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Glossary of Industry Terms

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                                           PCI Related Terms Technical Terms

Magnetic Ink Character Recognition Line

The characters at the bottom of a paper check that represent the routing number of the customer’s financial institution, the customer’s account number, and the check number. The characters are printed in magnetic ink for check reading by machines.
 

Magnetic Stripe Data

(PCI)
A stripe of magnetic information affixed to the back of a plastic Credit or Debit Card. The Magnetic Stripe contains essential Cardholder and account information that can be read by physical contact (”swiping”) on a hardware device. This same magnetic strip is also found on driver licenses, security passes and even train tickets.
 
Processing entities (merchants, gateways, POS devices, processors, etc.) must not retain full magnetic stripe data subsequent to transaction authorization. Specifically, subsequent to authorization, service codes, discretionary data/ Card Validation Value/Code, and proprietary reserved values must be purged; however, account number, expiration date, name, and service code may be extracted and retained, if needed for business purposes (chargeback processing).
 
The physical and magnetic characteristics of this stripe are specified in the International Organization for Standardization standards 7810, 7811, and 7813.
 

Magnetic Stripe Reader

A device, often a point-of-sale (POS) terminal, that reads information recorded on the magnetic stripe of a card and transmits that information to a transaction processor or computer terminal. Also known as a card swipe reader or card reader.
 

Mail Order/ Telephone Order Discount Rate

The discount rate charged by the merchant account provider for credit card transaction in which the actual credit card was not available to the merchant. MOTO discount rates are generally higher than swipe discount rates to account for the increased chance of fraud or non-payment.
 

Mail Order/Telephone Order

A merchant that transacts business by mail or phone.
 

See also Business Type.

Mail Order/Telephone Order discount rate

The discount rate charged by the merchant account provider for credit card transaction in which the actual credit card was not available to the merchant. MOTO discount rates are generally higher than swipe discount rates to account for the increased chance of fraud or nonpayment.
 

See also Mail Order/Telephone Order.

Mail Order/Telephone Order Transaction

A transaction where a cardholder orders goods or services from a merchant by telephone, mail or other means of telecommunication, and neither the card nor the cardholder is present at the merchant outlet.
 
Credit card transactions initiated via mail, email or telephone. Also known as card-not-present transactions.
 
 

See also Mail Order/Telephone Order.

Malware

(Technical)
Malicious software.
Designed to infiltrate or damage a computer system, without the owner\'s knowledge or consent
 

Manual Close

A batch close that must be initiated by the merchant on a daily basis, as opposed to an auto close at a pre-set time.
 

See also Batch Close.

Manual Entry

The operation of manual entering of the parameters of card with the use of the keyboard of computer or a POS terminal.
 

MasterCard

See Bankcard Association.

MasterCard Worldwide is a multinational corporation headquartered in Purchase, New York, that facilitates transactions between merchants’ banks and purchasers’ banks when its branded credit and debit cards are used for payment. It became a publicly traded company in 2006, but before that MasterCard Worldwide was a “membership organization” owned by the 25,000+ financial institutions issuing its card.
 

MasterCard Acquirer

A member that signs a MasterCard merchant or disburses currency to a MasterCard cardholder in a cash disbursement, and directly or indirectly enters the resulting transaction receipt into interchange.
 

MasterCard Card

A card that bears the MasterCard symbol, enabling a MasterCard cardholder to obtain goods, services, or cash from a MasterCard merchant or an acquirer.
 

Mastercard Issuer

A member that issues MasterCard cards.
 

M-Commerce

A term used to represent wireless e-commerce or the ordering of goods via wireless solutions like cell phone\'s, pocket PC\'s, PDA\'s, etc.
 

Media

The documentation of monetary transactions (i.e., Sales Drafts, Credit Drafts, computer printouts, etc.)
 

Member

An institution that participates in programs offered by MasterCard International Incorporated.
 

Member Alert to Control High-Risk Merchants

MATCH is an electronic bulletin board used to track people and businesses whose merchant processing accounts are reported "terminated" by acquiring banks. Merchants with excessive chargebacks are stripped of their merchant account and the ability to accept credit card orders and placed on the MATCH list. Being placed on this file can keep a merchant from obtaining another merchant account for several years.
 
 

Merchant

Merchants, in payments industry jargon, agree to accept credit cards, debit cards, or both, when properly presented by consumers for the merchant’s goods and/or services. The term “merchant” commonly refers to a person or firm buying goods at a wholesale price level for sale at retail to consumers or other businesses.
 
Also the customer of a processor/acquirer.
 

Merchant Account

A specialized bank account established by a merchant to receive the proceeds of credit card purchases. By establishing a merchant account, the merchant bank agrees to pay the merchant for valid credit card purchases in exchange for the right to collect on the debt owed by the consumer.
 

See also Acquirer.

See also Merchant.

Merchant Account Number

A set of information (normally a number from 9-16 digits) that uniquely identifies each merchant, outlet, or line of business to the Processor for accounting and billing purposes.
 

See also Merchant Identification Number.

Merchant Account Provider

An institution or a third party company that hosts merchant accounts and processes online credit card transactions. The term is also often used broadly to include any credit card processing service, including ISOs. Providers either have their own processing system to process and validate transactions, or they act as resellers of third parties\' processing systems.
 

Merchant Accounting System

A merchant accounting system is a computerized means by which a business that accepts payment cards (credit, debit, gift, etc.)
 

