Account number: Unique sequence of numbers assigned to a cardholder account which identifies the issuer and type of financial transaction card.
Acquirer: Bank or financial institution that issues merchant accounts for the acceptance of credit card transactions.
acquiring bank: Bank that maintains the merchant relationship and receives all transactions from the merchant.
address verification service / address verification: A service that verifies the cardholder’s billing address in order to help combat fraud in card-not-present transactions (for example, mail order, telephone order, internet, etc.).
AVS, short for Address Verification Service is used only in the United States, so refer to it as "address verification". AVS will be expanded in translation and will not make sense in all instances.
American Express: Organization that issues cards and acquires transactions, unlike Visa and MasterCard, which are bank associations.
Approval: Any transaction that is approved by the cardholder or check writer’s bank. Approvals are requested through an authorization. An approval is the opposite of a declined transaction.
Asynchronous: Method of transmitting data in which the data elements are identified with special start and stop characters. An asynchronous modem cannot communicate with a synchronous modem. Compare with Synchronous (e.g. standard Hayes compatible modem).
authorization code: Approved sale and authorization transactions always receive a numeric or alphanumeric authorization code that references the transaction for processing purposes.
bank identification number: Digits on a credit card that identify the issuing bank. It is sometimes the first six digits and is often referred to as a BIN.
Batch: Collection of transactions submitted for settlement. Usually a merchant has one batch per day or per shift.
batch ID: For most processors the batch ID is an identifying number assigned to a settle batch of transactions. Every transaction in the batch shares this ID. Normally if a transaction does not have a batch ID associated with it, the transaction has not been settled, or is a non-settleable transaction such as an authorization.
batch processing: Type of data processing where related transactions are transmitted as a group for processing.
BIN: See Bank Identification Number.
binary executable: Universal character-coding system.
Capture: Process of capturing funds from an authorization.
card-not-present: Situation where the cardholder (and the card) is not physically present at the time of purchase. Typical card-not-present transactions take place in businesses focused on mail order, telephone order, business to business, and internet-based transactions.
card-present: Situation where the cardholder (and the card) is physically present at the time of purchase, for example at gas stations and restaurants.
CGI: See Common Gateway Interface.
chargeback period: Number of calendar days in which a card issuer may charge sales back to the merchant, beginning with the day after the date the record is first received by the card issuer and continuing until the end of the day on which it is dispatched as a chargeback item.
chargeback reason code: Two digit code identifying the specific reason for the chargeback.
check guarantee: Service which guarantees check payment (up to the limit defined for the account), provided that the merchant follows correct procedures in accepting the check. The service determines whether the checkwriter has previously written delinquent checks. Companies like TeleCheck provide this type of service.
Clearing: Process of exchanging financial details between an acquirer and a card issuer to facilitate posting of a cardholder’s account and reconciliation of a merchant’s settlement position.
Common Gateway Interface: Protocol that specifies how a Web server executes and exchanges data with a program. Also referred to as gateways or CGI scripts, these protocol programs generally consist of a set of instructions written in a programming language like C or Perl that process requests from a browser, execute a program and format the results in HTML so they can be displayed in the browser. Gateway scripts often add interactivity to a web page by enabling users to fill out and submit forms for processing.
confirmation letter: Letter sent by a processor to a merchant on a daily or weekly basis to verify batch deposits.
Credit: Transaction type supported by Payflow that transfers funds from the merchant’s account back to a customer’s credit card. It is the only way to handle a refund after a transaction has been settled. This type of transaction is usually performed when a product is returned to the merchant. A credit can be performed in the Virtual Terminal area of PayPal Manager. Check refunds can only be done by credit card or through a non-electronic, paper check. A credit can only be issued to an account that has not had a previous authorization.
decline: A transaction in which the card issuer will not authorize the transaction.
delayed capture: Transaction type that uses the information from an authorization transaction to bill a credit card (capture funds). This is the second step in the delayed settlement process and should be used by merchants who do not provide immediate shipment of goods.
delayed settlement: This is a two-phase process that utilizes an authorization transaction and a delayed capture transaction in place of a sale transaction. Credit card associations require that this procedure be used when a merchant delivers goods or services more than 48 hours after they are ordered.
demand deposit amount: Standard checking or savings account into which electronic funds can be transferred.
discount rate: Amount charged to a merchant by the acquiring bank for processing a transaction. It is usually a percentage of the transaction amount. The rate is typically based on monthly transaction volume (total dollars) and average ticket.
external sales agent: American Express term for ISO or MSP.
floor limit: Preset limit established by a card issuer that allows merchants to accept credit card sales without authorization provided the merchant checked to see that the card number was not listed on a warning bulletin for lost or stolen cards. Floor limits are now rarely used.
host port: Port address that is used in conjunction with the host address when using the PayPal client in conjunction with a custom integration or storefront software application for transaction processing. Always use host port 443.
HTTP protocol: Hardware and/or software that connects computer networks and allows them to communicate.
Interchange: Flow of information between issuers and acquirers, e.g. transactions, retrieval requests, chargebacks.
interchange fee: Fee charged by Visa and MasterCard for each credit card transaction. This fee is part of the discount rate.
internet merchant account: Special type of account required for merchants who wish to sell goods and services over the internet and accept credit cards as payment. This type of account is different than a typical merchant account and is considered card-not-present.
manual entry: Credit card information that is entered through the Virtual Terminal of PayPal Manager.
MasterCard: Association of banks that governs the issuing and acquiring of MasterCard credit card transactions and Maestro debit transactions.
Member Service Provider: MasterCard term for a company that is sponsored by an acquiring bank to solicit and sometimes support merchants.
