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Glossary of Industry Terms

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                                           PCI Related Terms Technical Terms

CA

(Technical) See Certificate Authority.

Cancellation Code

The code that a lodging or car rental merchant gives to a cardholder. The cancellation code confirms that the cardholder did, indeed, cancel a reservation.

Capture

The submission of a credit card transaction for processing and settlement. POS terminals and real-time processing software capture transactions to submit to merchant account providers or credit card processors. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales.
 
It is possible to authorize and capture transactions in a single interaction in addition to a two-step process.

See also Settlement.

Capture Only

When an authorization code is obtained for a transaction (e.g. voice authorization), a merchant can then capture these funds using the Capture Only method (see Capture), typically in a batch close, but it is possible to do this real-time, depending on processor capabilities.

Card Association

Visa, MasterCard, Discover, Diners Club, AMEX, etc.

Card Issuer

Any association member financial institution, bank, credit union, or company that issues, or causes to be issued, plastic cards to cardholders.

See also Card Issuing Bank.

Card Issuing Bank

An EFT Network Member-Bank that runs a credit card or debit card "purchasing service" for their account holders. An example is CitiBank and the CitiBank Visa Card that they issue.

Card Not Present Transaction

A transaction that occurs when the Card is not present at the point-of-sale, including Internet, mail-order and telephone-order Card sales. Credit card data is manually entered into the terminal, or a web site page, as opposed to swiping a card\'s magnetic stripe through the terminal.

See also Card-Not-Present.

Card Present

A card present scenario indicates a merchant, sales or market environment in which credit card transactions can be completed only if both a valid credit card and its respective cardholder are both physically present during the transaction.

Card Reader

A device capable of reading the magnetic encoding on the back of plastic payment cards(credit, debit, EBT, gift & loyalty, etc.).

See also Magnetic Stripe Reader.

Card Validation Codes

A three-digit value printed in the signature panel of most Cards and a four-digit value printed on the front of an American Express Card. Visa

Card Validation Value or Code

Data element on a card\'s magnetic stripe that uses secure cryptographic process to protect data integrity on the stripe, and reveals any alteration or counterfeiting. Referred to as CAV, CVC, CVV, or CSC depending on payment card brand. The following list provides the terms for each card brand:
 
    • CAV Card Authentication Value (JCB payment cards)
    • CVC Card Validation Code (MasterCard payment cards)
    • CVV Card Verification Value (Visa and Discover payment cards)
    • CSC Card Security Code (American Express)
 
Note: The second type of card validation value or code is the three-digit value printed to the right of the credit card number in the signature panel area on the back of the card. For American Express cards, the code is a four-digit
Un-embossed number printed above the card number on the face of all payment cards. The code is associated with each individual piece of plastic and ties the card account number to the plastic. The following provides an overview:
    • CID Card Identification Number (American Express and Discover payment cards)
    • CAV2 Card Authentication Value 2 (JCB payment cards)
    • CVC2 Card Validation Code 2 (MasterCard payment cards)
    • CVV2 Card Verification Value 2 (Visa payment cards)
 

Card Verification Code

Numeric security code that is printed on the back of MasterCard credit cards. Requiring this number on order checkouts can reduce credit card fraud and chargeback instances significantly when used in addition to AVS protection.

Card Verification Value

The Card Verification Value is the three-digit security code that is printed on the signature panel on the back of a credit card. These numbers provides extra security against unauthorized use during non-face to face transactions. If merchants input the Card Verification Value as part of authorizing a MO/TO transaction, the card issuer will respond that there is a match or no match with what they have on file for this card. By using the Card Verification Value, the merchant is able to make a more informed decision about the validity of the card and the transaction.

Cardholder

A cardholder is an individual, merchant or a corporate individual to whom a credit or debit card is issued. The cardholder is the person or company who opens a credit card account and makes purchases using that respective credit card. A cardholder is eligible to initiate a payment card transaction.

Cardholder Data

(PCI)
Full magnetic stripe or the PAN plus any of the following:
    • Cardholder name
    • Expiration date
    • Service Code
 

Cardholder Data Environment

(PCI)
Area of computer system network that possesses cardholder data or sensitive authentication data and those systems and segments that directly attach or support cardholder processing, storage, or transmission. Adequate network segmentation, which isolates systems that store, process, or transmit cardholder data from those that do not, may reduce the scope of the cardholder data environment and thus the scope of the PCI assessment.

