CPP Study Deck Flashcards

Question

Average Ticket

Answer 1

Average ticket is a metric that provides details on the average amount of sales by a given customer. It is used by a range of businesses when analyzing business performance and sales activity.

Answer 2

The amount of money that is charged directly to an individual merchant account each time communication is made between credit card processing software (when the sale transaction is processed online; etc.) or point of sale (POS) terminal (when the sale transaction is processed physically in person) and the authorizing network.

Answer 3

The effective rate of a credit card processing statement is the total processing fees divided by total sales volume.

Answer 4

Batch credit card processing is the practice of a merchant processing all of its authorized credit card transactions for the day after the close of business or at a time determined by the credit card processor.

Answer 5

A chargeback is a transaction reversal meant to serve as a form of consumer protection from fraudulent activity committed by both merchants and individuals.

Answer 6

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that ALL companies that accept; process; store or transmit credit card information maintain a secure environment.

Answer 7

a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses; online retailers; bricks and clicks; or traditional brick and mortar. The payment gateway may be provided by a bank to its customers; but can be provided by a specialized financial service provider as a separate service; such as a payment service provider.

Answer 8

the web version of a physical credit card terminal or Point-of-Sale (POS) machine

Answer 9

Uses a dial-up connection to process payments

Answer 10

Loyalty programs are structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.

Answer 11

Check conversion is a reformatting service offered by banking merchants. Check conversion allows banks to convert paper checks into electronic ones and then send them to the appropriate receiving bank. The electronic check is forwarded on via the automated clearing house (ACH).

Answer 12

A cash advance allows you to use your credit card to get a short-term cash loan at a bank or ATM. Unlike a cash withdrawal from a bank account; a cash advance has to be paid back ‚Äî just like anything else you put on your credit card. Think of it as using your credit card to "buy" cash rather than goods or services.

Answer 13

Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches.

Answer 14

- business name (DBA) - physical location address - business telephone number - Tax Identification Number (TIN) - Employer Identification Number (EIN) - Contact information - Cardholder Storage - Copy of the merchant's voided check or bank letter with account name, account number and routing number - A bank contact name and phone

Answer 15

the selling of goods directly to the customer; face-to-face transaction

Answer 16

an eating establishment where food and drink are being sold to customers

Answer 17

the selling of goods online; non-face-to-face transaction (ANY Card Not Present environment)

Answer 18

large self-service retail store selling food and household goods

Answer 19

sleeping accommodations; furnished rooms to rent for the night

Answer 20

the card is swiped through a magnetic strip on the terminal; which connects to the processor's computer.

Answer 21

A terminal that can read the track data on a magnetic stripe and communicate transaction information to the frontend platform and receives authorization instructions via the merchant's phone line usually by dialing a toll free number.

Answer 22

does the same thing as a dial terminal except that the terminal communicates transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's connection to the internet.

Answer 23

has the ability to take cardholder data from a chip embedded within the card and communicate transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's phone line or Inter- net connection.

Answer 24

provides the ideal solution for businesses seeking the most effective way to complete credit card transactions off-site. Most wireless credit card terminals support credit and debit transactions and are equipped with an internal PIN pad. Wireless terminals can be used on the countertop or in a mobile environment.

Answer 25

for a sale; swipe the customer card or manually enter the credit card number; input sale amount; then press enter. The terminal will then transmit information through the network for approval; and a merchant receipt will be printed.

Answer 26

allows a merchant to accept credit cards using a cell phone with or without a card swipe mechanism.

Answer 27

a processing method using a secure web server that provides an interface for merchant websites and shopping carts that require real-time transaction processing. Depending on the merchant's software they can connect to a frontend via either an SSL server or payment gateway to get a real-time credit card authorization.

Answer 28

an electronic device used in a debit or smart card-based transaction to input and encrypt the cardholder's PIN (personal identification number). The PIN pad is required so that the customer's card can be accessed and the PIN can be securely entered and encrypted before it is sent to the transaction manager of the switch or the bank.

Answer 29

a payment automation device that reads the MICR (Magnetic Ink Character Recognition) information on checks.

Answer 30

any pocket-sized card with embedded integrated circuits that can process and store data and communicate with a terminal via radio waves.

Answer 31

to void the last sale; press the screen button next to void; choose last; verify transaction information on the display screen; then press enter. The transaction will be voided and a receipt showing the void will be printed.

Answer 32

to credit a refund; press the screen button next to refund; swipe the customer card; input return amount; press enter; and print merchant receipt.

Answer 33

merchant's business information

Answer 34

daily account of the month's transaction information

Answer 35

a summary of the month's transactions

Answer 36

the month's transactions sorted by card type and fees associated

Answer 37

downgraded transactions

Answer 38

electronic acceptance of government benefits (e.g.; food stamps and/or cash). These cards are generally accepted at grocery stores.

Answer 39

an ATM bankcard; also known as a check card; that allows a merchant to deduct money directly from a consumer's bank account. The use of a true debit card requires the cardholder to enter a PIN to complete the transaction.

Answer 40

a magnetic-stripe or smart (chip) card that replaces traditional paper gift certificates. The program is based on gift card usage that generates points in exchange for products and services.

Answer 41

A merchant may receive a capital advance from a third party and direct the processor to repay the third party with a % of their daily credit/debit card processing deposited into the third party's bank account and the remainder deposited into the merchants bank account.

Answer 42

a negotiable paper document drawn against deposited funds exchanged with a merchant for payment of products or services.

Answer 43

this is the process of issuing approval codes for check acceptance for merchants. With Check Guarantee; if a check is returned to a merchant for any reason and they followed the proper acceptance procedures; they are automatically credited for the 'bad' check and collection efforts are pursued directly with the check writer. While this process is better than regular check verification; the cost is higher.

Answer 44

this is the process of issuing verification codes for check acceptance for merchants. With Check Verifica- tion; if a check is returned to a merchant; they are typically not reimbursed by the processor. Collection efforts will be made on behalf of the merchant at an additional cost; however there is no 'guarantee' of payment on uncollected items. Therefore; this service is less expensive than Check Guarantee.

Answer 45

this is the process of capturing a check at the point of entry (can be point of sale scanner or a picture on a mobile phone). The check image is transmitted to the issuer and paid through the settlement process.

Answer 46

this is the process whereby the consumer gives a pre-approval to have funds debited from either their checking or savings account. This is not a real-time transaction and can be subject to non-sufficient funds rejection.

Answer 47

an end user or consumercard issuer is any banking institution that provides credit or debit cards to a consumer. Examples of card issuers include Chase; Capital One; Bank of America and credit unions.

Answer 48

the bank or financial institution that processes credit and/or debit card payments for a mer- chant. Examples of acquirers include HSBC and Wells Fargo.

Answer 49

a company (often a third party) appointed by a merchant to handle payment card transactions for acquiring banks. There are two types of processors: front-end and back-end. Front-end processors have connections to various card issuers and supply authorization and capture services to the acquiring banks' merchants. Back-end processors accept settle- ments from front-end processors and; via The Federal Reserve Bank; move the money from the issuing bank to the merchant bank. Examples of payments processors include Global Payments; First Data; Chase Paymentech; TSYS; and Elavon.

Answer 50

any business that accepts credit or debit cards for payment in exchange for goods or services. Examples include Amazon; Target and Best Buy.

Answer 51

a network of issuing banks and acquiring banks that processes brand-specific payments. The best known card brands are Visa; MasterCard; American Express; Discover; JCB and China UnionPay.

Answer 52

an organization or individual registered with a card brand (Visa or MasterCard); and has a payment card relationship with an acquirer or issuer to perform functions on behalf of the acquirer or issuer (i.e.; the ISO soliciting merchant accounts; arranging for terminal purchases or leases; providing customer service; and soliciting cardholders). Examples of ISOs include Total Merchant Services and North American Bankcard.

Answer 53

a company or organization that provides transaction processing solutions to merchants; any sales office that offers payment services to merchants.

Answer 54

provides the cardholder electronic access to his or her bank account(s) at a financial institution.

Answer 55

allows the cardholder to buy goods and services based on the cardholder's promise to pay for these goods and ser- vices at a later date

Answer 56

a device that processes transactions with a debit or a credit card; via a telephone line or Internet connection; typically powered by a power cord.

Answer 57

a device that processes transactions with a debit or a credit card via a cellular (wireless) data network; typi- cally powered by battery pack.

Answer 58

consists of a device and software application (typically a smart phone application and card reader) that process transactions with a debit or a credit card via a cellular (wireless) data network. Examples include Payment Jack and Square.

Answer 59

a payment gateway service provider allowing merchants to accept credit card and electronic check pay- ments through their website over an IP (Internet Protocol) connection.

Answer 60

electronic devices used in debit or smart card-based transactions to input and encrypt the cardholder's Personal Identification Number (PIN)

Answer 61

The cardholder presents the card as payment to the merchant; merchant submits the transaction to the acquirer (acquiring bank) through the payment processor. The acquirer verifies the credit card number; the transaction type and the amount with the issuer (card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant by use of an authoriza- tion code. An authorization will generate an approval code; which follows the life of the transaction through the processing systems.

