ACH: An electronic credit or debit to a bank account that routes via the federal reserve, typically taking 24-48 hours to process. Most “direct debit” or “echeck” or “online bill pay” services are driven by ACH.
Approval Code: Also known as an Authorization Code, a code issued by a credit card’s issuing bank which references a temporary guarantee of funds for a requested dollar amount on a customer’s credit card. This code serves as proof of the authorization and can be used to capture the authorization so the money settles and deposits to the bank account of the business that processed the transaction.
Avoidable Downgrade: A downgrade that occurs due to circumstances that are completely within the control of the business, app, or system submitting the transaction and is therefore correctable avoidable.
AVS: An acronym for Address Verification System, most commonly encountered when a customer's billing zip code is required and must match the billing address of their credit card in order for the transaction to approve.
Batch: A set of authorized transactions submitted to a processor for settlement so the authorizations can be settled. During settlement, actual money processes from the customer's card and deposits into the business bank account. The act of submitting a batch is called Batching or Settling.
Best Qualified: A transaction that settled as Best Qualified is one that has achieved the lowest and best processing rate available for the specific circumstances of the transaction.
Card Not Present: A transaction occurring in a scenario where the cardholder and business are in two different places and the business does not have the card in their hand. This is typically when the card number is provided over the phone, mail, or internet.
Card Present: A transaction occurring in a scenario where the card is present and the business representative is face-to-face with the customer. The majority of the time this means the transaction is swiped, though if the swipe is failing it may be keyed in.
Card Verification Code: A 3-4 digit security code on credit and debit cards often requested when transactions are done over the phone or online for added protection against fraud. This number is prohibited from being stored in any fashion by anybody after the transaction is submitted.
Chargeback: A formal dispute of the validity of a transaction initiated by the cardholder or the cardholder’s issuing bank, which must be argued by the business to avoid the transaction being reversed and funds forcibly refunded to the customer.
CVC: Abbreviation for Card Verification Code.
CVC2: Abbreviation for Card Verification Code used by Mastercard.
CVV2: Abbreviation for Card Verification Code used by Visa.
Interchange: A universal system of categories with assigned rates, typically a discount rate and a transaction fee. Every transaction processed in the US falls into an interchange category and incurs interchange fees, which comprise the majority of the expense of processing a transaction.
Issuing Bank: The bank that issues a credit card, typically branded on the front of a card. Examples include Capital One, Bank of America, Wells Fargo, Citibank, etc. These banks issue credit cards to consumers.
PCI: Abbreviation for Payment Card Industry referring to the PCI Security Standards Council, an industry organization established jointly by the card brands to establish and maintain a set of security standards for credit card processing, software, and hardware. This term used by itself may also refer to the PCI-DSS, the most common standard which all card-accepting businesses must follow.
PCI Compliance: Being “PCI Compliant” means that a business has validated that they are operating within the guidelines of the PCI-DSS. This is not a guarantee that they can never be hacked or experience fraud, theft, or a breach, but it goes a long way to reducing their risk.
PCI-DSS: PCI Data Security Standard. A universal baseline of rules and guidelines that all merchants in America are supposed to abide by in their business operations to minimize the risk of card data breaches.
Processor: A system, or collection of systems, which interface with Banks, Visa, Mastercard, Discover, and American Express to actually process transactions, execute authorization, calculate fees, and transfer funds related to sales and refunds.
Shopping Cart: A piece of software or website code that drives the ecommerce purchasing process so online consumers can add items to a virtual cart and checkout.
Terminal: A small dedicated electronic device built for the purpose of swiping cards, communicating with the processor, processing a transaction, and printing a receipt to complete a sale.
Transaction Approval: A successful message provided by the card issuer when a transaction authorization is attempted, meaning that the transaction and its amount was approved and the money owed to the business has now been reserved for them from the customer’s card.
Transaction Authorization: An attempt to get an approval on a transaction, can sometimes result in a decline.
Transaction Decline: An unsuccessful message provided by the card issuer when a transaction authorization is attempted, meaning the transaction was not approved and has failed. Typically, this is due to insufficient funds, invalid card number, or that there are signs of potential fraud in the transaction.
Transaction Settlement: An approved authorization that has been captured for deposit into the merchant’s bank account.
Truncation: The act of safely obscuring a number so only a few digits are displayed that pose no risk of data theft, i.e. instead of showing a card number as 4111-1111-1111-1111 it can be truncated to 4***-****-****-1111