Cardholder Information Security Program

(PCI)
Enforced standards of protecting cardholder information.

Card-Not-Present

The situation in which the seller does not have the possibility to see the buyer as well as the credit card; the result is that information cannot be retrieved from the magnetic strip of the credit card, to verify signature or to look at the hologram. In order to increase the reliability of the payment system, in this case, Address Verification Service is typically used.

See also Card Not Present Transaction.

Card-Swiped Transaction

A transaction where a card is read by a magnetic stripe card reader.

Card-Unblocking

The action of unblocking the credit card. This typically occurs in private label or merchant-specific transaction processing where specific cards are blocked from processing – this action unblocks them and allows transactions to be processed against that card.

Cash Benefits

An EBT account maintained by an Issuer that represents prefunded or day-of-draw benefits, or both, administered by one or more Government entities, and for which the Issuer has agreed to provide access under the EBT program. Multiple benefits may be combined in a single cash benefit account.

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.

Cash Flow

The difference of the merchants incoming and outgoing money.

Cash Over Transaction/Cash Back Transaction

Dispensing of cash by a merchant in connection with a Card sale, other than a PIN Debit Card transaction, for the purchase of goods or services.

Center for Internet Security

Non-progit enterprise with mission to help organizations reduce the risk of business and e-commerce disruptions resulting from inadequate technical security controls.

Certificate

(Technical)
A digital identifier linking an entity and a trusted third party able to confirm the entity’s identity

Certificate Authority

(Technical)
A trusted entity issuing certificates confirming the identity of, or given facts associated with, the certificate’s subject. It generally provides, and then confirms, digitally signs public keys sent to it by a web browser or by the merchant\'s server software. It issues and validates digital certificates associated with SET and other secured transactions.

Charge Off

A Charge-off or write-off is a situation in which a credit card issuing institution is faced with a delinquent loan of such severity that it must temporarily or permanently absorb the entire amount of the debt in order to clear that amount from its records.

Chargeback

A transaction returned by an issuing bank to an acquiring bank. A chargeback is the result of an action taken by a cardholder who disputes a credit card transaction through their credit card issuer. The card issuer initiates a chargeback against the merchant’s account. The sale amount of the disputed transaction is immediately debited from the merchant’s bank account. Merchants have 10 days in which to dispute the chargeback. This may be accomplished by providing the card issuing bank with a proof of purchase by the cardholder. This could be a signature or proof of delivery. A chargeback fee is generally assessed to the merchant account by the merchant bank for the handling of this process.
 
Chargebacks can occur for a number of reasons, including: customer disputes, potential or actual fraud (on the part of merchants, sales associates and/or customers), processing errors and authorization issues. Chargebacks are governed by a complex set of rules and time limits that can be costly to merchants and their banks if disregarded.
 
Cardholder disputes are typically the result of one of the following:
    • Non fulfillment of product or Service
    • Un-authorized purchase
    • Product/service expectations not met
 
Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.
 
When a chargeback is generated, the issuing and acquiring banks must research the facts to determine which party is responsible for the transaction.
 
Also known as a "Debit Memo," a chargeback is a reversal of a sales transaction. So if you deposited a $50 transaction in your merchant bank account, a chargeback for that transaction means that the $50 has now been debited from your merchant account.
 

See also Chargeback Defense.

See also Retrieval Request.

Chargeback Defense

A customer who does not receive his goods or services, or says he did not place an order, can ask his issuing bank to charge back the merchant. The Issuing Bank sends the chargeback request to the merchant bank, which forwards it to the merchant asking to validate the charge. Information such as the amount, an invoice or folio, customer signature, or shipping documents, and the shipping address (used in AVS during the authorization) are needed to defend against a chargeback.

See also Chargeback.

See also Retrieval Request.

Chargeback Period

The length of time during which a card issuer can charge a transaction back to the merchant. The issuer can initiate a chargeback within 180 days after the transaction is settled.

See also Chargeback.

Chargeback Reason Code

A two-digit number, through which the reason of the chargeback is indicated.

See also Chargeback.

Check

A negotiable demand draft drawn on a bank, a Federal Reserve Bank, the Treasury of the U.S., a state government, or other financial institution.

Check 21

Officially known as the Check Clearing for the 21st Century Act, this law promotes the concept of electronic check
imaging and check truncation by overriding past laws that demanded the retention of original paper checks by banks and their customers for reasons such as the settlement of legal claims. Check 21 became effective Oct. 28, 2004.

