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Capture - The submission of an electronic credit card transaction for financial settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales. Also see Settlement.

Card Association - MasterCard International, Visa U.S.A., Visa International and any other association and/or network assigned to the Merchant Bankcard Services Agreement.

Cardholder - Any person who holds a payment card account (bankcard or otherwise). Person that uses a credit card to purchase goods and services.

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 Bank and the Bank Visa Card that they issue.

Card Not Present - A transaction where the card is not present at the time of the transaction (such as mail order or telephone order). Credit card data is manually entered into the terminal, as opposed to swiping a card's magnetic stripe through the terminal.

Card Verification Value (Visa CVV 2), Card Validation Code (MasterCard CVC 2) - A three-digit value printed in the signature panel on the back of a MasterCard or Visa card. This value is a security feature designed to crosscheck the information embossed on the card.

Cash Reserve Account Days - The number of days as indicated in the Merchant Bankcard Services Agreement that funds will be set-aside in the Reserve Account.

Chargeback - A credit card transaction that is billed back to the merchant after the sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or product/service dissatisfaction. Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.

Chargeback Ratio - The amount of sale transactions divided by the amount of chargebacks received in any given month. This is calculated using either the item count of both or the dollar amount of both.

Close Batch - The process of sending the batch for settlement.

Code 10 Authorization - If you suspect a card is fraudulent at the time of the transaction, the merchant can call their voice authorization phone number and ask for a code 10. The voice operator will instruct the merchant on how to proceed.

Corporate Card - Credit or charge cards issued to businesses to cover expenses such as travel and entertainment and procurement. Includes the multiple payment card brands of purchasing cards, business cards, corporate cards and multi-utility fleet cards. Visa and Master Card 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.

Credit (Reversal) - Nullification of an authorized transaction (sale) that has not been settled. If supported by the card issuer, a reversal will immediately "undo" an authorization and return it to the open-to-buy balance on a cardholder's account. Some card issuers do not support reversals.

Credit Card Processing - Credit card processing is the process of taking raw data and converting it to money to be used as a form or payment. This process involves the following parties: 
  • Cardholder - the owner of the card used to make a purchase
  • Merchant -the business accepting credit card payments for products or services sold to the cardholder
  • Acquirer - the financial institution or other organization that provides card processing services to the merchant
  • Card association - a network such as VISA®, MasterCard®, Discover® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions
  • Issuer - the financial institution or other organization that issued the credit card to the cardholder

The flow of information and money between these parties, always through the card associations, consists of the following steps: 

  • Authorization - The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and then processes the transaction for the cardholder.
  • Batching - After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day).
  • Clearing and settlement - The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions.
  • Funding - Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction.
  (The whole process takes about 1-2 business days).


 
 

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