Answer 62

Authorized transactions are stored in batches; either in the terminal or on the processor's host; which are sent to the acquiring clearing processor on a predetermined schedule; also know as "auto batch". If a transaction is not submitted in the batch; the authorization will stay valid for a period of time; determined by the issuer; after which the held amount will be returned to the cardholder's available credit (see authorization hold). Some transactions may be submitted in the batch without prior authorizations; these are typically seen where the authorization was unsuccessful but the merchant still attempts to force the transaction through. (Such may be the case when the cardholder is not present but owes the merchant additional money; such as a hotel stay extension or car rental.)

Answer 63

The acquirer sends the batch transactions through the card brand; which debits/credits (if charge- backs and returns exceed sales for the day) the issuer for payment and credits/debits the acquirer. Essentially; the issuer pays the acquirer for the transaction.

Answer 64

Once the acquirer has been paid; the acquirer pays the merchant. The merchant receives the amount totaling the funds in the batch in total or less the discount fees charged.

Answer 65

A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargebacks are initiated by the cardholder or the issuing bank. In the event of a chargeback; the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant; who must either accept the chargeback or contest it.

Answer 66

risk systems must monitor the average ticket and a maximum ticket. Transactions above the maximum ticket may be an indicator of misinformation during the application process; a change in the merchant product; cardholder fraud; a bust-out scheme; or perhaps collusion and should be reviewed and possible investigated.

Answer 67

if the application shows a $30 average ticket and you see an average ticket of $400; you should investigate to ensure they are selling what the application stated. Alternately; it could be a fraudulent cardholder transaction.

Answer 68

applications typically request the average monthly volume and a peak season volume. Sales beyond these volumes may indicate risk problems or may warrant adjustments in account set up to off set merchant growth. Larger than expected volumes in the first month may be an indicator that the merchant has past sales they are trying to process; a bust-out scheme; or that the application was erroneous or false. The volume should also be balanced against similar merchants. Larger volumes than similar merchants may be an indicator of risk and should be investigated.

Answer 69

monitoring credits is a good way to gauge the satisfaction of your merchant's customer with the products and/or services sold. Excessive credits may indicate money problems at your merchant. Large dollar credits may be an indicator of a merchant utilizing the card schemes to layer money amongst their various accounts. It is required that all credits have an offsetting sale. Credits without an offsetting sale may be an indicator of employee theft; merchant system hack; or a fraudulent merchant. Frequent credits for large amounts may be an indicator of money laundering.

Answer 70

if your merchant is receiving a lot of chargebacks; you should quickly evaluate the reason codes behind the chargebacks and question the merchant's practices. Increased chargebacks may mean your merchant's business is in financial distress; is experiencing supplier issues; or has gone rogue and is committing fraud; potentially against the consumer. This is especially the case if the chargebacks are for unauthorized charges; services not received; or duplicate transactions.

Answer 71

monitoring the percentage of swiped transactions vs. keyed transactions is a simple way to tell whether your merchant has shifted from retail to MOTO (mail or telephone order) or internet. If you see more keyed transactions than indicated and subsequently approved on the application; you should talk with your merchant to understand why transactions are being keyed. Increased key-entered transactions may also be an indicator of factoring or money laundering where the cards are not present.

Answer 72

evaluate authorization logs to help determine whether your merchant has software problems that cause repeated authorizations or whether your merchant is being targeted by a fraudster seeking to find good card numbers. Monitoring excessive authorizations is also a way to help your merchant avoid brand fees associated with non-settled transactions.

Answer 73

another area to monitor is when merchants change checking accounts; contact information; or websites. It is important to understand why the changes are being made; how often; who is authorizing the changes; and what impact the changes might have on the business.

Answer 74

Periodically checking the financial health of your merchant and watching trends in processing volume can help protect against unexpected financial loss. If the merchant is struggling to cover their costs of goods it is possible owed fees may be returned as NSF (non-sufficient funds).

Answer 75

The risk with transactions dependent on the future delivery of goods and services is that the chargeback period may be quite lengthy. Examples include household furniture and/or appliances; membership dues; home renovation/ remodeling; or service contracts. If the merchant goes out of business prior to delivery or completion of services and is not capable of covering the returns/chargebacks; the acquirer will absorb loss.

Answer 76

The regulations for PIN debit and the PIN debit network rules allow for cardholder disputes in certain instances. You should be aware of these regulations and understand the potential impact on your business.

Answer 77

With the increase in merchants using point of sale systems (not just a terminal) comes an increase in the likeli- hood that you will experience a data breach at a retail merchant. Diligence should be used in ensuring software and hardware in use is PCI compliant and that your merchant follows proper procedures and guidelines for protecting cardholder data.

Answer 78

If a consumer presents a chip card and the merchant is not able to accept the card AND the consumer claims fraud; the liability is now held by the merchant. This is a new risk not previously faced by card present merchants. The details of this shift are below.

Answer 79

The Address Verification System (AVS) is a system used to verify the address of a person claiming to own a credit card.

Answer 80

The automatic transfer of funds from one account to another. An example is the Fedwire or wire transfer transaction.

Answer 81

The unique number devised by the American Bankers Association (ABA) in 1910 that identifies the bank issuer of depository accounts. It is a 10-digit number (nine digits and a verification digit) issued by the Federal Reserve Bank to identify each bank by a bank identification number. This number (also called the ABA number and the routing transit number) has changed over the years to accommodate such things as the Federal Reserve System; the advent of MICR; and the implementation of the Expedited Funds Availability Act (EFAA). It is used both in check processing and in the ACH (Automated Clearing House) routing of electronic checking account debits. The number is usually the first sequence of numbers preceding an account number at the bottom of a check.

Answer 82

A plastic card used in an automated teller machine (ATM) to complete deposits; cash withdrawals; account transfers; and other related account functions.

Answer 83

In the smart card industry; a term referring to the bit pattern that the reader transmits to the control panel. The format specifies how many bits make up the data stream and what these bits represent. For example; the first few bits might transmit the facility code; the next few the unique ID number; the next few parity; and so on. (Source: Smart Card Alliance).

Answer 84

A card; code; or other means of access to a consumer's account that may be used to initiate an electronic funds transfer. This term does not include the terminal; telephone; or personal computer.

Answer 85

A company that provides its customers access to the Internet. The user normally connects to the access provider πs server by a modem using a dial-up connection or a broadband connection.

Answer 86

A telecommunication term referring to a device or point where connections may be made for testing or using particular communications circuits.

Answer 87

The amount of time needed to obtain information from; or place information into; computer storage.

Answer 88

A consumer prepaid payment card; with monetary value stored in an account that is accessed and its value updated when the consumer uses the payment card. (Source: Smart Card Alliance)

Answer 89

The term used by MasterCard to describe security violations to card and account data.

Answer 90

A term used by Visa to indicate an electronic commerce purchase transaction for the purpose of adding funds to a Visa prepaid account that is posted to a Visa card and includes the transmission of the Account Funding Transaction Indicator.

Answer 91

The payment history of an account over a specified period; including the number of times the account was past due or over the credit limit.

Answer 92

One type of security used in the smart card industry to describe a value on the chip that is used to authenticate the accountholder. (Source: Smart Card Alliance)

Answer 93

For both the card issuer and the card acquirer; the operation involving nondollar changes to the database; such as name; address; and checking account changes; product profiles; billing information; and rate changes.

Answer 94

Editing criteria used to verify the accuracy of a seller's account number in certain electronic payment transactions.

Answer 95

Issuing: An issuer-assigned number that identifies a cardholder's account; the issuer; and the type of financial transaction card (e.g.; commercial card or debit card). Acquiring: An acquirer-assigned number that identifies a particular merchant or group of merchants. Note: The first six digits of each number identify the issuing and acquiring institutions. See BIN.

Answer 96

A point-of-transaction terminal that may be required by Visa at specified high-locations. This terminal reads the account number encoded on the magnetic stripe or embedded in the chip (smart card); compares the last four digits of the encoded account number to the keyentered last four digits of the embossed account number; and transmits the full; unaltered contents of the magnetic stripe or chip in the authorization message.

Answer 97

Debts a business owes its creditors.

Answer 98

Debts owed to a business.

Answer 99

A single-entry debit initiated by an automated clearinghouse (ACH) originator to a consumer account of an ACH receiver pursuant to a source document provided by the receiver via postal mail; or at a drop box location or via electronic means. When a paper check payment is converted to an ACH electronic payment and with ARC; the check is destroyed after conversion; in POP; the check is returned to the check writer at the time of payment. These transactions flow through the ACH Network. (Source www.NACHA.org)

Answer 100

Utilizing the automated clearinghouse network to access funds illegally. Some ACH fraud categories include: unauthorized transactions; returns/60-day right of recredit; consumer fraud against merchants; fraudulent use of stolen bank accounts; transaction-level fraud; and merchant-level fraud.

Answer 101

The Automated Clearing House (ACH) Network facilitates commerce; electronically; by serving as an efficient; reliable and secure payments system. NACHA; led by member depository financial institutions and payments associations; fulfills this purpose by managing the development; administration; and governance of the ACH Network; and by providing superior services and value to its members as the industry association responsible for ACH payments. The ACH Network connects the originating depository financial institutions with the receiving depository financial institutions.