Check Authorization

Validating a checks routing and account to confirm a check writer and his/her account is in good standing.

Check Conversion

A check protection service by which a merchant scans a check image and converts it into an electronic transaction, similar to a PIN-based debit, for which the merchant is paid immediately. Check conversion requires a check imager peripheral.

Check Debit

The process of converting a paper check into an electronic transaction in order to debit funds from a check writer\'s account to the merchant\'s account.
 

Check Guarantee

A service (commonly offered to merchants) guaranteeing that a check writer has sufficient funds on his deposit to cover the payment.  It is a service that guarantees the merchant will  receive payment for a check, even in the event of insufficient funds.  Check guarantee requires a check reader periperal.

Check Safekeeping

When a financial institution keeps an account holder\'s checks, sending them an image of the check instead.

Check Verification

A service provided in which a merchant accesses a national negative file dattabase through its terminal/register to verify or authorize that a person has no outstanding bad check complaints at any of the member merchants.  This is not a guarantee of payment to the merchant.

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.

Clearing House

The organization that collects, sorts, and distributes information in order to settle a transaction.  This is  typically associated with ACH transactions.

See also Automated Clearing House (ACH).

Client

The party typically identified as "Client" on a merchant Application.

(Technical)
As in Client-Server interactions. Refers to a computer that is a requestor of interactions with another computer that acts as the server of those requests. Using a computer on the web illustrates the client-server interaction. The web browser communicates with a web server to return requested information to the user operating the web browser on their computer. The user’s computer is the client and the web server is the server.
 

Close Batch

The act of submitting a batch of transactions for settlement.
 

See also Batch Close.

Cobranded Card

 A credit card issued jointly by a member bank and a merchant, bearing the "brand" of both.
 

Code 10 Authorization

This is a voice authorization code that is used when a merchant suspects a card is stolen or fake, or when a customer is acting suspiciously. When a merchant suspects that a credit card is stolen or fake, they call their voice authorization number and request a Code 10. The operator gives the merchant instructions on how to proceed without alarming the customer.
 

Collateral

Property that is provided to secure a loan or other credit and that becomes subject to seizure upon default.

Commerce Server

Web server that contains the software that is necessary for processing customer orders via the Web, including shopping cart programs, dynamic inventory databases, and online payment systems. Commerce servers are usually

Commerce Service Provider

Supplies the system and services to establish the back-office infrastructure for businesses. Major aspects include: the processing of secure transactions, the developing and managing of customer relationships, the collecting of payment, and the delivering of products or services over the Web. A CSP may provide the following services: buyer authentication, order taking, details of what is for sale in an electronic offer, validation, payment processing (via traditional credit card payment processors), and generation of electronic receipts. Fulfillment may be made of electronic goods or physical goods.
 

Commercial Cards

A general name for cards typically issued for business use and may include Corporate Cards, Purchase Cards, Business Cards, Travel & Entertainment Cards and Fleet cards. Visa and MasterCard now have special procedures for passing billing information back to the card issuing bank so that it can be displayed on card holder statements; this is a program for promoting the use of credit cards for business purchases by providing purchase tracking to business users. New regulations require that this billing information be passed back with the transactions, otherwise a higher pass through fee will be incurred. In some cases, merchants are asked to input additional data as part of the accepting these cards, such as entering the sales tax amount and/or a purchase order number.
 

Commercial Credit

This is short-term credit that a seller gives to a buyer to pay for a service or product.
 

Communication Cost

This is the charge to a merchant for transferring the information pertaining to a transaction from the merchant’s environment to the processor’s environment. This cost may vary, according to the method used for conveying the transaction. Forms may be dialup, private networks (such as frame relay and VPN over the internet), wireless, and http over the Internet to mention a few. Dial-up is the most costly form of communication due to the costs of maintaining toll-free phone circuits and modems directly, or via specialized providers. The private line offers faster communication speed for the transactions, especially for the authorization, but carries with it a monthly fee which is normally passed on to the merchant. Less expensive than the Dial-up and private line methods of communication is utilizing the Internet. Depending on the mechanism used, this may contain a small charge (for a VPN, for instance), or no additional cost at all.
 
