocol. They also sell eCheck.Net, an Internet-based
protocol used to ACH consumer checking ac-counts.
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Average
Ticket Size (AVT)
The average Visa/MasterCard
dollar amount of each transaction the merchant anticipates processing.
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AVS
See "Address
Verification Service."
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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.
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Basis
Points
A "basis
point" is 1/100 th 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.
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Batch
Processing
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.
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Browser
This is the program
used by a computer to navigate the Internet. Two of the largest browsers
in this country are Microsoft.s Internet Explorer and Netscape.s Netscape
Navigator.
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Business
Financials
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 Humboldt Bank merchant processing, we are
only concerned with a given merchant.s Profit and Loss Statement and
Balance Statement.
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Business
Type
Business type
is determined by the way in which a business processes transactions:
- Retail Merchants selling tangible goods in a face-to-face environment who normally use conventional terminals and swipe transactions.
- Service Merchants selling services like plumbing or auto repair in a face-to-face environment, who normally use conventional terminals and may key or swipe trans-actions.
- 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.
- MOTO 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 seconds later.
Buy
Rate
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.
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Chargeback
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.
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Checklister
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.
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Contingent
Liability
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.
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Corporate
Resolution
This form is used by a corporation to designate an individual(s) as
a signer(s) on behalf of the company.
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Credit
Report
A credit report
is ordered for every signing principal on the application, and is used
by under-writers to make approval decisions. Humboldt Bank purchases
Experian Reports.
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CVV2
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.
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CyberCash
CyberCash, Inc.,
is the creator and vendor of CyberCash, a popular Internet protocol.
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Cyberspace
This is a term
used to describe the Internet, originally coined by science-fiction
novelist William Gibson in his 1984 book, Neuromancer.
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Debit
Networks
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.
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Direct
Marketing
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.
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Discount
Rate
This is percentage
fee a merchant pays Humboldt Bank Merchant Services to process a trans-action
(See "Qualified Discount Rate.").
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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.
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Downloading
The process of
transferring software or data (pictures, text, or sound) from the Internet
to a computer. When you retrieve e-mail from the Internet, you are downloading
it.
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eCheck.Net
See "Authorize.Net"
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e-Commerce
This is a generic
term denoting business done over the web and/or processed electronically.
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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.
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Face-To-Face
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.")
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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.
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First
Data Corporation (FDC)
This Omaha, Nebraska-based
company processes all of our merchant.s credit card transactions. This
company used to be called FDR (First Data Resources) and the two names
are now sometimes, if mistakenly, used interchangeably.
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First
Data Resources (FDR)
See FDC.
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Frequently
Asked Questions (FAQ)
This acronym
is used extensively online to identify lists of questions and corresponding
answers. Clicking on a link/icon labeled FAQ is a great source for problem
solving.
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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.
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Gateway
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.
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Guarantor
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 Humboldt Bank incurs as a result of our business relationship
with this merchant. This is the person or per-sons 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.
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Host
This is the computer
on which a web site is physically located, normally the Internet Service
Provider (ISP).
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Hotel
See "Business
Type."
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Hypercom
This company
manufactures conventional processing terminals. Models include the T77
and T7P terminal/printer combinations and the S8 PinPad.
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Hyperlink
See "Link."
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Hypertext
See "Link."
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Hypertext
Mark-up Language (HTML)
Hypertext Mark-up
Language, commonly referred to as HTML is a behind-the-scenes method
of formatting text that is used in most web pages.
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Hypertext
Transfer Protocol (http)
Hypertext Transfer
Protocol tells computers how to communicate with one another.
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Hypertext
Transfer Protocol, Secure Connection (https)
This allows for
secure communication between computers. One must have the proper pass-word
(s) to get into a secure site.
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IC
Verify
This an ETC type
7 software that is marketed by CyberCash. It is widely used.
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Imprinter
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 physical imprint.
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Independent
Contractor/Independent Sales Organization (IC/ISO)
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.
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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.
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Internet
This is a large
computer network that links smaller computer networks on a world-wide
basis.