Answer 102

The central clearing facility; operated by a Federal Reserve Bank or a private-sector organization on behalf of depository financial institutions; in which participating financial institutions transmit or receive ACH entries.

Answer 103

The 36 regional governing bodies of the Automated Clearing House Network rules and regulations.

Answer 104

The financial institutions that directly or indirectly enter into contractual relationships with merchants for the acceptance of plastic cards as a form of payment and for maintaining and servicing such relationships.

Answer 105

A program that monitors an acquirer's fraud activity level and provides reports to the acquirer when its level exceeds established thresholds. Advices and/or Alerts are sent at predefined volumes of fraudulent activity; when the fraud amount exceeds a set dollar amount per month; or when the acquirer's fraud activity to sales ratio exceeds a calculated average.

Answer 106

The date upon which the transactions are submitted into interchange for clearing and settlement.

Answer 107

A 23-digit or 24-digit identification number specified by the Visa and MasterCard rules and submitted with the clearing records by the backend processor. It includes the bank identification number (BIN) and the acquirer's processing date.

Answer 108

The bank that contracts with a merchant; as required by card association rules enabling the merchant to accept the association-branded bank cards. These cards may be consumer and/or corporate and credit and/or debit or prepaid. The merchant has an account with this bank and each day deposits the value of the day πs credit card sales. Acquirers buy (acquire) the merchant πs sales slips and credit the tickets π value to the merchant πs account. See Merchant Bank.

Answer 109

The member of MasterCard or Visa that holds the liability for merchant relationships and in return receives all bank card transactions from the merchant. This term can also be used to describe the disburser of funds in a cash disbursement.

Answer 110

A third party contracted by an acquirer to provide credit card acquiring services; such as clearing; billing; reporting; settlement; and operational services. Some acquirers outsource this processing activity to gain cost-effectiveness.

Answer 111

One organization's purchase of another or the merger of two or more organizations. Acquisition has different consequences under corporate and tax law depending on whether it involves the assets or the capital stock of the target company.

Answer 112

A card fraud prevention mechanism used by issuers. To activate a bank card received by mail; the cardholder must call a toll-free telephone number. Operators or automatic prompts verify certain cardholder information; after which the card is activated and may be used by the cardholder.

Answer 113

The transactions that appear on a cardholder's bill or a merchant's monthly statement.

Answer 114

Used by Visa's VisaNet Integrated Payments system (VIP) or MasterCard's BankNet system to track an issuer's stand-in-processing approval responses within a four day period.

Answer 115

Issuer-stablished maximum limits on the number and value of transactions that the Association may authorize on the issuer's behalf.

Answer 116

The maximum dollar amount; maximum transaction count; or both that can be authorized against a card.

Answer 117

An electronic record attached to an ACH payment entry; used for the purpose of transmitting payment-related information.

Answer 118

A supplemental part or section added to a book or contract. Also called an appendix or schedule.

Answer 119

Data required as part of a bank card transaction in addition to the normal data such as cardholder's name and billing address. Additional data‚Äîalso called enhanced data or level 2 data‚Äîcan include information relating to sales tax; accounting code; and fuel consumption for fleet cards as required by the card companies on business; corporate; purchasing; and fleet cards.

Answer 120

Visa and MasterCard service through which a merchant can verify a cardholder's billing address before completing a transaction. This service is typically used in "card-not-present" transactions such as mail order/telephone order (MOTO) and Internet transactions. AVS helps verify the legitimacy of the cardholder but does not guarantee that the transaction is valid. Responses to the AVS request are:

Answer 121

In the health care field; the administrative procedure used to process a claim for service according to the covered benefits. The POS industry has implemented some programs to work directly with insurance companies and HMOs to process claims electronically and manage the co-payment process.

Answer 122

A transaction used to correct an incorrect or out-of-balance situation. An adjustment can be made either at the time a terminal is balancing or during the reconciliation of the settlement data after a transaction has been cleared.

Answer 123

A federal information processing standard (FIPS) outlined in FISPA Publication 197 that specifies a cryptographic algorithm for use by U.S. government agencies to protect sensitive; unclassified information. AES uses keys that are 128; 196; and 256 bits to encrypt and decrypt information in blocks of 128 bits. It can encrypt data much faster than 3DES (Triple DES); which it replaces.

Answer 124

A loan or line of credit calculated so that all of the fees and finance charges are deducted before the consumer receives the principal.

Answer 125

A daily; weekly; or monthly report that alerts an acquirer that a merchant has experienced above-average levels of suspect or fraud activity.

Answer 126

A member or licensee of Visa International or Visa U.S.A. or an organization affiliated with a MasterCard member that participates under the member's rule or card plan on either the cardholder or merchant side.

Answer 127

A Visa; MasterCard; Discover or American Express card bearing the trade name or mark of an affinity partner. These cards are issued through marketing alliances; an organization; or a collective group (such as a professional association or special interest group). The affinity partner's name and logo are shown on the card; and the partner then solicits its membership or group for special rewards and promotions. Popular with sporting teams and university alumni groups; affinity cards work like regular credit/debit/prepaid cards and can be used anywhere that the brand is accepted. The card issuer often pays the affinity organization a royalty on charge transactions.

Answer 128

An entity that is not eligible for membership in either Visa or MasterCard and has a relationship with an issuer for the issuance of affinity cards.

Answer 129

Under the law of agency; a person authorized by another (known as the "principal") to act for the principal. Agents can include processors; independent sales organizations; third-party servicers; independent contractors; and financial institutions engaged by a bank card member to provide services or act on its behalf in connection with payment services. For example; an independent sales organization may have a contractual relationship with a bank card member to sell and service retail merchants; thus becoming an agent of the member.

Answer 130

A contract with an agent under which the agent and the principal can be obligated. See Agent.

Answer 131

Issuing: Agent banks contract with larger issuing (or sponsoring) banks to issue cards that are branded with the agent bank's name. Cardholders are solicited through the agent. Shared revenue or fixed compensation may be negotiated; but the liability rests with the sponsoring bank; not the agent. Acquiring: Similar relationships exist in which the agent sells and services the merchants on behalf of the principal bank.

Answer 132

A member of Visa or MasterCard that by agreement; participates in another member's card program; usually by turning over its cardholder and merchant applications to the member administering the card program and by acting as a depository for merchants.

Answer 133

A file maintained by Visa U.S.A. containing information about independent sales organizations; third-party processors; third-party servicers; and independent contractors.

Answer 134

A security authentication; which can be POS terminal-based; that is used by certain age-sensitive market segments such as liquor and tobacco outlets; bars; and casinos. The merchant can verify the consumer's age and deny transactions to an underage consumer.

Answer 135

A service bureau that provides bill presentment and/or payment consolidation services. Issuing: Aggregators enable a bank to enroll and aggregate information from multiple bank and brokerage accounts so that it can be presented in one place to the consumer. Merchants: Merchants such as PayPal and Amazon‚Äîwhich act as electronic Internet malls‚Äîcan process under one merchant number but with multiple sub-merchant numbers for their individual accounts.

Answer 136

The process by which account receivables are classified by the amount of time that has passed since the date of the invoice. It is used for the purpose of determining delinquency; ranging from current to charge-off status.

Answer 137

A federally funded and usually state- or county-administered public assistance program that provides supplemental financial aid to qualifying households that include one or more minor children. An AFDC family may receive benefits and services from other assistance programs; including food stamps; Medicaid; and subsidized child care. Families receive food stamps via an EBT (electronic benefits transfer) card; which works like a debit card. The EBT system reduces fraud; theft; and abuse.

Answer 138

1. Weekly notification to an acquirer when the acquirer's suspect transaction or fraud activity level exceeds a specified risk identification service parameter. 2. A notification to an acquirer when the acquirer's fraud activity-to-sales ratio exceeds a specified Acquirer Monitoring Program alert threshold.

Answer 139

Those merchants that have more than 8 percent of their sales dollars labeled as fraud transactions in two consecutive months. Acquirers must terminate or assume chargeback liability on all fraud for one year.

Answer 140

A step-by-step procedure for solving a problem or accomplishing an end; especially by a computer.

Answer 141

A set of letters and numbers. When used in reference to computer input and output; the set usually is expanded to include the uppercase and lowercase alphabetic characters (A-Z; a-z); the numeric characters (0-9); and special characters (such as the symbols $; #; and @; mathematical symbols; and punctuation marks).

Answer 142

A card on which the original embossed or encoded information has been altered for fraudulent purposes.

Answer 143

A non-traditional payment method such as instant transactional credit and ACH debit systems such as PayPal or Amazon Payments.

Answer 144

A nonprofit organization; founded in 1875; that serves the banking industry. Its members include community; regional; and money center banks and holding companies; as well as savings associations; trust companies; and savings banks.

Answer 145

A diversified worldwide travel; financial; and network services company; founded in 1850. American Express issues credit; prepaid and charge Cards that support a broad base of clients and needs for both consumers and businesses. Along with its Card business; the company also provides business credit lines and merchant establishment services. In 1958; it introduced the American Express Card; a "charge card" with the entire bill paid in full each month. Because American Express was both the only issuer and the direct acquirer; it could gather more information on each transaction and was the first company to offer a detailed statement. Still viewed as a prestige business travel and entertainment supplier; American Express now offers an array of charge; prepaid and credit cards. It also has a reseller program; the External Sales Agent (ESA) Program; that provides incentives to ISOs and acquirers to market American Express cards to merchants. All American Express cards begin with "3."

