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Glossary

Acquiring Bank

The bank with which you have your merchant account. This bank is a part of the card associations’ networks and has the authority to process transactions for you.

Assessment Fee

A fee charged to the merchant by the card associations each time they process a transaction.

AVS

Address Verification Service. A system that compares the billing address as entered by the customer during checkout to the address on-file with the bank. The results can return as a full match, partial match, or no match.

Card Association

Any of the major credit card labels – Visa, MasterCard, Discover, and American Express.

Glossary | High-Risk Merchants | E-Commerce 4 IMCard Identification Number / Card Identifier (CID)

A three-digit (Visa, MasterCard and Discover) or four-digit (American Express) code printed on the credit card that provides an additional layer of security and is often requested during a transaction as proof that you possess the physical credit card. The 3 digit is on the back of the card, the 4 digit on the front of the card.

Card-Not-Present (CNP)

A transaction where the credit card number is typed into the system instead of swiped, usually during the course of an e-commerce transaction where the card is not physically presented to the merchant.

Chargeback

A charge reversal that occurs when the customer successfully disputes the charge as being fraudulent or for an item he never received or which is substantially different than what the merchant advertised.

Chargeback Fee

A fee charged to the merchant on top of the fee reversal each time a chargeback occurs.

Chargeback Reason Code

A short, alpha-numeric code issues with each chargeback that briefly describes the reason for the dispute, such as “fraudulent transaction” or “item not received.”

Chip Card

A credit card that contains data about the cardholder stored on an electronic chip. Also called EMV cards.

CNP

See “Card-Not-Present.”

CVC2

Card Validation Code. A three-digit embossed code on the back of a MasterCard that provides an additional layer of security and is often requested during a CNP transaction to ensure that the customer possesses the physical card.

CVV2

Card Verification Value. A three-digit embossed code on the back of a Visa that provides an additional layer of security and is often requested during a CNP transaction to ensure that the customer possesses the physical card.

E-Commerce

Buying and selling that is performed over the internet, often with the use of credit cards that are typed in by the customer as opposed to being swiped at a point-of-sale terminal.

EMV Card

See “Chip Card”

Fixed Reserves

A set portion of your sales that is held in a non-interest bearing escrow by the merchant bank. Funds are not normally released until the merchant account has been closed for 6 months. It is used as security to cover chargebacks and other related issues, should they occur.

Fraud

A transaction in which someone other than the legitimate card owner makes a purchase or attempts to make a purchase using stolen credit card information.

Friendly Fraud

A type of fraud in which a customer will order an item, then issue a chargeback falsely claiming the item was never received.

High-Risk Industry

A group of industries where the historic rate of chargebacks and/or early business closure with a negative bank balance is higher than average. Some banks may deny these businesses merchant accounts or require high processing fees or rolling reserves.

Interchange Fee

A fee paid to the customer’s issuing bank each time he uses a credit card. This fee reimburses the bank for their cost and risk in extended credit.

Interchange Plus

A flat fee system used by some payment processors that results in a single percentage charge for all transactions, as opposed to a tiered pricing system.

Issuing Bank

A bank that issues a credit or debit card.

Glossary | Credit Card Processing | High-Risk Merchant Accounts | E-Commerce 4 IM

Markup

Fees that are added to interchange and assessment fees by the payment processor. These rate vary by the processor and may be negotiable.

Merchant Account

An account at a bank with whom you have a credit card processing agreement. Funds from your sales will be temporarily placed in your merchant account while the bank processes the transaction, then transferred to your personal bank account, where you can access it.

Payment Gateway

Software that allows you to process credit card payments. It can call up information from the customer’s bank to verify the transaction and forward data to your credit card processor. It may also include to have the option to include additional services such fraud protection.

Payment Processor

The entity that handles the credit card transactions for your merchant bank. The processor approves the transaction and moves the money from the customer’s bank account to your own.

Reserve

A percentage of your sales that is held in a non-interest bearing escrow by the merchant bank before they transfer it to your bank account. It is used as security to cover chargebacks and other related issues, should they occur.

Retrieval Request

A request from a customer’s issuing bank to the merchant asking for proof that the transaction took place and/or that it was the customer that performed the transaction. It often precedes a formal chargeback.

Glossary | E-Commerce 4 IM | High Risk Merchants Online ProcessingRolling Reserves

A percentage of your sales that is held in a non-interest bearing escrow by the merchant bank for specific period of time before they transfer it to your bank account. It is used as security to cover chargebacks and other related issues, should they occur.

Shopping Cart

Software that allows the customer to save items to purchase, select his shipping options and other preferences, then interface with your payment gateway to enter his credit card information and complete the purchase.

Tiered Pricing

A pricing structure used by some payment processors, whereby goods qualify for one or more of a number of different pricing “tiers.”

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