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Glossary of Industry Terms

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                                           PCI Related Terms Technical Terms

Tamper-resistance

(PCI) (Technical)
System that is difficult to modify or subvert, even for an assailant with physical access to the system
 

Tax Identification Number

A state department number issued to businesses so they can buy items at wholesale without paying sales tax.
 

See also Federal Tax ID Number.

T-Commerce

The ability to order certain products and/or services right directly from your television. Still a very new concept that is being tested in Europe.
 

TCP

(PCI) (Technical) See Transmission Control Protocol.

TCP/IP

(PCI) (Technical) See Transmission Control Protocol.

TDES

(PCI) (Technical) See Triple Data Encryption Standard.

Telecommunication Card Sale

Individual local or long-distance telephone calls, for which the telephone service provider is paid directly by use of a Card. These do not include, however, calls paid for with pre-paid telephone service cards. Telecommunication Card Sales are considered Card Not Present sales.
 

Telephone Network Protocol

(PCI) (Technical)
Typically used to provide user-oriented command line login sessions between hosts on the internet. Program originally designed to emulate a single terminal attached to the other computer
 

TELNET

(PCI) (Technical) See Telephone Network Protocol.

Tender Type

The type of payment used in a transaction like credit card, check, currency, ACH, etc.
 

Terminal

A credit card machine used for accepting credit cards, debit cards, check processing, gift and loyalty cards, and other electronic payments.
 

Terminal access controller access control system

(PCI) (Technical)
Remote authentication protocol
 

Terminal Identification Number

In the payment card industry, a number provided to a merchant by a credit card processor when that merchant retains the services of that credit card processor to uniquely identify a point-of-sale (POS) terminal or workstation that can be used to identify the merchant operating the terminal during credit card sales transaction processing.
A credit card processor may assign several terminal IDs to a given merchant\'s terminals although that merchant has a single merchant ID with that processor.
 

Terminal Provider

A terminal provider typically refers to a manufacturer, vendor and/or service provider that offers either actual (physical) point-of-sale (POS) payment card processing terminals and systems, or a virtual credit card processing terminal, to merchants who conduct brick-and-mortar retail and/or online sales.
 

Terminal Software

Programming that determines the characteristics and features of the terminal.
 

Test Transaction

A test transaction is a means for the merchant to test a terminal that has been freshly down-loaded or changed in some way. When asking a merchant to complete a test transaction, re-member the following points:
The amount of a test transaction should never exceed $0.10.
 
The transaction should be voided (as opposed to credited) immediately after it is completed (or at the very latest, before the merchant batches out).  The merchant should be advised that this is the only condition/time in which they are permitted to use their own credit card in their terminal (processor specific rules may apply).
 

Third Party Processor

A Third Party Processor is an independent processor that is contracted with by a Bank or Processor to conduct some part of the transaction processing process.
They may also service the actual accounts on behalf of the issuers, emboss cards, and mail cards to cardholders.
 
    • Some of these Third Party Processors specialize in running and hosting networks of Point Of Sale (POS) terminals connected to their Host via dial out modem; they produce the software in the POS terminals as well as in their host, and route authorization requests to Visa or MasterCard as needed (MAPP, MDI, FDR, for example).
    • Other Third Party Processors specialize in the Settlement of credit card transactions with Visa and MasterCard so that merchants can be paid (FDR for example).
    • In the world of Internet Credit Card Processing, the Secure Payment Gateway Provider is another type of Third Party Processor. Some would argue that to be considered a Third Party Processor, the hardware should directly interface to association end-points rather than connecting to another Third Party Processor.
 
 

Third-party Organization

Any outside company with which the acquirer contracts to provide merchant processing services.
 