Answer 146

A private; nonprofit organization that administers and coordinates the U.S. voluntary standardization and conformity assessment system in many areas; including computers and communications. ANSI's mission is to enhance both the global competitiveness of U.S. business and the nation's quality of life by promoting and facilitating voluntary consensus standards and conformity assessment systems and safeguarding their integrity.

Answer 147

A nonprofit international association of more than 1;400 public and private member organizations; including transit systems and commuter rail operators; planning; design; construction; and finance firms; product and service providers; academic institutions; transit associations; and state departments of transportation. APTA governs and oversees the public transportation industry; which is involved in setting standards for micropayments and smart card technology.

Answer 148

The standard code used for information interchange among data processing systems; data communications systems; and associated equipment in the United States. ASCII code is an alphabet used in computer machine languages and represents the standard PC character set.

Answer 149

The American with Disabilities Act of 1990 (effective July 26; 1992) prohibits private employers; state and local governments; employment agencies; and labor unions from discriminating against qualified individuals with disabilities in job application procedures; hiring; firing; advancement; compensation; job training; and other terms; conditions; and privileges of employment. The ADA mandates the accessible design of buildings; machines; and public vehicles. The impact to automated teller machines was significant; as the law required accessibility for the physically impaired as well as the sight- and hearing-impaired.

Answer 150

Information presented in the form of a continuously varying signal.

Answer 151

A wealthy individual who invests his/her private money in what he/she believes to be promising opportunities; such as startup companies. Sometimes two or more "angels" will jointly invest in opportunities to spread the risk. (Source: ventureline.com)

Answer 152

A fraud prevention and risk management tool used in conjunction with Internet processing that rejects a transaction from known anonymous proxies. Anonymous proxies are frequently used by hackers.

Answer 153

Standards that regulate electronic data interchange (EDI) as governed by the American National Standards Institute Accelerated Standards Committee.

Answer 154

Standards for authentication and message encryption key management. These standards are maintained by the American National Standards Institute and can be found at the Computer Security Resource Center (www.csrc.nist.gov).

Answer 155

Standards for data encryption and decryption. These standards are maintained by the American National Standards Institute and can be found at the Computer Security Resource Center (www.csrc.nist.gov).

Answer 156

A fee paid by a cardholder to the issuer for the privilege of holding a financial transaction card and using it to buy goods and services. Not all cards have annual fees.

Answer 157

The annual cost of financial charges levied on consumer credit as required by the Truth in Lending Act (Regulation Z) of 1969. The lender's administrative costs; profit margin; and interest charges on the loan are typically added to a charge payable throughout the term of the contract and expressed as a percentage of the value of the transaction. The APR is often calculated as the monthly rate times 12.

Answer 158

All companies (including merchants) that deal with cash loads onto prepaid cards must have an AML policy and employees must be trained and knowledgeable on that policy. This includes filing of certain government reports pertaining to over-the-limit cash loads and suspicious transactions.

Answer 159

A compact program that can be downloaded quickly and used by a remote computing device. Applets are not allowed to access certain resources on the remote device.

Answer 160

Any form completed by an applicant. Typically; an application will request name; address; and other similar contact information that can be used for credit and risk assessment purposes. Examples are the profile form filled out by the cardholder requesting a card or a merchant applying to accept bank cards as a payment medium.

Answer 161

A formalized set of software calls and routines that can be referenced by a software application program in order to access supporting network services.

Answer 162

Both issuers and acquirers process applications; typically by reviewing the application through an operational department and running risk management procedures; such as credit and background checks. The application is approved based on preset criteria. If approved; it is key-entered into the database that generates the cardholder or merchant production and set-up. If the application is given pending status; it is returned to the sales area or directly to the customer for more information. If it is denied; the applicant receives a letter explaining the reasons for the denial. Most acquirers have automated this and process the majority of applications electronically. Pending applications are also reviewed electronically.

Answer 163

A third-party provider that supplies ancillary computing services. For example; a vendor can hire an ASP to handle the presentment of his electronic invoices.

Answer 164

The response code issued by a card-issuing bank that allows a sale to be charged to the cardholder's account. The approval is a positive response to an authorization request from the acquiring merchant.

Answer 165

1. The submission of a disputed matter to a private or official person ("arbitrator") for determination. The arbitrator is selected in a manner provided by law or agreement. Arbitration attempts to avoid resorting to the judicial system and its costs. Many contracts call for the resolution of disputes by arbitration rather than by litigation. 2. The process followed by the card companies to determine whether an issuer or an acquirer has ultimate responsibility for a chargeback. The process is initiated by either member after the re-presentment process has been completed.

Answer 166

A formal case submitted after unsuccessful dispute resolution through the chargeback-presentment cycle.

Answer 167

The storing of files; records; and other data for reference and backup.

Answer 168

A third-party application service provider that provides front-end; data center; or transaction processing capabilities for either a buyer or a seller.

Answer 169

In the Automated Clearing House (ACH) process; a consumer's consent that his bank account be debited for a specific amount on a specific date or period.

Answer 170

The transfer of rights and obligations to another person or entity.

Answer 171

An organization owned by bank members that services and obtains processing services for members and functions as a principal/proprietary member of Visa or MasterCard.

Answer 172

1. An access technology that allows voice and high-speed data to be sent simultaneously over local phone lines. 2. A modem technology that provides enhanced and affordable access to the Internet; live video; and a variety of other services.

Answer 173

A technology for broadband transmission of high-capacity telecommunications signals.

Answer 174

An acquirer that provides ATM processing.

Answer 175

A card issued by a bank that can be used at an automated teller machine (ATM) for withdrawals; deposits; balance inquiries; and account transfers. The card can also be used at point-of-sale devices to make purchases using funds from a customer's checking or savings account. There are two ways that an ATM/debit card can be processed at the point-of-sale. Signature-based or offline debit cards are processed like a credit card and require the cardholder's signature. PIN-based or online debit cards use acceptance procedures that require the cardholder to enter a personal identification number instead of signing a sales slip.

Answer 176

The band of frequencies that; when transmitted as acoustic waves; can be heard by the normal human ear.

Answer 177

A device that provides synthesized voice responses to dual-tone multifrequency signaling input by processing calls based on the call-originator input; information received from a host database; and information in the incoming call; such as the time of day. ARU systems are the bank card industry standard for voice backup authorization services and for help desk questions because they reduce staffing and operational expenses. This is also referred to as IVR (interactive voice response) or VRU (voice response unit).

Answer 178

Inspection and verification of financial accounts; records; and accounting procedures.

Answer 179

1. A security measure designed to establish the validity of a transmission; message; or originator; or a means of verifying an individual πs authorization to receive specific categories of information or transaction approval (in the case of plastic cards or payment orders). 2. A security measure designed to protect a communications system against acceptance of a fraudulent transmission or simulation by establishing the validity of a transmission; message; or originator. 3. Evidence by proper signature or seal that a document is genuine and official. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms) 4. A cryptographic process performed during a chip-initiated transaction used to validate the integrity of data provided to identify one or more of the following: issuer; card; chip-reading device; and message content.

Answer 180

A data-encryption algorithm key used to authenticate data in accordance with specific encryption standards. This key can be used to generate and approve a personal identification number.

Answer 181

The first of seven stages in processing a bank card transaction. In this stage; the merchant issues a request to charge the amount to the cardholder's card. The card issuer or an authorized agent; such as an authorizing processor or a stand-in processor; references the cardholder's account status and credit limit and approves or denies the transaction.

Answer 182

The response by the issuer to an authorization request that approves the transaction.

Answer 183

Any of several types of certificates containing information used in the authorization process. Note: Authorization information may also be contained in a public key certificate; which also serves as an authorization certification.

Answer 184

Number assigned by the authorizing processor; card issuer; or stand-in processor to a cardholder's transaction which has received specific approval. The code is proof that the transaction has been properly authorized. The code is returned in the authorization response message and is always recorded on the transaction receipt and stored within the point-of-sale system.

Answer 185

A point-of-sale process in which a merchant requests to check a cardholder's account validity via this message to the issuer. This type of transaction is rarely used. Also see Status Check Procedure.

Answer 186

A merchant's or acquirer's request for authorization.

Answer 187

A code or cipher used for a chip card process called online card authentication. The cryptogram is generated by the card for transactions requiring online authorization. It is sent to the issuer; who validates the authorization request cryptogram to ensure that the card is authentic and that card data was not copied from another card.

Answer 188

A card issuer's; authorizing processor; or stand-in processor's response to an authorization request or account number verification. The response can be approved; denied; referred to the issuing bank; or coded to pick up the card.

Answer 189

A code generated by the chip-reading device in chip transactions authorized offline. The code is based on the issuer's instructions programmed in the chip. The acquirer must provide the authorization response code in the clearing record.

Answer 190

An embossed Visa Prepaid card that is issued with a Service Code in the magnetic stripe that requests authorization when the magnetic stripe is read by a POS terminal that recognizes and processes Service Codes; but in all other ways operates like a standard Visa card.

