GLOSSARY TERMS

Cancellation Code
A code provided by lodging or car rental merchants to confirm that the cardholder has cancelled a reservation.

Capture
When a card transaction is submitted to the merchant account holder for processing and to verify the availability of funds on a credit card. A capture is merely a verification of funds, and does not actually withdraw funds from the cardholder’s account. This will not occur until the transaction is batched (see Batch).

Card Verification Code (CVC2)
A numeric security code printed on the back of MasterCard credit cards. By requiring this number on online order checkouts, in addition to using AVS protection, merchants can reduce credit card fraud and chargeback instances significantly.

Card Verification Value (CVV2)
A three-digit security number printed on the back of most Visa credit cards. By requesting this number on online order checkouts, in addition to using AVS protection, a merchant can reduce credit card fraud and chargeback instances significantly.

Card-Not-Present (CNP) Transactions
Any credit or debit card transaction processed without the card in hand, such as mail, phone or online purchases.

Cardholder
Any individual or business with an established credit or debit card account. Cardholders are eligible to make payment card transactions.

Cardholder Information Security Program (CISP)
A defined standard of procedure and enforcement intended to protect cardholder information.

Cash Flow
Incoming cash vs. outgoing cash.

Certificate Authority (CA)
A service provided by banks which digitally signs public keys sent by a web browser or by a merchant's server software. The bank issues and validates digital certificates associated with SET transactions.

Charge Back
A credit card charge that has been challenged or refused by the credit card holder. The credit card issuer manages the charge back process, and will require evidence from the business that charged the card that the transaction was authorized and that the product or service was delivered as agreed. If a business cannot provide sufficient evidence, the money will be taken from your account, often with a sizeable fee. Charge backs can be especially difficult to refute when doing card-not-present transactions (see Card-not-present above), where businesses do not have a customer signature to support the charge and may not be able prove that products or services were received. An excessive number of charge backs may result in higher merchant account fees, and in extreme cases, the cancellation of merchant accounts.

Code 10 Authorization
A voice authorization code which can be used when a transaction is suspected to be fraudulent, such as a suspected stolen card, or suspicious customer.

Collateral
Property provided to secure credit or a loan, which may be subject to seizure if the loan goes into default.

Commercial Credit
Short-term credit arrangement provided by a business enabling a customer to pay for a service or product.

Costs
Merchant account costs will vary depending on the bank or merchant account provider you choose, the number of middlemen involved, the type of business you run, as well as the services you require. Setup costs, transaction fees, equipment costs, and other expenses can vary greatly. Look at several options before you apply. And depending on your needs, remember that the least expensive option may not be the best.

Credit Bureau
Companies that gather information about consumer credit histories, including personal information such as identity, payment habits, and public records. These credit reports are then sold to creditors (banks, finance companies, retailers, etc.) who use the credit reports to determine the creditworthiness of a potential customer. Experian, Equifax, and TransUnion are the three major US credit bureaus.

Credit card
A type of bank card widely used as a form of payment. The credit card holder makes a purchase on credit, then reimburses the credit card company for the amount of the purchase plus any interest that may apply.

Credit Card Fee (Discount Rate)
A percentage-based transaction fee charged to merchants by the credit card company. Fees can range from about 1.99% to 2.54%, with an average around 2.40%. American Express has an independent rate, usually around 3%. Fees for card-not-present transactions are typically higher than those for traditional businesses, especially online transactions which are considered high-risk by most banks. The discount rate fee is always taken off the top along with any transaction fees before any money is deposited into your account.

Credit Card Processing Clearinghouse
The actual “processing” of the credit card transaction is usually handled by a Clearinghouse, not by your merchant bank. The Clearinghouse authorizes and validates the card, and ensures that sufficient funds are available.

Credit Rating
A system used by creditors to help determine your creditworthiness, or how likely it is that you will repay a loan. This system utilizes information collected from your credit application and your credit report.