Merchant: A retailer, or any other entity (pursuant to a Merchant Agreement), that agrees to accept credit cards, debit cards, or both, when properly presented.
Merchant agreement: The written contract between a merchant and an acquirer that details their respective rights, responsibilities and warranties.
merchant bank: Bank that has entered into an agreement with a merchant to process bank card transactions, also called the acquirer or acquiring bank.
merchant category code: Code assigned by an acquirer to a merchant to identify the merchant’s principal trade, profession, or line of business. This four-digit code is also know as the SIC code.
Network: See Processor. Commonly used to refer to communication networks, like AT&T or CompuServe, or for internal corporate communications.
non-qualified: Broad term that describes a transaction that did not interchange at the best rate because it was entered manually, was not settled in a timely manner, or the data set required for the best interchange was not provided.
open-to-buy: Amount of credit available at a given time on a credit card holder’s account.
original transaction ID: Unique PayPal transaction ID that is used to process a secondary transaction, like a delayed capture, credit, or void.
point-of-sale terminal: The device used to capture transactions.
post authorization: Transaction for which a voice authorization was received. See Prior Authorized Sale.
Posting: Process of recording debits and credits to individual cardholder account balances.
prior authorized sale: Transaction for which authorization was obtained at an earlier time, e.g. when a merchant has to call for authorization before services are rendered (hotel reservation, auto rental, etc.).
private label card: A credit card that can be used only in a specific merchant’s store. Typically not a bank card.
processor: Large data center that processes credit card transactions and settles funds to merchants. A processor connects to the merchant on behalf of an acquirer via a gateway or POS system to process payments electronically. Processors edit and format messages and switch to bankcard networks. They provide files for clearing and settlement and other value-added services.
Qualification: Level at which a transaction interchanges. Level of qualification is dependent on how credit card number is entered, how quickly a transaction is settled, the type of industry, specific information, etc.
Receipt: Hard copy description of the transaction that occurred at the point of sale. Minimum information contained on a receipt is date, merchant name and location, account number, type of account used (e.g. Visa, MasterCard, AmEx, etc.), amount, reference number and/or authorization number, and action code.
Receiving Depository Financial Institution: Financial institution that provides depository account services to consumers, employees, and businesses and accepts electronic debits and credits to and from those accounts. Do not use the acronym RDFI.
recurring transaction: Transaction in which a cardholder has given a merchant permission to periodically charge the cardholder’s account.
response code: One-letter code that indicates whether a transaction was approved or declined.
result code: One to three-digit number that indicates the result of a transaction. Approved transactions receive a ‘0’, while there are a variety of codes for declined transactions, which may have failed for a variety of reasons.
retrieval request: Request to a merchant for documentation concerning a transaction, usually initiated by a cardholder dispute or suspicious sale/return. A retrieval request can lead to a chargeback.
return code: Any of the codes returned by PayPal when a transaction is processed.
Sale: Transaction type supported by PayPal that approves a transaction and settles it at the next settlement period.
Secure Sockets Layer: Encryption system that allows merchants to securely process electronic transactions to processors. Okay to use SSL.
Settlement: Process by which transactions with authorization codes are sent to the processor for payment to the merchant. Settlement is a sort of electronic bookkeeping procedure that causes all funds from captured transactions to be routed to the merchant’s acquiring bank for deposit. Payflow automatically submits all captured transactions for settlement on a daily basis. The time that it takes for these funds to reach the merchant account after settlement is 1-5 days, but varies by the merchant’s agreement with their card processing company.
SIC code: Refers to Standard Industry Classification. These codes are four digit numbers used to identify business type.
standard level: Lowest qualification level at which a Visa or MasterCard transaction may interchange. This occurs when a transaction is deposited several days after the original authorization and is not swiped.
Surcharges: Any additional charges to a merchant’s standard processing fees. They are a result of non-qualified transactions of different communications methods.
swiped card: edit card information that is transferred directly as a result of swiping or sliding the credit card through a card reader. Swiped cards are used in retail and other card-present situations. The information magnetically encoded in the magnetic stripe includes secret data that helps validate the card.
Synchronous: method of transmitting data in which the data elements are sent at a specific rate so that start and stop characters are not needed. Used by older modems, American Express PIP terminals, etc. Compare to Asynchronous.
tender type: Form of payment to be used when processing a transaction, such as credit card.
third-party processor: Non-member agent, employed by an acquiring bank, which provides authorization, settlement and merchant services to the bank’s merchant.
Transaction: Action between a cardholder and a merchant that results in activity on the cardholder’s account.
transaction fee: Use price per transaction in website copy. A transaction fee is a per transaction charge incurred by merchants who are on scale pricing. This is in addition to the percentage discount fees.
transaction ID: Reference number that PayPal assigns to every transaction that is processed. It is 12 characters, not necessarily alphanumeric ones.
unsettled transactions: All transactions must be settled before any money changes hands. Payflow automatically settles captured transactions on a daily basis. Please note that authorization transactions are not captured until they are completed by a delayed capture transaction.
Visa: Association of banks that governs the issuing and acquiring of Visa credit card transactions.
voice authorization: Transaction type supported by PayPal where payment information is submitted over the telephone. Sometimes processing networks decline transactions with a referral message indicating that the merchant must call the cardholder’s issuing bank to complete the transaction. If the transaction is approved, the merchant is provided with an authorization code (authcode) for the transaction. This authorization code must then be sent to the Payflow server as part of a voice authorization transaction using PayPal Manager’s Virtual Terminal. In Website Payments Pro this transaction is specified with an “F”.
void: Reversal of an approved transaction, one that has been authorized but not settled. Settled transactions require processing of a credit in order to be reversed. A void does not remove any hold on the customer’s open-to-buy (available credit).