Answer 191

A processor that provides authorization services for merchants or issuing members. These services may include a voice backup or ARU capability.

Answer 192

The network and system used to effect an authorization of the payment instrument for a purchase. The system has parameters and criteria set up by the issuer of the instrument that; when met; will approve or deny the transaction.

Answer 193

A point-of-sale terminal permitting electronic authorization. Authorization terminals do not necessarily capture transaction data into a payment system. See EDC Terminal.

Answer 194

A machine-readable; information-only ACH transaction that represents accounting information sent from an ACH operator to a participating depository financial institution for use in automated accounting systems.

Answer 195

A process associated with host-based terminals in which the system automatically initiates and operates an end-of-day process for capturing and submitting items for clearing and settlement. This process forces the daily submission of items. In some cases; the merchant must make an adjustment in order to balance the items before submission.

Answer 196

The process for crediting funds from a consumer πs bank account to a creditor's account for the payment of a consumer πs bill or obligation.

Answer 197

Both Visa and MasterCard have an interchange rate category for petroleum merchants using pay-at-the-pump unattended terminals. The merchant category code must be oil and gas; petroleum (5542). Only one electronic authorization per transaction is allowed; and the magnetic stripe components must be transmitted. For Visa; the transaction must be sent for processing within 24 hours of the authorization and for MasterCard within 2 days. MasterCard and Visa allow a $50 "pre-auth" as the transaction authorization. The merchant's name and location must be provided in the authorization record. This category includes all rate structures and card types. Visa calls their program CPS/AFD and MasterCard has three interchange rate programs for gas stations and convenience stores: Petroleum; Petroleum-Service Station and Petroleum-CAT/AFD.

Answer 198

The paperless funds transfer system maintained by the Federal Reserve and other approved operators that utilizes electronic networks to exchange funds transfer items. Also called automatic check handling.

Answer 199

An ACH credit or debit enrollment entry initiated by a participating depository financial institution (DFI) to a federal government agency on behalf of an account holder.

Answer 200

An ACH notification of change transaction automatically derived from the original erroneous item. The acronym COR is an abbreviation for correction.

Answer 201

An unattended computer terminal that performs basic teller functions: dispensing cash; accepting deposits; cashing checks; accepting loan payments; and enabling a bank customer to order transfers among accounts and make account inquiries. The first ATM was deployed as a cash dispenser by Barclay's Bank in the United Kingdom in June 1967. The first U.S. ATM was deployed in 1969 by Chemical Bank at its branch in Rockville Centre; N.Y. Some machines have more functions and also sell products such as postage stamps; while others are limited-function cash dispensers only. Recently ATMs have been used to image checks thereby automating the check deposit process as well as dispensing prepaid/gift cards.

Answer 202

An arrangement between a merchant or service provider and a customer that allows the customer's credit or debit account or credit/debit/prepaid card to be charged automatically for goods or services.

Answer 203

Another term for the automated clearing house functions.

Answer 204

Fare collection systems installed by transit merchants; such as subways; buses; and taxis; for use with contactless; prepaid or smart cards.

Answer 205

Chargebacks (credit not issued; transaction not authorized; etc.) that are automatically resolved by the processor on the merchant's behalf without the merchant's knowledge or intervention.

Answer 206

The amount of credit available to a cardholder. It is the difference between a cardholder's credit limit and the present balance on the account; including outstanding authorizations not yet received through interchange.

Answer 207

Funds available to the account holder for immediate use.

Answer 208

An amount calculated by dividing the balance outstanding at the close of each day during the billing cycle; by the number of days in that cycle. The average daily balance is used to calculate the interest due on the outstanding account balance.

Answer 209

The average sale amount per merchant location.

Answer 210

The exchange of goods or services between one business and another business.

Answer 211

The exchange of goods and services between a business and a consumer.

Answer 212

A risk management process in which the principals of a company are analyzed for historical behavior. This process typically is part of the acceptance criteria.

Answer 213

Debt that has been written off and sent to a collection agency for payment.

Answer 214

A data processing company that contracts with acquirers to provide communication and processing systems that connect with the interchange systems for clearing and the ACH systems for settlement services. The back-end processor receives the data; captures items from the front-end processor; formats and submits the items to the card company for clearing and settlement. The back-end processor also handles all chargeback and retrieval processing; the production of merchant statements; and the formatting of the merchant deposit for submission to the depository bank or into the ACH.

Answer 215

The method of converting checks in the back-office into electronic means for clearing. BOC will allow retailers and billers that accept checks at the point-of-sale or at manned bill payment locations to convert eligible checks to ACH debits in the back-office. BOC became available to the market on March 16; 2007. Rules regarding BOC maintain proper consumer notification; provide the consumer with proper customer service information and allow the consumer to opt-out. Checks with values over $25;000 and checks with auxiliary on-us fields are ineligible.

Answer 216

A transaction in which the cardholder obtains his/her account balance at an ATM for traditional debit cards or at the point-of-sale for prepaid/gift cards.

Answer 217

1. The difference between the limiting frequencies within which performance of a device; in respect to some characteristic; falls within specified limits. 2. The difference between the limiting frequencies of a continuous frequency.

Answer 218

A national banking educational company often consulted for its information reporting standards.

Answer 219

A financial payment card issued by a financial institution used for purchasing good or services.

Answer 220

A group of institutions formed for the purpose of sponsoring a bank card program; using a common processing and administrative center.

Answer 221

Third parties; including independent sales organizations and member service providers; that provide merchant and cardholder services for issuers and acquirers.

Answer 222

The six-digit number assigned by the card company to identify a member (issuer or acquirer processor) for issuing; authorization; clearing; or settlement processing. The issuer assigns the six digits as the first six digits of the card number. The acquirer assigns the six digits as the first six digits of the merchant number.

Answer 223

The BSA includes OFAC (Office of Foreign Asset Control) Program and AML (anti-money laundering) for a company as well as other federal requirements. Companies also have to comply with the US Department of Treasury regulation 31 CFR 103; and the Office of Thrift Supervision regulation 12 CFR 563.177.

Answer 224

Any day on which a depository financial institution is open to the public.

Answer 225

The online financial network service by which MasterCard delivers authorization; clearing; and settlement services to its members and their agents. BankNet separates communications processing from financial applications processing; allowing an unlimited variety of financial applications to transmit messages over a single network.

Answer 226

The point at which a bank closes out the current day's transactions and begins the next business day.

Answer 227

The number uniquely identifying a bank for payment processing. This number consists of the first nine digits that appear across the bottom of a personal check. Also called the transit routing number and the ABA transit routing number.

Answer 228

The process of obtaining relief from debt by filing a claim with a U.S. court. Chapter 7 bankruptcy allows the individual to claim a total lack of assets; this type usually does not allow the collection of any debt from the creditor. Chapter 13 bankruptcy involves the reorganization of the filer's personal finances; some creditors will be paid. Chapter 11 bankruptcy involves the reorganization and alignment of a corporation's debt.

Answer 229

A positive or negative ACH balance adjustment resulting from a corrected transaction that restates the previous balance.

Answer 230

Transfer of funds to any bank within the Federal Reserve System.

Answer 231

A code representing characters by sets of parallel bars of varying thickness and separation that are read optically by transverse scanning. Bar code uses include identifying merchandise; sorting mail; and inventorying supplies.

Answer 232

The magnetic technology that uses this chemical in the composition of the ID credential to store data and make data available to the reading device. (Source: Smart Card Alliance)

Answer 233

The VisaNet data processing system and operations used to provide authorization and authorization-related services between Visa issuers and acquirers.

Answer 234

The VisaNet data processing system and operations used to provide clearing and settlement and other interchange-related services between Visa issuers and acquirers.

Answer 235

One one-hundredth (0.01) of 1 percent; a measurement usually used in interest rates or discount rates. For example; a change from 1.43 percent to 1.50 percent is a change of seven basis points.

Answer 236

The accumulation of transactions from a point-of-sale terminal gathered; reconciled; and transmitted for clearing and settlement. Also; the transmission or processing of a group of payment orders as a set at discrete intervals of time (as opposed to real time).

Answer 237

A process; usually in a mail order or catalogue order; in which the authorization requests are accumulated and sent at one time for authorization. The resulting responses will also be returned in a grouping; or batch. Batch authorization is particularly effective when real-time authorization is not effective or when the order to ship an item is not requested in a real-time situation.

Answer 238

A system designed to allow certain merchants‚Äîmail order merchants; for example‚Äîto batch-process authorizations on their own time schedules.

Answer 239

The process of sending transactions to the processor for clearing and settlement. Also; end-of-day closing or terminal balancing.

Answer 240

The identifying form used by the electronic submission merchant to indicate a batch of sales or credit slips (usually one day πs transactions).

Answer 241

A sequential number assigned to each submitted batch. Each transaction within the batch shares the same reference number; which is used mainly for reconciliation and retrieval.

Answer 242

A data processing procedure in which similar input items are grouped for processing; as opposed to real-time processing; which takes place as each transaction occurs. Accumulating the data in advance means that the user cannot influence the processing while it is in progress.

Answer 243

An electronic procedure in which the front-end processor consolidates the transactions within a group or batch and forwards the batch to the back-end processor for submission to the card company for clearing and later settlement or payment of funds to the acquirer. The acquirer then funds the merchant's account for payment.