Third-Party Secure Payment Gateway

In this model, the Third Party Secure Payment Gateway\'s server-computers have to provide a connection between the merchant\'s web site and  the Visa/MC (or Check) Merchant Processor. This is done via telephone (or leased land line), Internet, or other communication method. The Merchant Processor will receive the transaction through it\'s non-internet modem bank, and then send the transaction through it\'s direct connection to the Card Network (like Visa) for approval. The Merchant Processor returns a response via the connection to the Secure Payment Gateway, which encrypts the message and transmits it over the web back to the originating secure web site host. The Third Party Secure Payment Gateway is a different company than the Merchant Processor, and has it\'s own fees that are separate from any Merchant Processing fees.  Examples of these are Cybercash and Authorize.net.
 
Rather than try and create their own Secure Web System, many Banks and Bank/Processor alliances will use a Secure Payment Gateway Provider to perform this task for them.
 

Threat

(PCI)
Condition that may cause information or information processing resources to be intentionally or accidentally lost, modified, exposed, made inaccessible, or otherwise affected to the detriment of the organization
 

Ticket Size

The monetary value of an order placed by credit card.
 

Tiered Pricing

The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants, although the new 6-Tier Pricing is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier.
First Tier - Qualified Rate
A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution. This is usually the lowest rate a merchant will incur when accepting a credit card. The qualified rate is also the rate commonly quoted to a merchant when they inquire about pricing. The qualified rate is created based on the way a merchant will be accepting a majority of their credit cards. For example, for an internet merchant, the internet interchange categories will be defined as Qualified, while for a physical retailer only transactions swiped through or read by their terminal in an ordinary manner will be defined as Qualified.
Second Tier - Mid-qualified Rate
Also known as a partially qualified rate, the mid-qualified rate is the percentage rate a merchant will be charged whenever they accept a credit card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as:
    • A consumer credit card is keyed into a credit card terminal instead of being swiped
    • A special kind of credit card is used like a rewards card or business card
A mid-qualified rate is higher than a qualified rate. Some of the transactions that are usually grouped into the Mid-Qualified Tier can cost the provider more in interchange costs, so the merchant account providers do make a markup on these rates.
The use of "rewards cards" can be as high as 40% of transactions. So it is important that the financial impact of this fee be understood. So therefore, merchants will be charged the qualified plus the mid qualified rate. Example) If your qualified rate is 1.5% and the mid qualified rate is 1 %, your effective rate would be 2.5 %.
Third Tier - Non-qualified Rate
The non-qualified rate is usually the highest percentage rate a merchant will be charged whenever they accept a credit card. In most cases all transactions that are not qualified or mid-qualified will fall to this rate. This may happen for several reasons such as:
    • A consumer credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed
    • A special kind of credit card is used like a business card and all required fields are not entered
    • A merchant does not settle their daily batch within the allotted time frame, usually past 48 hours from time of authorization.
A non-qualified rate can be significantly higher than a qualified rate and can cost the provider much more in interchange costs, so the merchant account providers do make a markup on these rates.
 

TLS

(PCI) (Technical) See Transport layer security.

Token

(PCI) (Technical)
Device that performs dynamic authentication. Also the data that represents the authentication in software or communication protocol.
 

Trade Reference

A trade reference is a company with which a merchant does regular business, used as a means of verifying the creditworthiness of that merchant to a third party considering the extension of credit.
 

Transaction

This is any action between a cardholder and a merchant that results in activity on the account, such as an authorization and settlement. Merchants and financial institutions also conduct follow-on transactions that affect the cardholders\' account, such as a capture and credit.
 
(1) any agreement between two or more parties that establishes a legal obligation.
(2) the act of carrying out such an obligation.
(3) all activities that effect a deposit account that are performed at the request of the account holder.
(4) All events that cause some change in the assets, liabilities or net worth of a business.
(5) Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.
 

Transaction date

The date a cardholder effects a card purchase of goods, services, or other things of value, or effects a cash disbursement.
 

Transaction Fee

A charge for each transaction processed, collected by the merchant account provider (MAP) or ISO for transaction activity such as sales, credits, returns, batch closures and more.. Transaction fees are determined by the acquiring bank and/or ISO and usually fall between $0.20 and $1 (U.S.), but depending on the merchant size can be as low as a penny (you need to be very large for this type of price).
 

