This glossary provides definitions for many of the terms used
in the bankcard industry.
- Account number - A unique sequence of numbers assigned to a cardholder account that identifies the issuer and type of financial transaction card.
- Acquirer - A licensed member that maintains the merchant relationship and acquires the data relating to a transaction from the merchant or card acceptor and submits that data into interchange, either directly or indirectly.
- Authorization - A process defined in operations regulations whereby a transaction is approved by or on behalf of an issuer; commonly understood to be receiving of a sales validation by the merchant, by telephone, or authorization terminal.
- Automated Teller Machine (ATM) - An unattended, magnetic stripe-reading terminal that dispenses cash; accepts deposits and loan payments; enables a bank customer to order transfers among accounts and make account inquiries.
- Bankcard -A debit or credit card issued by a bank or other financial institution, such as a MasterCard® or Maestro card.
- Bank Rate - Also known as "Discount Rate". This is a percentage of each sale that the bank charges as per Visa and MasterCard Rate requirements. All banks are required to have at least 3 rate structures. Face to face retail (usually the lowest rate e.g.. 1.49%). Phone, Mail and Internet rates (usually higher e.g.. 2.24%). And a rate for imprinted or phone authorized rates (highest rate e.g.. 2.62%). It is very important to correctly classify the way you will accept credit cards so that you can achieve the best rate structure
- Cardholder -The customer to whom a card has been issued or the individual authorized to use the card.
- Cash disbursement - A transaction that is posted to a cardholder's MasterCard card account in which the cardholder receives cash at an ATM, or cash or travelers checks at a branch of a member financial institution or at a qualified and approved agent of a member financial institution.
- Clearing - The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position.
- Cobranded card - A credit card issued jointly by a member bank and a merchant, bearing the "brand" of both.
- Corporate card - A bankcard issued to companies for use by company employees. The liability for abuse of the card typically rests with the company and not with the employee.
- Credit card - A plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.
- Currency conversion - The process by which the transaction currency is converted into the currency of settlement or the currency of the issuer for the purpose of facilitating transaction authorization, clearing and settlement reporting. The currency of transaction is determined by the acquirer; the currency of the issuer is the preferred currency used by the issuer, and most often, the currency in which the cardholder will be billed.
- Debit card - A plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the cardholder's asset account is debited by the issuer.
- Electronic Commerce Indicator (ECI) - A system in which the transaction data from an Internet transaction is tagged with this indicator and sent on to Visa or MasterCard. It is a requirement (October 1st, 2000) for all merchants with a majority of sales via the Internet to use an approved and ECI compliant payment gateway. Hand keying of credit card numbers in to standard credit card terminals would not capture and pass on the ECI, therefore this method is not compliant
- Electronic draft capture (EDC) - A system in which the transaction data is captured at the merchant location for processing and storage.
- Electronic funds transfer (EFT) - A paperless transfer of funds initiated from a terminal, computer, telephone instrument, or magnetic tape.
- Emboss - The process of printing identifying data on a bankcard in the form of raised characters.
- Equipment - Most credit card transactions are conducted electronically by using Electronic Draft Capture (see EDC). Typically this is performed by terminal (like the Verifone Tranz 330), Software or via the Internet.
- Imprinter -A device to produce an image of the embossed characters of the bankcard on all copies of sales drafts and credit slips.
- Issuer - The member that enters into a contractual agreement with MasterCard to issue MasterCard® cards.
- Magnetic stripe - The magnetically encoded stripe on the bankcard plastic that contains information pertinent to the cardholder account. The physical and magnetic characteristics of the magnetic stripe are specified in ISO Standards 7810, 7811, and 7813.
- Magnetic stripe reader - A device that reads information recorded on the magnetic stripe of a card. Also known as a card swipe reader.
- Mail Order/Telephone Order (MO/TO) - A transaction initiated by mail or telephone to be debited or credited to a bankcard account.
- Member - An institution that participates in the programs offered by MasterCard International Incorporated.
- Merchant - A retailer, or any other person, firm, or corporation that (pursuant to a merchant agreement) agrees to accept credit cards, debit cards, or both, when properly presented.
- Merchant Account - A specialized bank approved and issued account to process credit card transactions. One of three parts needed to accept credit cards. Other parts required, a local bank checking account (to deposit funds) and a Processing Solution (to access your merchant account).
- Merchant bank - A bank that has entered into an agreement with a merchant to accept deposits generated by bankcard transactions; also called the acquirer or acquiring bank.
- Personal identification number (PIN) - A four-to-twelve character secret code that allows an issuer to positively authenticate the cardholder for the purpose of approving an ATM or terminal transaction occurring at a point-of-interaction device.
- Processing Solution - A device, software or virtual product that allows you to connect to a Merchant Account. With out a processing solution, like a credit card terminal, there would be no way to verify, approve and deposit credit card transactions.
- Purchasing card - Designed to help companies maintain control of purchases while reducing the administrative cost associated with authorizing, tracking, paying, and reconciling those purchases.
- Receipt - A hardcopy document representing a transaction that took place at the point of sale, with a description that usually includes: date, merchant name/location, primary account number, amount and reference number.
- Settlement - The process by which merchant and cardholder banks exchange financial data and value resulting from sales transactions, cash disbursements and merchandise credits.
- Third-party processing - Processing of transactions by parties acting under contract to issuers or acquirers.
- Transaction - Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.
- Transaction date - The date a cardholder effects a card purchase of goods, services, or other things of value, or effects a cash disbursement.