Answer 244

1. A unit of modulation rate. One baud corresponds to a rate of one unit interval per second; where the modulation rate is expressed as the reciprocal of the duration in seconds of the shortest unit interval. 2. A unit of signaling speed equal to the number of discrete signal conditions; variations; or events per second. If the duration of the unit interval is 20 milliseconds; the signaling speed is 50 bauds. The term is sometimes used as a synonym for bit-per-second. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 245

A technique used to compare the performance of others within the same industry or product set.

Answer 246

In electronic benefits transfer; the person who has the right to receive federal benefits payable by law through programs such as the Food Stamp Program; Aid to Families with Dependent Children (AFDC); and Women; Infants; and Children (WIC).

Answer 247

The food stamp account or the cash account offered through the federal Benefit Security Program.

Answer 248

A national member organization that uses codes of ethics; news alerts; databases and other programs to maintain a high level of trust between businesses and the public.

Answer 249

A bill service provider that consolidates bills from other bill service providers or billers and delivers them for presentment to the customer service provider.

Answer 250

Information from a biller that provides line-level information to a customer; including specific billing event information such as credit card charges; telephone calls; or kilowatts used. Also called invoice detail.

Answer 251

A process in which a customer is notified that an electronic bill is available for review and payment.

Answer 252

An agent of the biller (usually a financial institution) that originates and accepts payments on behalf of the biller.

Answer 253

A financial institution or nonfinancial entity acting as an intermediary between the biller and the consumer for the exchange of electronic bill payment information.

Answer 254

Summary information from a biller that is essential to a consumer to understand what is owed. Typical information may include: amount owed; date due; biller; biller's account number; summary record; summary; and invoice summary.

Answer 255

A means of recovering or reducing interchange fees for transactions clearing differently than planned. The processing company passes through the charges to the merchant.

Answer 256

A company or organization that sends a bill or statement to a consumer; usually requesting payment for a product or service.

Answer 257

A model of electronic bill presentment and payment (EBPP). A biller establishes an electronic billing capability on its own web site and provides its consumers with their billing information and the capability to make payments directly from the site. See also Thick Consolidation; Thin Consolidation.

Answer 258

The 28- to 31-day timeframe between production of the cardholder's current and next statements.

Answer 259

The month; day; and year when a monthly statement is produced. The current finance charges; minimum payment due; and new balance are calculated as of the billing date.

Answer 260

A member or nonmember of a card company that has been designated by a member as a processor or issuer and is allocated responsibility for a specific BIN.

Answer 261

Any specific and uniquely identifiable physical human characteristic that may be used to validate the identity of an individual. Examples include characteristics of the retina; iris; acoustic spectrum of the voice (voiceprint); fingerprints; handwriting; and pattern of finger lengths. Biometric identification provides a highly secure means of identification; for purposes of security involving; for example; Internet communications and cryptosystems. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 262

A card program offering higher credit lines and expanded services. Qualifications for cardholder applicants require charging of more than $500;000 annually.

Answer 263

A technology that allows an array of devices to communicate over short-distance wireless connections. This technology applies to PCs on a local area network as well as to cell phones; personal digital assistants; and wristwatches.

Answer 264

The process of processing and adding new accounts to the system. Traditionally when adding new merchant relationships; paperwork includes individual information for each type of service being utilized; such as American Express; Discover and Check services. The data entry required adding each service to the data base individually; then mailing or faxing the application directly to the service; such as American Express; for them to add to their database. This process could take up to three weeks to set up thus holding up progress on setting up a merchant. New "Boarding" systems have been developed that allow a single point of data entry and then transmission of the relevant data to the appropriate party; e.g. American Express information to American Express. This service is also called "single point of entry." Note that for the new Discover acquiring method; Discover merchants would be added with MasterCard and Visa and would not require this additional paperwork.

Answer 265

The value of an asset as it is written in the accounts of a company; as opposed to the real market value.

Answer 266

The name; logo; symbol; slogan; jingle; or character that is intended to identify a product or service. Brands can provide a guarantee of product safety and quality and offer predictability and consistency over time and space. MasterCard calls their logo on the plastic payment card their "brand."

Answer 267

The vision or personality that companies want their products and services to convey.

Answer 268

A customer's loyalty to a product for reasons specific to the individual.

Answer 269

Used in prepaid cards and travelers' checks to represent the amount of prepaid funds that the purchaser did not use. These funds are assumed by the issuer; processor or program manager.

Answer 270

The amount of additional revenue needed to cover expenses.

Answer 271

A traditional business serving customers in a physical storefront or office; contrasted to an online business.

Answer 272

Evolving digital technologies that provide consumers a signal-switched facility offering integrated access to voice; high-speed data service; video-demand services; and interactive delivery services. (Source: Federal Communications Commission)

Answer 273

The Web browser; the tool (program) that allows users to surf the World Wide Web. The most popular browsers are Netscape Navigator and Microsoft Internet Explorer.

Answer 274

The technical specifications for mainframe-to-mainframe computer transmission of files between a financial institution and the Federal Reserve Bank.

Answer 275

A dial-up electronic message system for reading and posting messages or downloading files.

Answer 276

The pricing scenario that includes all transaction processing fees as well as interchange reimbursement fees. Typically referred to as the discount rate; it can be expressed as a percentage plus a per-item fee. Also called bundled pricing and bundled fees.

Answer 277

The U.S. Department of Commerce bureau that analyzes and produces reports on the Gross Domestic Product and

Answer 278

The rate at which a company, typically a start-up company‚ consumes its capital. Also called run rate.

Answer 279

A bank card issued to companies for use by company employees. The liability for the abuse of the card typically rests with the company; not with the employee. Also called corporate card.

Answer 280

Introduced in 1985 to meet the needs of the small business market in the United States; the MasterCard Business Card program offers the ability to extend payments and separate business expenses from personal expenses. All card companies offer business card programs.

Answer 281

A calendar day other than a Saturday; Sunday; or federal holiday.

Answer 282

A unique number used by Visa to identify an acquirer or processor.

Answer 283

The process of automating payment disputes and investigations.

Answer 284

Collusive merchants; ISOs or agents; and cardholders who perpetrate fraud against credit cards. The merchant is usually an existing business and works with an ISO or agent to procure terminals and a merchant account. The merchant establishes a number of new businesses and obtains more terminals and merchant numbers from the ISO or agent. Cardholders charge various amounts; exhausting the credit limit; but with different merchant numbers. The cardholder pays the balance in full and then redoes the process of charging to the limit. The check bounces within two days; and the group has two cycles of credit line charges that the issuing bank cannot collect.

Answer 285

Merchants who perpetrate bust-out card fraud.

Answer 286

A business customer; or payer.

Answer 287

EIPP (electronic invoice presentment and payment) model connecting one buyer to many sellers. Sellers post their invoice data to the buyer's site.

Answer 288

A service of MasterCard; included in some card programs; that offers the cardholder discounts on special catalogue merchandise.

Answer 289

The price at which an ISO can buy services. A sponsor quotes a buy rate to an ISO; which then can mark up the price and sell the service or product at its own rate. The difference between the buy rate and the sales price quoted by the ISO is income to the ISO.

Answer 290

A functional area within an organization or an outsourced; separate facility that exists solely to answer inbound or place outbound telephone calls. Usually refers to a sophisticated voice operations center that provides a full range of high-volume inbound or outbound call-handling services; including customer support; operator services; directory assistance; multilingual customer support; credit services; card services; inbound and outbound telemarketing; interactive voice response; and Web-based services.

Answer 291

A response to an acquirer's authorization request; generated by the issuer or through stand-in processing; that requires the merchant to contact the issuer directly.

Answer 292

A report completed to document a sales call.

Answer 293

A multipurpose card issued by a university or school. Each student uses this instrument as an ID card; meal ticket; library card; dormitory entry card; classroom attendance card; and general payment card. The card can be a smart card; contactless; magnetic stripe card; or a combination. Also called multi-card or universal card.

Answer 294

An electronic message sent by the merchant; the acquirer; or the processor to nullify a previously transmitted transaction request or response.

Answer 295

Also called cancellation number. The code that a lodging or car rental merchant gives to a cardholder. The cancellation code proves that the cardholder did; in fact; cancel a reservation. It is used in the dispute process.

Answer 296

Stage three of the seven stages of processing; which involves converting the authorization amount into a billable transaction record within a batch. A transaction cannot be captured unless it has been authorized. Rules also state that the merchant should not send the transaction to be cleared until goods or services have been shipped or provided to the consumer. The front-end processor aggregates the merchant batches by BIN; matches authorization data to settlement data; and sends the transaction to the back-end processor for clearing and settlement. The front-end processor may also send the independent card company transactions (AMEX; Discover; Diners; and JCB) directly to the card companies depending on the relationship with the acquirer.

Answer 297

The date on which an acquirer processor processes a transaction for settlement and clearing.

Answer 298

The method by which transactions are captured at the point-of-sale. The options are terminal or host capture.

Answer 299

Any valid plastic card issued by a card company or other card-issuing organization that is presented as payment for goods and services or to obtain cash advances.