Merchant Accounts

A merchant account is a bank account that is established by a merchant through a bank or other institution that is a member of the major credit card network. It is a bank account used by a merchant to receive the proceeds of credit card purchases. By establishing a merchant account, the merchant/acquiring bank agrees to pay the merchant for valid credit card purchases in exchange for the right to collect on the debt owed by the consumer.
 

Merchant Agreement

A written agreement between a merchant and a bank containing their respective rights, duties, and warranties with respect to acceptance of the bankcard and matters related to the bankcard activity. The merchant agreements vary in regard to the number of parties involved, but often include the Merchant, Processor and Bank contained in the Merchant Application and the Schedules. The agreement typically includes the rates and fees charged the merchant as well as the terms and conditions.
 

Merchant Application

See Merchant Processing Application.

The application executed by Client, Processor and Bank, which is one of the documents comprising the merchant Agreement.
 

See also Merchant Agreement.

See also Merchant Underwriting.

Merchant Cash Advance

Allows a business account holder to borrow true currency against future sales. Unlike a consumer or individual credit card cash advance, in which the amount of cash that is available for such an advance is typically a small percentage of an account holder’s overall credit limit.
 

Merchant Category Code

A four-digit classification code used in the warning bulletin, authorization, clearing, and settlement systems to identify the type of merchant business in various stages of transaction processing.
 

See also Standard Industry Code/Merchant Category Code.

Merchant Depository Account

Demand deposit account established by a merchant with the acquiring bank to receive payment for sales drafts submitted to the bank card plan.
 

Merchant Fees

Sometimes referred to as “interchange fees”, but includes other fees, such as terminal fees, statement fees, monthly minimums, and other charges.
 

Merchant Identification Card

Used with a manual printer as a backup system when power fails or when systems are down this is a metal embossed Card supplied to each merchant to be used for imprinting information to be submitted with each Batch of paper Sales Drafts. Embossed data includes Merchant Account Number, name and sometimes merchant identification code and terminal number.
 

Merchant Identification Number

A merchant identification number (MID) is a unique number assigned to a merchant account by a financial institution or processor to identify it throughout the course of processing activities.
Also sometimes called the merchant number.
 

Merchant Processing

The settlement of electronic payment transactions for merchants. It is a separate and distinct business line from credit card issuing. Merchant processing involves gathering sales information from the merchant, collecting funds from the issuing bank, and payment to the merchant.
 

Merchant Processing Application

An application required by acquiring institutions for new merchants. The application is used in the underwriting process to ensure that the merchant was not previously a fraudulent merchant and to identify the amount of risk to associate with the merchant.
 

See also Merchant Underwriting.

Merchant Service Provider

A company that is registered with card associations to represent a financial institution for the purpose providing processing services to merchants. Many MSPs provide merchant accounts, while others require their clients to establish merchant accounts on their own. Some MSPs claim that they do not require merchant accounts; this may indicate factoring, which is illegal in many areas.
 

Merchant Underwriting

Merchant underwriting & approval policy helps control credit risk. The policy is effective in designating and targeting merchants who meet the acquiring banks processing criteria. The policy also acts as a an agreement between the third party billing agent & the acquiring banks as to what information is needed from the merchants to measure the merchant against the acquiring desired list of criteria. The policy also outlines and lists what information is needed from the merchant, for the merchant’s agreement.
 

See also Merchant Agreement.

See also Merchant Application.

Merit

MasterCard\'s requirements for obtaining favorable interchange rates. Similar to CPS requirements by Visa.
 

Micro payment

A very small sum, possibly, can be lower than a cent.
 

See also Micropayments.

Micropayments

The payment acceptance method used by merchants who offer products, services, or information for a few cents to a few dollars. Processing these small payments with a merchant account would significantly reduce the amount of profit you would gain from the sale.
 

See also Micro payment.

Mid-Qualified

A Mid-Qualified Rate, also called a partially qualified rate, is the percentage rate that merchants are charged whenever they accept credit cards that do not qualify for the lowest rate (Qualified Rate).
 

See also Qualified Discount Rate.

Mobile Commerce

The acceptance method has been around for a few years, but is just really starting to make a large impact on how we do business away from our offices. mCommerce first started with the use of wireless POS (Point Of Sale) swipe terminals and has since then made its way into cellular phones and PDA\'s (Personal Digital Assistants). Wireless POS swipe terminals are much more expensive (usually around $700 and up) then regular "wired" terminals which require you to be nearby a phone jack and electrical outlet in order to operate. As a result, this has caused many people to find alternative ways to process transactions.
 

Monitoring

(PCI)
Use of system that constantly oversees a computer network including for slow or failing systems and that notifies the user in case of outages or other alarms
 

Monthly Discount

The process of deducting the processing fees once a month from the merchant\'s settlement account. The monthly discount method of billing makes reconciliation very easy for the merchant compared with daily discount billing
 

Monthly Minimum

The specific dollar figure in processing fees that must be generated by a merchant account in a particular month usually in the $25 range. If the current months in Discount Rate fees do not exceed the monthly minimum the merchant account holder must make up the difference.
 

Monthly Statement

A Monthly Statement is a printed document and/or an electronic equivalent, displayed on- or off-line, that identifies exactly what fees and charges a merchant pays to a merchant service provider for the use of a merchant bank account.
 

Monthly Volume

The maximum monthly dollar volume that a merchant is approved to process for all Visa and MasterCard sales transactions. The MV is important for underwriter consideration of the file and also helps to determine what type of documentation will be required with the file. (American Ex-press, Discover or any other card processing volume is never included in the calculated monthly volume.)
 

Multiple Transaction Processing

Electronic communications process where multiple authorization requests and responses are exchanged during a single phone connection with the third-party transaction processor.
 

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