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Glossary of Industry Terms

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                                           PCI Related Terms Technical Terms

Real-Time Processing

In credit card processing, it is the verification and processing of credit card transactions immediately following (or actually a part of) a purchase as opposed to a batch authorization which takes place at a later time (after the purchase is completed and interaction with the consumer is now longer possible is they walked out with the merchandise). Real-time verification on the Web usually takes less than a minute – typically in the 5-30 second range. Real-time verification is especially important for websites that sell products and services that consumers expect immediately, such as memberships to the site or software downloads.
 

Receipt

A hardcopy (or an emailed or html electronic version) document representing a transaction that took place at the point of sale, with a description that usually includes: date, merchant name/location, truncated primary account number, approval code, amount and reference number. It may also contain a consumer signature.
 

Receiver

Anyone who authorizes credit or debit entries to a transaction account at an RDFI.
 

Receiving Depository Financial Institution

A financial institution which receives ACH entries and provides depository account services to customers.
 

See also Financial Institution.

Reconciliation

An exchange of messages between two institutions (acquirer, card issuer, or their agents) to reach agreement on their financial totals. Also reporting provided to merchants to aid them in reconciling their bank account transaction processing-based deposits to the processing statement (showing, transaction/batch totals, fees, and net deposits).
 

Recurring billing

Transactions for which a cardholder grants permission to the Merchant to periodically charge his account number for recurring goods or services.
 

Recurring fees

Regular, usually monthly, charges for maintaining a merchant account. Recurring fees include the discount rate, transaction fees, statement fee, and monthly minimum.
 

Recurring Payment Indicator

A value used to identify transactions for which a consumer provides permission to a merchant to bill the consumer’s Card account at either a predetermined interval or as agreed by the Cardholder for recurring goods or services.
 

Recurring Transaction

Based upon a consumer/merchant agreement, a recurring transaction is a periodic transaction charged against the consumer for goods and services. The period may be agreed to by the consumer and may be monthly, quarterly, annually, or other such period. For example a monthly cable TV payment, insurance payment, etc. where the cardholder has authorized the merchant to charge their account on a predetermined basis.
 
 

Reference Number

A number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.
 

Referral

In credit card authorization processing, this message is received from an Issuer when an attempt for Authorization requires a call to the Voice Authorization Center or Voice Response Unit (VRU).
 

Refund

Create a credit to a cardholder account, usually as a result of a product return or to correct an error.
 

Refund Policy

A deliberate set of plans of action set by merchants regarding refunds to their customers for goods or services received if either is unsatisfied with the transactions that generated said good or service sales.
 

Regulation CC

The Federal Reserve Board’s regulation that mandates the time limit for fund availability on deposited items.
 

Regulation E

The Federal Reserve Board’s regulation that mandates customer rights and obligations regarding electronic fund transfers. It establishes the rights, liabilities, and responsibilities of parties in electronic funds transfers and protects consumers when they use such systems.
 

Regulations

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 is effective Oct. 28, 2004.
 
FTC Act: Passed in 1914, this law created the Federal Trade Commission (FTC) and vested in the commission responsibility for "protecting trade and commerce against unlawful restraints and monopolies" and protecting the public against unfair business practices.
 
Regulation CC: Implements a 1987 law known as the Expedited Funds Availability Act and addresses availability and hold policies related to check deposits.
 
Regulation E: A federal regulation spelling out the rights of consumers using electronic funds transfer (EFT) products and services as well as the responsibilities of organizations providing those services.
 
Regulation Z (see Truth In Lending Act)
 
Truth in Lending Act: One of several consumer protection statutes enforced by the FTC, the Federal Reserve and other federal financial services regulatory agencies. This particular law addresses meaningful disclosure of credit terms and prescribes uniform methods for computing the cost of credit, for disclosing credit terms, and for resolving errors on certain types of credit accounts. This federal regulation governs all aspects concerning credit cards. It pertains to the issuer and cardholder, as well as any organization involved in the processing of credit cards.
 
USA PATRIOT Act: An omnibus bill passed in the aftermath of Sept. 11, 2001, the Patriot Act has consequences for most businesses. In the merchant acquiring business the implications arise primarily from the potential for money laundering and related terrorist activities. Officially, the law is known as the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terror Act.
 
 

Re-keying

(PCI) (Technical)
Process of changing cryptographic keys to limit amount of data to be encrypted with the same key
 

Remote authentication and dial-In user service

(PCI) (Technical)
Authentication and accounting system. Checks if information such as username and password that is passed to the RADIUS server is correct, and then authorizes access to the system.
 

Replacement Authorization

An authorization used when a previous authorization was approved and a subsequent authorization is required because the amount of the transaction is now different from the originally approved amount.
 

See also Authorization.

Representment

A financial transaction originated by an merchant to recover funds charged back by a card issuer.
 

Request

(Technical)
A message where the sender (also called the client) conveys information to a receiver (also called the server of the request), asking that a service be performed. A response is sent back to the sender, confirming that the request has been completed. The response may also be the information requested.
 

Request Auth

Submits a transaction for Authorization Only. (See Authorization)
 

Reserve

Reserve, which is also known as Rolling Reserve or even as Hold Back, is an amount of money that is literally held in reserve by the merchant account provider to cover potential customer dispute charges, related chargeback fees and other types of expenses. See Reserve Account
 

Reserve Account

An account some merchants must obtain from a processors sponsoring bank in order to lower the risks of processing merchant transactions. One method Processors use to mitigate risk is to require that merchants maintain a Reserve Account at the Processor\'s Sponsoring Bank. This allows the Processor to issue a Hold on funds in this account when fraud has been detected or an excessively large number of returns is received. Merchants with good credit and history can usually meet the expectations of Processors for covering returns and so are not always required to keep a reserve account. In cases where a reserve is required, the minimum-reserve-balance in the account is set at about 20% of the anticipated processing volume. New merchants are usually allowed to build up their reserve by sending in transactions which are not withdrawn until the minimum reserve balance is achieved; after that, the merchant is allowed to withdraw the excess funds for transfer to their banking account.
 