Transaction File

The file, into which the processor of payments places all transactions, carried out in the previous day.
 

Transaction Identifier

A unique 15 character value that VISA assigns to each transaction and returns to the Acquirer in the authorization response. VISA uses this value to maintain an audit trail throughout the life cycle of the transaction and all related transactions, such as reversals, adjustments, confirmations, and chargebacks.
 

Transaction Log

The transactions, recorded by the state of accomplishment.
 

Transaction Processor

An entity that validates and authorizes credit card purchases. They may also service the actual accounts on behalf of the issuers, emboss cards, and mail cards to cardholders.
 

Transaction Type

A specific type of financial detail transaction activity that can be submitted to the clearing system.
 

Transmission Control Protocol

(PCI) (Technical)
A standard format for transmitting data from one computer to another across the internet. TCP deals with the construction of the data. IP routes the data from one computer to another.
 

Transport layer security

(PCI) (Technical)
Designed with goal of providing data secrecy and data integrity between two communicating applications. TLS is successor of SSL
 

Travel and Entertainment

Properly used, this phrase refers to American Express (Amex) and Diners Club cards where a cardholder normally pays off the card each month. This is to differentiate these programs from pure credit cards. Discover is commonly lumped-in with the other T&E card types, although it is not technically a T&E card type.
 

See also Corporate Card.

Travel and Entertainment Cards

Credit or charge card used by businesses for travel and entertainment expenses. Examples of these cards are American Express, Diners Club, Carte Blanche and JCB.
 

Travel and Entertainment Merchant

An airline, car rental company, or hotel whose primary function is to provide travel-related services. A travel agency (excluding one that is primarily engaged in the sale of transportation or travel-related arrangement services by mail/phone order) is a T&E merchant to the extent that it acts as the agent of an airline, car rental company, or hotel.
 

See also Corporate Card.

See also Travel and Entertainment Cards.

Triple Data Encryption Standard

(PCI) (Technical)
Block cipher formed from a data encryption algorithm based on DES in which information is processed through the DES algorithm three times.
 

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. 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.
 

Tunneling Protocol

A communications method for allowing a user to use encryption and special access to gain access to computers through a firewall from the outside of the secure environment. This is normally provided to employees who need to maintain or otherwise access the computers as a normal course of their job. This is also known as Layer 2 Tunneling and used to support VPNs (Virtual Private Networks).
 

Turn-key

A solution a firm offers in which they provide an individual with a fully e-commerce enabled web site. Usually complete with shopping cart, web design, hosting and merchant account
 

Two-factor authentication

(PCI) (Technical)
Authentication that requires users to produce two credentials to access a system. Credentials consist of something the user has in their possession (for example, smartcards or hardware tokens) and something they know for example, a password). To access a system, the user must produce both factors.
 

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In this time of uncertain federal and state funding for colleges and universities, it is imperative that we manage and reduce the costs of doing business wherever possible to ensure that students and their families can afford higher education and PE Systems has helped us lower credit card fees.
Grand Rapids Community College

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Grand Rapids Community College
143 Bostwick Avenue NE
Grand Rapids, MI 49503-3295
 
Dear Mr. Parrish:
 
I wanted to take a moment to thank you and PE Systems for your assistance in helping Grand Rapids Community College understand, manage and reduce the cost of accepting credit cards!
 
Today’s college and university business officers have a myriad of responsibilities and requirements.  Because of the complexity of credit card processing and fees, it is a difficult skill for us to master with limited time and resources.  PE Systems helps the business officer interpret the monthly statements and works with them to identify cost savings.  Through it all, PE Systems leaves the control in the hands of the institution so that decisions and relationships are not jeopardized.
 
In this time of uncertain federal and state funding for colleges and universities, it is imperative that we manage and reduce the costs of doing business wherever possible to ensure that students and their families can afford higher education and PE Systems has helped us lower credit card fees.  We really appreciate your professional assistance to Grand Rapids Community College!
 
Sincerely,
 
Executive Director of Financial Services






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