In cases where there is a monthly charge, the Discount Rate should not contain the charge for the communication. If there is no separate charge on the Merchant Statement for communication, the Discount Rate may contain a communication component. Merchant Service Providers often bury communication costs into their rates to pass them on to their Merchants or they may appear on the customer’s statement as 950, 800 or WATS fees. If the Merchant statement doesn’t reflect communication costs directly then the costs are most likely bundled in the Discount Rate.
 

Compensating Controls

(PCI)
Compensating controls may be considered when an entity cannot meet a requirement explicitly as stated, due to legitimate technical or documented business constraints but has sufficiently mitigated the risk associated with the requirement through implementation of other controls. Compensating controls must 1) meet the intent and rigor of the original stated PCI DSS requirement; 2) repel a compromise attempt with similar force; 3) be "above and beyond" other PCI DSS requirements (not simply in compliance with other PCI DSS requirements); and 4) be commensurate with the additional risk imposed by not adhering to the PCI DSS requirement
 

Composite Receivers File

A directory of all RDFIs served by an ACH operator.

Compromise

(PCI)
Intrusion into computer system where unauthorized disclosure, modification, or destruction of cardholder data is suspected.
 

Confirmation Letter

An electronic letter sent to the Merchant from the Processor containing information regarding the processed data files. It can be used to verify batch deposits.
 

Console

(PCI) (Technical)
Screen and keyboard which permits access and control of the server or mainframe computer in a networked environment.
 

Consumer

The person who purchases a merchants goods and services with payment methods like cash, checks, or credit and debit cards.
 

Consumer Account

The deposit account held by a consumer for personal use.
 

Contingent Liability

This is the term used by underwriters and sales people to identify a situation that is created when merchants process transactions in advance of the date cardholders can expect to receive the goods or services they purchased. Travel agencies pose a contingent liability risk. Similarly, all MOTO merchants pose contingent liability risks to the bank.
 

Controlled Disbursement

A bank service that notifies a company of funds waiting to clear on a given day. The company then funds the account with the correct dollar amount in order to clear the funds.
 

Conversion

The process that converts a paper check into an electronic debit or credit payment to the merchant.

Cookie

(PCI) (Technical)
A small amount of information stored on a client computer by a Web site that is sent back to the site each time the user visits it. The use of cookies to maintain persistent, client-side state information significantly extends the capabilities of Web-based client/server applications. Cookies allow Web sites to "personalize" their appearance by identifying visitors, storing passwords, tracking preferences, and other possibilities.
 

Corporate Card

A bankcard issued to companies for use by company employees for business-related expenses such as travel and entertainment. The liability for abuse of the card typically rests with the company and not with the employee.
 
 

See also Travel and Entertainment Cards.

Corporate Resolution

A corporate resolution is a recorded formal process adopted by a majority of a company’s Board of Directors authorizing the company’s officers or management team to undertake actions on behalf of the entire company. This may be used by a corporation to designate an individual(s) as a signer(s) on behalf of the company. A merchant application may need to have a corporate resolution to identify appropriate signers of the agreement.
 
 

Credit

The process of refunding the amount, or part of the amount, of a transaction back to a customer. It could be a return/refund or price adjustment given for a previous purchase transaction. Credit transactions appear on the cardholder\'s statement.
 

Credit Bureau

An organization, such as Experian or Equifax, that gathers information about a consumer or merchants finances. This information is then sold to businesses and lenders in order to approve loans and sales to that consumer or merchant.
 

Credit Card

A credit card is a thin plastic card, roughly three by two inches in size, which is used by consumers and companies to make purchases. A valid Card bearing the service mark of bank associations and credit extending organizations  such as Visa, MasterCard or American Express, Discover, etc. The credit card holder must then reimburse the credit card company for the amount of the total sales the holder had charged on that particular credit card. The cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.

Credit Card Fraud

Credit card fraud occurs when anyone uses another person’s credit card as a source of illegal funds.

Credit Card Number

Unique number assigned to credit card. The first six Digits contain the bank identification number (BIN) and identifies the card brand/bank that issued the card.
 

See also Bank Identification Number (BIN).

Credit Card Processing

Credit card processing is a complex series of electronic events that accomplishes the secure, successful transfer of funds from a bank to a merchant in payment for goods and services purchased by a valid credit card holder.
 

See also Third Party Processor.