Answer 300

An environment in which a transaction is completed under both of the following conditions: the cardholder is not present and the card is not present. Transactions in this environment include deferred payments; electronic commerce; mail order and phone order; and recurring transactions. They do not include face-to-face transactions where the card is present.

Answer 301

A merchant's agreement to accept plastic cards as a form of payment.

Answer 302

The term used by American Express to mean the merchant contract.

Answer 303

To activate a credit card for usage; the cardholder typically calls a number indicated on a sticker on the mailed plastic card and verifies some account information or calls from the home phone number where the activation is automatic. To activate a debit card; the cardholder can also use the card in an ATM before utilizing the card in a POS. A prepaid or gift card typically is activated when the card is purchased at the point-of-sale. If the prepaid card is provided in the mail or via an employer; then the card will require a phone call to the issuer for activation.

Answer 304

An entity certified by card companies to produce payment plastic cards with logos/brands/flags imprinted on the card within the card companies' specified guidelines.

Answer 305

Visa is a member-based organization formed to manage the rules; regulations; and process of interchanging plastic card transactions. Their membership consists of issuers; which are responsible for the management and issuance of plastic debit; prepaid and credit cards. MasterCard was an Association until 2006 when they changed the company structure and became a public company. Visa plans to combine Visa Canada; Visa International and Visa USA into a single private stock company; Visa Inc. late in 2007. Visa Europe will remain a membership association and will become a licensee of; and own a minority interest in; Visa Inc.

Answer 306

A cryptographic value encoded on track 2 of an electronic benefits transfer card and used to validate its content.

Answer 307

The American Express Card Authorization System; a computer system that performs the credit analysis of Cardmember charges. Its primary purpose is to protect the service establishment from fraud loss and credit abuse. (Source: American Express)

Answer 308

The population of cardholders; especially in the context of a singlecard family.

Answer 309

A consumer prepaid payment card with monetary value stored on the card. When the card is used; the terminal deducts the transaction amount from the value on the card at the point-of-sale; without connecting to an issuer system. (Source: Smart Card Alliance)

Answer 310

The capability of an ATM device to capture cards when they have been coded as lost or stolen or when the cardholder makes more than a prescribed number of PIN attempts.

Answer 311

An 8 ¬Ω" x 11" piece of paper to which the card is affixed. The carrier is included inside a #10 envelop and mailed to the cardholder. The carrier is often customized for the card program and includes details of the program.

Answer 312

Generic term used to describe the network brand: Visa; MasterCard; Discover; American Express.

Answer 313

The person or entity that has been issued a credit; prepaid or debit card and is responsible for compliance with the rules of engagement as contracted with the card-issuing body. This information is provided in the card's terms and conditions.

Answer 314

A terminal; personal computer; or other device that a cardholder uses to initiate an electronic commerce transaction.

Answer 315

A magnetic-stripe terminal or chip-reading device that is not an ATM but is activated or used by a cardholder and not a merchant.

Answer 316

A value transmitted by an issuer in response to a three-domain (3-D) secure authentication request.

Answer 317

The bank that has issued a bank card to an individual. Frequently used to identify the card-issuing bank in an interchange arrangement.

Answer 318

A dispute initiated by the cardholder. In the bank card industry; the dispute can be in the form of a chargeback.

Answer 319

Types of fraud include fraudulent applications that use fake or misleading information to obtain a credit card illegally; lost and stolen cards that are used to obtain goods or services illegally; counterfeit cards; magnetic-stripe fraud; which involves the re-encoding of card information on the magnetic stripe; thus allowing the transaction to not match the embossed information; fraud perpetrated by a cardholder who claims that his/her card is lost when actually it is being used by the cardholder to make purchases.

Answer 320

A cardholder-initiated dispute. Reasons for the dispute include: the goods or services were never received; the transaction amount is incorrect; or the transaction is a duplicate. Also called substantive chargeback.

Answer 321

A Visa program that establishes data security standards; procedures; and tools for all entities-merchants; service providers; issuers; and merchant banks-that store Visa cardholder account information. CISP compliance is mandatory. Compliance with CISP means compliance with the PCI Data Security Standard with the required program validation.

Answer 322

The issuer's record of all cardholder accounts. The file contains information on each account; such as name; credit line; and account status.

Answer 323

A registered entity of MasterCard under the member Service Provider (MSP) Program that supports a member's issuing program; usually by soliciting cardholders and providing customer service.

Answer 324

The demographics of a cardholder's portfolio.

Answer 325

A unique 4-digit check value generated using a secure cryptographic process that is thermal-printed on the front of an American Express card or provided to a virtual account holder.

Answer 326

The member of Visa and/or MasterCard and/or Discover; licensed under the rules and guidelines of the respective card companies to solicit; contract with; issue; and manage cardholder programs for the express purpose of extending credit; or facilitating debit access instruments through a depository account. With regards to prepaid; the card issuing bank does not extend credit but provides an account whereby funds must be loaded prior to performing transactions. Also called card issuer.

Answer 327

Special packaging used to mail new or reissued cards to the cardholder. The mailer may contain special information; disclosures; and/or instructions to the cardholder about the account.

Answer 328

For American Express; consumers who have American Express Cards.

Answer 329

A computer application that generates a series of account numbers by using preset parameters such as bank identification numbers (BIN) with sequential numbering and a check digit verification number. Complete lists of valid numbers can be produced at one time for issuance over a period of time. These programs are also used in fraudulent or counterfeit schemes to create a mass of cards with valid numbers.

Answer 330

An environment that describes the conditions of either the face-to- face or cardholder-activated terminal environment.

Answer 331

The process of encoding and embossing cards and rendering them to the customer. The generation of card mailers; merging and mailing of the cards; and insertion of terms and conditions are also handled in this process. To produce a Visa; MasterCard; Discover; American Express; or any regional debit card; the vendor must have an extensive security check and meet compliance regulations for the actual facility. See Card Approved Vendor

Answer 332

A company that provides an optional service to cardholders; usually for an annual fee. Cardholders register their credit card account numbers with the company. If a card is lost or stolen; the cardholder makes one call to the card registration company; which then notifies the issuers of all the lost or stolen cards.

Answer 333

Preparing; packaging; and sending new cards to cardholders prior to the current card's expiration date.

Answer 334

1. Cards in Force: Number of American Express cards in force by type of card or geographic area. (Source: American Express) 2. Central Information File: In data processing; the centralized database containing a financial institution's client base. (Source: American Express)

Answer 335

Reading the magnetic stripe on a card and copying the information for use in the creation of a duplicate card that can be used for fraudulent transactions.

Answer 336

A MasterCard tool used to prevent fraud. MasterCard requires that the number be embedded in the magnetic stripe. The data must be valid and verified at the card issuer. This prevents fraud because

Answer 337

A unique 3-digit check value generated using a secure cryptographic process that is indent-printed on the back of a MasterCard card or provided to a virtual account holder.

Answer 338

A Visa service in which Visa validates the card verification value on behalf of the issuer in an authorization request.

Answer 339

A unique check value encoded on the magnetic stripe and replicated in the chip of a card or the magnetic stripe of a Visa Card to validate card information during the authorization process. The card verification value is calculated from the data encoded on the magnetic stripe or chip using a secure cryptographic process. MasterCard's is called CVC.

Answer 340

For each transaction authorization the message will include one of the following with regards to the CVV2: CVV2 is intentionally not provided; CVV2 is present; CVV2 is present but illegible; cardholder states that there is no CVV2 on card. Responses are: CVV2 match; CVV2 no match; not processed; merchant indicates no CVV2 on card; card issuer cannot certify. CVV2 is recommended for all internet transactions. It is a risk the merchant would take to not require the CVV2 as a security measure.

Answer 341

A unique 3-digit check value generated using a secure cryptographic process that is indent-printed on the back of a Visa card or provided to a virtual account holder.

Answer 342

A unique value generated for each transaction using a secure cryptographic process that is used exclusively for Visa contactless cards.

Answer 343

An authorization file for the cash benefit account within a prescribed EBT program.

Answer 344

The ability to obtain cash from a cash dispenser; or a bank teller. Interchange on these transactions is paid by the issuer to the acquirer for the float on funds disbursed. Cardholders pay high charges for these

Answer 345

A debit transaction that allows a cardholder to authorize more than the cost of goods or services actually purchased and receives the difference in cash from the merchant.

Answer 346

Annuity and public assistance benefits that are in the form of cash. These benefits are generally disbursed through direct deposit; warranty; state check; U.S. Treasury check; or EBT.

Answer 347

The ACH format for corporate payments; which can include one option addenda record.

Answer 348

The difference between incoming cash and outgoing cash.

Answer 349

The bundle of checks and/or items sent to or from one financial institution to another for deposit or collection on the items within.

Answer 350

In banking; the process of depositing cash and checks as well as the investment of the funds deposited.

Answer 351

Requires the federal Financial Management Service (FMS) to issue regulations to ensure greater efficiency; effectiveness; and equity in federal/state funds transfer.

Answer 352

An account holding funds that are accessible in the case of fraudulent activity or excessive chargebacks. This account is a standard practice for doing business with a newly formed company as a risk mitigation practice.