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Internet
Merchant
See Business
Type
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Internet
Service Provider (ISP)
Companies that
charge a monthly fee for internet access.
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Issuing
Bank
An Issuing Bank
is any Visa/MasterCard member bank that enters into contractual relation-ships
with cardholders for the issuance of cards.
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Java
Java is an object-oriented,
cross platform programming language, similar to C++, that is de-signed
for building applications for the Internet.
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Keyed
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.
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Link
On the internet
and intranets, links may be either text or graphic/icons. Clicking on
a link enables transition from one Internet site to another by clicking
on the "link" with your mouse
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MacAuthorize
See Tellan.
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Mail
Order/Telephone Order (MOTO)
See "Business
Type."
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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 banks
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Merchant
Category Code (MCC)
See "SIC
Code."
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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 monthly volume.)
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Modem
A modem is a
device used by computers to transmit information to one another via
an ordinary telephone line. Modems are rated by their respective data-transfer
speed capabilities, referred to as "baud rates." A common
problem/limitation that computers face is modem in-compatibility.
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Online
This word is
used to associate things with having a presence on the Internet or with
having access to the Internet. "Going Online" means sitting
before a computer and signing on to the Internet.
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PC
Authorize
See "Tellan."
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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 signa-ture.
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Pinpads
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.
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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).
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Protocol
Protocol, in
"computerspeak," is a set of conventions for formatting data
in an electronic system. Quite literally, it is the "language"
that allows one computer to speak with another.
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PTC
Software
This is an ETC
type 7 software product.
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Purchase
Cards
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 locations.
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Qualified
Discount Rate
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.
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Refund
Policy
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.
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Retail
See "Business
Type."
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Routing
Number
See "ABA
Routing Number."
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Scroll
Scrolling is
the action of moving the computer mouse to click on arrows along side
and at the bottom of the computer screen in such a fashion as to view
different portions of a document on a computer monitor. It is possible
to scroll up, down, and sideways.
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Search
Engine
Internet browsers
feature several Search Engines to choose from. These are programs (Such
as Yahoo and Northern Light) that "search" the Internet for
web pages that contain information similar to that which you used to
define the search parameter. In other words, typing, "blue dogs,"
will prompt the Search Engine to find and display a list of all of the
web sites that contain information about, or references to, "blue
dogs."
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Shopping
Cart
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.
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Standard
Industry Code/Merchant Category Code (SIC/MCC Code)
The SIC code
is a four-digit, numeric identifier of merchant business types. There
are thou-sands of these codes, all of them defined by VISA International
in the VISA USA Merchant Data Manual.
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Swipe
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 transactions.
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T&E
See "Travel
and Entertainment."
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T77
T7P
See "Hypercom."
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Tellan
Software
This is a non-Internet software that works exactly like a "regular"
terminal in terms of how it processes (via land-phone lines). It is
a versatile program that works with any PC or MacIntosh computer via
PCAuthorize and MacAuthorize, their two respective products.
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Terminal
Identification Number (TID)
A Terminal Identification
Number is used to identify a specific serial-numbered piece of equipment.
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Test
Transaction
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, re-member 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 out).
.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.
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Trade
Reference
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 re-quested of all applicants.
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Tranz
See "VeriFone."
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Travel
and Entertainment (T&E)
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, al-though it is not technically
a T&E card type.
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Upload
This is the process of transferring data from one computer to another
via the Internet. By definition, every time you send e-mail to someone,
you are uploading it. By contrast, each time e-mail is received and
read it, it has been downloaded.
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URL
Uniform Resource
Locator; this term describes the location and access method of a resource
on the Internet. All web sites have URL.s and are commonly thought of
as Internet "addresses." Most begin with, "http."
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VeriFone
This company manufactures conventional processing terminals. Model names
include: Tranz 380, Tranz 330, Tranz 460, the P250 Printer and the PinPad
1000.
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World
Wide Web (www)
The World Wide Web is a collection of electronic documents loosely knit
by a concept called "hypertext." Documents connect to each
other by clickable "hyperlinks." It is necessary to run a
browser program to access the web.
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