Credit Card Processor

Credit card processors are businesses, including but not limited to chartered financial institutions, that give merchants the ability to accept debit and credit card payments for goods and services. The processor may be an agent of a financial institution or may be the institution itself. The processor may be processing on behalf of the acquiring bank, the issuing bank, or both. See also Third Party Processor. A third party processor is a type of credit card processor that specifically acts as an agent for an acquiring or issuing bank rather than being an institution itself.
 
 

Credit Card Terminal

A credit card terminal is a real or virtual business device that allows merchants to process cardholder payments.
 

Credit Draft

A document evidencing the return of merchandise by a Cardholder to a Client, or other refund made by the Client to the Cardholder.
 

Credit Limit

The credit line set by the Card Issuer for the Cardholder’s account.
 

Credit Rating

A rating based on a consumer or merchant’s history of re-paying loans. A credit rating is used to determine a consumer or merchant’s chance of getting a future loan.
 

Credit Report

A credit report is a complete history of financial transactions conducted by an individual, a business or even a country over a fixed period of time. A credit report may be ordered for every signing principal on a merchant application, and is used by under-writers to make approval decisions.
 

CRL

(Technical)
A certificate revocation list ­ a database of certificates no longer valid within a given security infrastructure.
 

Cross-site scripting

(PCI) (Technical)
Type of security vulnerability typically found in web applications. Can be used by an attacker to gain elevated privilege to sensitive page content, session cookies, and variety of other objects
 

Cryptographic Key

(Technical)
A mathematical term or other parameter used to define how a given algorithm will transform data into ciphertext.

Cryptography

(PCI) (Technical)
The art or science of transforming clear, meaningful information into an enciphered, unintelligible form using an algorithm and a key. It is a discipline of mathematics and computer science concerned with information security and related issues, particularly encryption and authentication and such applications as access control. In computer and network security, a tool for access control and information confidentiality
 

Currency

The currency code of USD for U.S. dollars, but transactions may be conducted in many different currencies supported by various issuing banks in regions of the world, such as the Euro and Yen.
 

Currency Conversion

A process where the currency involved in the transaction is then 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.

Custom Payment Service

Visa\'s regulations for the information that must be submitted with each transaction. Transactions must meet CPS criteria in order to qualify for lowest transaction processing fees available. Similar to MasterCard\'s Merit system.
 

Customer

End customer (buyer or consumer) interacting with a merchant to purchase goods or services.

Customer Activated Terminal

A magnetic stripe terminal or chipreading device (such as an automatic dispensing machine, Limited Amount Terminal, or Self-Service Terminal) that is not an ATM.
 

Customer Code

A unique identification of the customer used with Purchase Card transactions. The code is typically defined by the customer (cardholder) and used for accounting or project tracking purposes.
 

Customer Satisfaction

Satisfying consumers through quality products or good employee consumer relations.
 

Customer Service Provider

A company that provides Electronic bill presentment and payment (EBPP) services.
 

CVV2

See Card Verification Value.

CVV2 is a three-digit security code that is printed on the back of most credit cards. The CVV2 program is designed to reduce fraud in the card-not-present environment by validating that a genuine Visa/MasterCard credit card is being used during a transaction.
 

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or click below to send an email to us at: information@pesystemscorp.com
 
I would highly recommend PE Systems to organizations exploring opportunities to better manage the costs of their credit card program.
University of Texas, Austin

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The University of Texas at Austin
 
The University of Texas at Austin
PO Box 8179
Austin, TX 78713-8179
 
To Whom It May Concern:
 
Profit Enhancement Systems (PE Systems) has completed an analysis of the administrative cost of The University of Texas at Austin’s credit card program.  Throughout the term of their engagement, the PE Systems personnel were professional, courteous, and required minimal assistance from the university staff beyond collecting the base data to be analyzed.  The work has been performed by PE Systems on a successful efforts basis; whereby PE Systems would have been compensated from realized savings as a result of their recommendations.
 
PE Systems’ work product was found to be complete, insightful, and  was presented in a fashion that could easily be understood by individuals with little background in the economics of credit card processing.  Due to major changes underway with respect to the credit card acceptance policy by the University, the savings opportunities identified by PE Systems were not implemented.  Had the University continued with the credit card program as structured at the time PE Systems made their analysis, we almost certainly would have implemented a number of their findings and recommendations.
 
I would highly recommend PE Systems to organizations exploring opportunities to better manage the costs of their credit card program.
 
Sincerely,
 
 
 
Kevin P. Hegarty
Vice President and Chief Financial Officer
 






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