Answer 353

A category of Internet theft in which a criminal breaks into a business's payments account and manually generates a high volume of sales using stolen cards. The criminal then credits the funds to his or her own card; effectively using the merchant's authorization terminal to siphon cash from one set of cards to another. The average cost of the fraud is limited only by the number of cards that the hacker has and the aggregate credit limit on those cards. The average economic impact is more than $10;000. Also called account takeover.

Answer 354

A higher-speed; more efficient packet-based data network replacing CDPD. CDMA is a cellular technology originally known as IS-95; and also competes with GSM technology for dominance in the cellular world.

Answer 355

The transfer of data via unused bandwidth normally used by mobile phones between 800 and 900 MHZ. Speeds of up to 19.2 kbits/sec are possible.

Answer 356

Abbreviation for compact disc read-only memory. A high-capacity optical digital storage device that can be read from but not written to. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 357

NACHA's Council for Electronic Billing and Payment.

Answer 358

For American Express; the term used to designate the hierarchy of an account in relationship to multiple locations. (Source: American Express)

Answer 359

1. For BASE II; the date (based on Greenwich Mean Time) on which a member inputs interchange data and the data is accepted by a Visa interchange center. 2. For single message system users; the date the transaction is settled.

Answer 360

The central computer processor used in transaction processing.

Answer 361

In cryptography; the public key and the identity of an entity; with other information; rendered unforgeable by digitally signing the entire information with the private key of the issuing certification authority. Also called digital certificate. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 362

Also called certificate authority. 1. In cryptography; a center trusted by one or more agencies or individuals to create and assign certificates and; optionally; to create users' keys. 2. In secure communications; a trusted person or entity that issues certificates (also called public-key certificates) for encryption purposes. 3. An independent party identifying and certifying payers and payees for real-time credit card transactions in electronic commerce. 4. The third level of the Public Key Infrastructure (PKI) Certification Management Authority responsible for issuing and revoking user certificates and exacting compliance to the PKI policy. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 363

A series of merchant locations managed and owned by the same entity.

Answer 364

Multiple transactions that occur in a customer-operated device such as an ATM without the reentry of the card or PIN.

Answer 365

A procedure whereby a cardholder or the cardholder's bank disputes transactions to payment cards. A disputed payment card transaction is returned to the acquirer/ISO/MSP for reimbursement to the cardholder's account. Chargebacks can be procedural (see Issuer-Initiated Chargebacks) or substantive (see Cardholder-Initiated Chargebacks).

Answer 366

A standardized form that contains all pertinent

Answer 367

The number of calendar days from the central processing date of a transaction receipt during which the issuer may exercise a chargeback right. The number of days varies from 45 to 180 days; according to the type of transaction.

Answer 368

A numerical code that identifies the specific reason for the chargeback. MasterCard and Visa each have unique codes.

Answer 369

An issuer-assigned number that identifies the source of an outgoing chargeback.

Answer 370

Measured by total sales chargebacks to total sales transactions. The maximum usually is .018 percent without incurring warnings and fines.

Answer 371

Plastic cards in which payments are set against a special-purpose account. The entire bill must be paid at the end of the billing period; and typically; there is no interest.

Answer 372

The situation in which the issuer is faced with a delinquent loan of such severity that it must absorb the amount of debt; at least temporarily; in order to clear the amount from its ledgers. The issuer may still attempt to collect some or the entire amount owed through the recovery process.

Answer 373

A fee charged on any authorized transaction to cover costs usually associated with delivery of the authorization.

Answer 374

The sum of dollars transacted on American Express Cards; usually either within a particular sales establishment or group of sales establishments. This information is available by month and by type of card. (Source: American Express)

Answer 375

Abbreviation for conversational hypertext access technology. A form of interactive online typewritten communication that allows participants ( ∫members ∫) to engage in text-message conferencing via real-time computer networking over designated communications facilities ( ∫chat rooms ∫); without storing the messages. Participants π messages are instantaneously relayed to all other participants logged into the chat room. Their replies are instantaneously relayed to the originator and all other participants. (Source: Federal Standard 1037C; Telecommunications: Glossary of Telecommunication Terms)

Answer 376

A paper negotiable instrument payable upon demand to transfer funds from the payer to the payee.

Answer 377

A paper-based processing method in which the biller is sent a single check representing multiple payments accompanied by a list of payments that it represents.

Answer 378

The confirmation that the check presenter has not been linked to excessive returns of previously written checks.

Answer 379

A system that allows consumers to provide their checking account information to a merchant over the phone. A duplicate check (paper draft or electronic check) is created for payment.

Answer 380

A bank card that enables the user to purchase goods and services and obtain cash disbursements against his or her asset account (generally a checking account). Also called an offline debit card or deposit access card.

Answer 381

The process of converting a paper check to an electronic debit.

Answer 382

The last digit of an account number or transit routing number on a check that may be calculated using an algorithm; usually MOD 10; and may be used to test the validity of a card; check; or instrument.

Answer 383

The use of a paper check or checking account to obtain funds illegally.

Answer 384

A service that guarantees payment on each check presented; up to a limit defined by the account; provided that the merchant follows correct procedures in accepting the check. The guarantee service collects any returned items; and the merchant typically follows a stringent set of

Answer 385

The conversion of the paper check to digitized images at various points along the collection stream; eliminating the need for paper -hand-offs.

Answer 386

A hardware device that can be integrated to the terminal or stand-alone device that reads the MICR line on a check for authentication; negative file comparison; or truncation.

Answer 387

The actual paper instrument is held at the first point of presentation; whether at a point of purchase (POP) or at the deposited financial institution. Information from the checks is transmitted electronically from the truncation point to the depositor's financial institution.

Answer 388

The Federal Reserve Bank law; effective in 2004; that allows banks to transmit electronic images of checks instead of actual paper checks; if desired.

Answer 389

An online authorization service that allows merchants to query a database to determine if customers have a history of returned checks. Merchants may also add checks that have been returned for nonsufficient funds (NSF). For large national retailers; the service provider may load a check list into the merchant's system. Check verification service can be combined with a check guarantee service. See also Check Guarantee.

Answer 390

An account set up by a consumer at a bank or licensed depository institution. The account is accessible by checks; a debit card; or the Automated Clearing House (ACH). The working account set up by merchants for depository activity for debiting and crediting bank card processing items. Also called demand deposit account (DDA).

Answer 391

A small square of thin semiconductor material; such as silicon; that has been chemically processed to have a specific set of electrical characteristics such as circuit storage or logic elements. When used on a plastic card; a chip performs logic; processing; or memory functions. See also Integrated Circuit.

Answer 392

A large dollar funds transfer system; a member of the New York Clearing House family of payments.

Answer 393

Data or messages that have been encrypted. The utilization of various formats such as DES actually messages the data or the entire message so that the data integrity remains intact.

Answer 394

Cirrus is MasterCard πs ATM-only brand; and offers cardholders secure access to cash and other banking services. Cirrus can stand alone or sit with MasterCard πs point-of-sale brands; giving them ATM access. It can also be used by competing brands such as Diners Club; and private label credit cards; to provide ATM access for those cards. The Cirrus logo appears on over 920 million cards; with issuance particularly strong in North America. Cards bearing the Cirrus logo can be used at over 900;000 Cirrus ATMs worldwide.

Answer 395

The personal injury; property losses; damages (including indirect; consequential; special; or incidental damages) losses; suits; claims; expenses; costs (including attorney's fees); or any other liability; under any theory whatsoever; including without limitation; tort; or contract.

Answer 396

The original category for a standard Visa card.

Answer 397

The type of certification by an acquirer processor by which an online help desk is used to support the download and support of the POS application. This certification includes the message authentication formats used in Class B certification.

Answer 398

The act of message authentication to the processor and the most widely used certification by value-added resellers (VARS). In this type of certification; the processor does not certify how the terminal application performs but only that the application can communicate in the format needed for transaction processing.

Answer 399

Enacted in 1914 to protect from discrimination in prices; services; or facilities.

Answer 400

American Express policy that dictates that an establishment cannot place any point-of-purchase (POP) on or around the establishment or on doors; windows; cash registers; etc. (Source: American Express)

Answer 401

The process of submitting transactions to the respective card company (Visa; Discover; AMEX or MasterCard) for interchange processing; the fourth in the seven stages of processing. This presentment of the transactions is also a request for payment in the settlement process. The back-end processor has received the captured transactions from the front-end processor. The back-end processor performs edit checks and risk management procedures on the transactions to look for possible rejects. The back-end processor then formats the merchant deposit and sends the transactions to the card companies for actual interchange among the members.

Answer 402

A checking account set up at a bank that will receive a member πs credit or debit for net settlement.

Answer 403

The balance in an account maintained by a financial institution at a Federal Reserve or correspondent bank.

Answer 404

The bank designated by the member to receive the member πs daily net settlement advisement. The clearing bank conducts funds transfer activities with the net settlement bank and maintains the member πs clearing account. This bank may be the member itself.

Answer 405

The card company member; or its designated processor; that provides clearing and settlement services for merchants or other members. This is a typical function of a back-end processor.

Answer 406

A VisaNet transaction that negates a transaction previously sent through BASE II or the single message system.

Answer 407

Messages and data that are not encrypted but appear in readable format. Data that can be compromised or used for fraudulent activity should never appear "in the clear."