Also referred to as a reserve. This is a fee held back from a merchant\'s credit card transactions to cover any possible charge backs, and other disputed charges that a merchant may encounter. Usually, after a time, the hold backs are returned to the merchant.
 
The reserve (holdback) is sometimes a fixed percentage of a merchant’s total dollar volume not delivered to his account but held by the credit card processing bank to cover any future unforeseen catastrophic losses. A holdback percentage is sometimes levied on new merchant account applications if the applicant does not have sufficient credit history or assets to qualify.
 
 

Residual

An amount paid to a sales person on a monthly basis as part of sales commission. This is normally a percentage of the merchants fees.

Response Code

The coded that indicates a transactions approval or decline. The actual codes and meanings vary by processor.
 
 

See also Result Code.

Resubmission

A transaction that the merchant originally processed as a Store and Forward transaction but received a soft denial from the respective debit network or Association. The resubmission transaction allows the merchant to attempt to obtain an approval for the soft denial, in which case you assume the risk should the transaction fail.
 

Result Code

The digits indicating the result of a transaction, from 0 for approved transactions to a variety of codes for declined transactions.
 

Retail Customer

A consumer who pays for a good or service at a retail point-of-sale.
 

See also Business Type.

Retail Merchant

A merchant that provides goods and/or services in the retail industry, but is not a mail/phone merchant, a recurring services merchant, or a T&E merchant.
 

See also Business Type.

Retrieval Request

  A “retrieval request” is a request made to a merchant for either a legible copy of a sales transaction record or an original sales record (sales draft). Usually it comes from an issuing bank, when the holder of the card disputes a transaction seen on their statement.
 
The card issuer initiates a retrieval request, in which the merchant has 10 days to respond with the order information or the retrieval request will turn into a chargeback. There is usually a retrieval request fee issued against the merchant also in these cases.
 

Return Processing

Process of returning and settling funds for checks that were not honored by the RDFI and returned to the ODFI.
 

Reversal

A transaction from the acquirer to the card issuer informing the card issuer that the previously initiated transaction cannot be processed as instructed, i.e., is undeliverable, unprocessed or cancelled by the receiver.
 

Rewards Cards

Use of a Rewards Card offers something back to the consumer whether it be POINTS, MILES, GIFTS, and OR EVEN CASH. The majority of the cards being issued today are Rewards Cards. The funding of the rewards provided to the consumer basically comes from fees paid by the merchant.
 

Risk Analysis

(PCI)
Process that systematically identifies valuable system resources and threats; quantifies loss exposures (that is, loss potential) based on estimated frequencies and costs of occurrence; and (optionally) recommends how to allocate resources to countermeasures so as to minimize total exposure. Risk assessment
 

Rolling Reserve

See Reserve.

A portion of the revenue from a merchant\'s credit card transactions, held in reserve by the merchant account provider to cover possible disputed charges, chargeback fees, and other expenses. After a predetermined time, holdbacks are turned over to the merchant. Note: Merchant account providers almost never pay interest on holdbacks
 

Router

(PCI) (Technical)
Hardware or software that connects two or more networks. Functions as sorter and interpreter by looking at addresses and passing bits of information to proper destinations. Software routers are sometimes referred to as gateways.
 

Routing/Transit Number

The 9-digit number which identifies a financial institution.
 

RSA

Algorithm for public-key encryption described in 1977 by Ron Rivest, Adi Shamir, and Len Adleman at Massachusetts Institute of Technology (MIT); letters RSA are the initials of their surnames
 

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Although we suspected certain overcharge situations, we have to admit we were shocked at the sheer volume of mistakes that had been occurring on our processors end.
Palm Beach Community College

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Palm Beach Community College
Office of the Controller
4200 Congress Avenue
Lake Worth, FL  33461-4796
 
To Whom It May Concern:
 
We are writing to share the experience that we at Palm Beach Community College have had with PE Systems Corp.  We contracted with PE Systems to confirm that the fees we were paying in order to accept credit cards were at levels they should be.
 
As a very large and busy community college, time is a precious commodity and we were glad to find a valuable service that would handle this kind of complex task for us.
 
We initially provided PES with the last twelve months of our credit card processing statements and they stated that they would come back to us in 2 – 4 weeks with their results.
 
We have been extremely satisfied with the savings they found for us.  Although we suspected certain overcharge situations, we have to admit we were shocked at the sheer volume of mistakes that had been occurring on our processors end.  These were all situations that were not easily visible by looking at the information with which we were provided.  It took someone who knew what they were looking for and who also had the time and the resources to drill down into the intricate details that affected the fees we were paying to help correct our billing situations.
 
Not only did PE systems find and correct the situations that were causing us to lose money, they also took the time to educate us so that in the future we knew exactly what to look for if there were any questions or concerns.  We also greatly appreciate the work that they do every month for our organization, such as dealing with ongoing issues and monitoring the work that they have already done, to insure that everything remains acceptable.  With their help we still find errors and potential overcharge situations that get corrected.
 
We are very satisfied with the service that we have received with PE Systems and recommend the expertise they provide to anyone who would like to save money on the fees that they pay to accept credit cards.
 
Sincerely,
 
 
 
Palm Beach Community College






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