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E-commerce Glossary

We have prepared a list of common terms used within the e-commerce and online payment processing industry that you may wish to refer to in case you are are confused. Hopefully this list may help you to become familiar with some of the terminology used by us and other e-commerce providers.

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Industry terms

Technical terms

Financial terms

Industry terms

3-D Secure

Collective name for Visa's Verified By Visa and MasterCard's SecureCode cardholder not present authentication protocol.Required for all Maestro transactions and removes liability shift from merchant to acquirer.

API

Application Program Interface.

Acquirer

Banks that make arrangements with businesses to accept credit card sales. When you pay for something in a shop, say the money is sent to the acquirer, who puts it into the shops bank account and sends details of the sale to the credit card issuer. The card issuer records the sale and charges it to your account. The acquirer charges the shop a small fee - usually a few pence. The acquirers in the UK are; Royal Bank of Scotland, Clydesdale Bank, Bank of Scotland, Nat West Streamline, HSBC and Lloyds TSB.

Acquiring Bank

A bank that receives the credit card transactions and then settles with the issuing banks. Bank that signs up / enables the merchant to process transactions.

Address Verification Service (AVS)

A method of reducing fraud in mail order/telephone order transactions by using cardholder billing address information in the authorisation request.

Authorisation

Every retailer has a purchase limit above which they must seek authorisation from the card issuer before they can complete the sale. This can be done by telephone or electronically at the cash till. Authorisation is used to control credit card fraud. The cardholder's available credit limit is reduced by the authorized amount.

Authorised Transactions

Transaction that has been approved.

Card Issuer

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

Cardholder

An individual to whom a card is issued, or who is authorized to use an issued card.

Chargeback

A transaction returned through interchange by an issuer to an acquirer. A transaction may be returned because of it was non-compliant with the association rules and regulations or because it was disputed by a cardholder.

Chargeback Period

The number of days from the processing date or endorsement date transaction during which the issuer may initiate a chargeback.

Credit Card Processor

A company that performs authorisation and settlement of credit card payments, usually handling several types of credit and payment cards (such as Visa, MasterCard, and American Express). If merchants wish to sell their products to cardholders, they retain the services of one or more processors who handle the credit cards that the merchant wishes to accept. When a merchant retains the services of a credit card processor, it is issued a merchant ID.

Currency

Default is GBP for U.K. pounds. This feature will be used when sterling is used in a transaction.

Fraudulent Transaction

A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover, or other fraudulent conditions as defined by the card company or the member company.

Fraudulent User

An individual who is not the cardholder or designee and who uses a card (or, in a mail/phone order or recurring transaction, an account number) to obtain goods or services without the cardholders consent.

Independent Service Organisation (ISO)

In the payment systems industry, a third party organization that facilitates merchant registration to accept charge or credit cards.

ISP

Internet Service Provider

MasterCard Secure Code

The Mastercard equivalent of the Visa by scheme.

Merchant

An entity that contracts with merchant banks or ISO?s to originate transactions.

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.

Merchant Bank

Bank that has a merchant agreement with a merchant to accept (acquire) deposits generated by bankcard transactions.

Merchant ID

In the credit card industry, a merchant ID is a number provided to a merchant by a credit card processor when that merchant retains the services of that processor. Also sometimes called the merchant number.

Merchant Number

A series or group of digits that uniquely identifies the merchant to the merchant signing bank for account and billing purposes.

Merchant Payment Interface (MPI)

The merchant add in component for the Verified by Visa and MasterCard SercureCode schemes.

Payment Service Provider (PSP)

A company that specializes in the provision of payment services for merchant on the Internet. The PSP will handle the capture, authorisation and settlement of Credit and debit card payments and all the electronic and physical security required. They will often provide additional services such as fraud detection and prevention.

Recurring Billing

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

Refund

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

SSL

Secure Sockets Layer -an encryption standard devised by Netscape Communications for secure communication over the World Wide Web.

Settlement

The reporting of settlement amounts owed by one member to another, or to a card issuing concern, as a result of clearing. This is the actual buying and selling of transactions between the merchants, processors, and acquirers; along with the card issuing entities.

Settlement Bank

A bank, including a correspondent or intermediary bank, that is both located in the country where a members settlement currency is the local currency, and authorized to execute settlement of interchange on behalf of the member or the members bank.

Terminal ID

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 terminal. Also sometimes called the terminal number. A credit card processor may assign several terminal IDs to a given merchants terminals although that merchant has a single merchant ID with that processor.

Transaction Type

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

Verified By Visa

The Visa scheme designed to authenticate cardholders so that they cannot subsequently repudiate there use of a card to purchase goods. It will also reduce other fraud as fraudulent users will not generally know the pass phrase or PIN associated with the card.

Virtual Terminal

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.

Technical terms

ASCII

American Standard Code for Information Interchange - The standard system for representing letters and symbols. Each letter or symbol is assigned a unique number between 0 and 127.

Access Control

The process of ensuring that systems are only accessed by those authorized to do so, and only in a manner for which they have been authorized.

Application Layer

The layer of the ISO Reference Model which provides communication between applications.

Application Security

The provision of security services within user applications running above the Application Layer of the ISO model.

Approval Response

An authorisation response received when a transaction is approved. Authentication - The process of assuring that data has come from its claimed source, or of corroborating the claimed identity of a communicating party.

Certificate Revocation List (CRL)

A list of a database of certificates no longer valid within a given security infrastructure.

Certification Authority (CA)

A trusted entity issuing certificates confirming the identity of, or given facts associated with, the certificates subject.

Cookie

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.

Cryptographic Key

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

Cryptography

The art or science of transforming clear, meaningful information into an enciphered, unintelligible form using an algorithm and a key.

DES - Data Encryption Standard

A cryptographic algorithm adopted by the National Bureau of Standards for data security. The algorithm encrypts or decrypts 64 bits of data using a 56-bit key. See also Triple DES.

DSA

Also known as electronic draft capture (EDC) or draft capture. A data processing term for collecting, formatting, and storing data in computer memory according to predefined fields, for example, customer name, account number, and currency amount of purchase. When a terminal reads this information from a plastic card or from entries at a terminal, the information is stored in computer memory for later output as a hard copy printout or as soft copy on a CRT display. See Electronic Draft Capture.

Data Integrity

Measures to prevent unauthorized alteration of data.

Deciphering

Conversion of ciphertext back into plaintext.

Decryption

Decryption is the process of transforming ciphertext back into plaintext. It is the reverse of encryption.

Enciphering

Conversion of plain data into encrypted data (plaintext into ciphertext).

Encryption

Encryption is the process of disguising a message (using mathematical formulas called algorithms) in such a way as to hide its substance, a process of creating secret writing.

Encryption Key

When used in the context of encryption, a series of numbers which are used by an encryption algorithm to transform plaintext data into encrypted (ciphertext) data, and vice versa.

End-to-end Security

Application of security measures consistently across a whole data system or process, leaving no weak points.

Floor Limit

An amount that Visa and MasterCard have established for single transactions at specific types of merchant outlets and branches, above which authorisation is required.

HTTP (Hypertext Transfer Protocol)

HTTP is a client/server protocol for delivering hypertext material across an internet. HTTP is stateless: when a client makes multiple requests to a single HTTP server, each request is treated independently. HTTP servers do not remember the earlier requests. The stateless protocol allows HTTP servers to respond to requests quickly.

HTTPS (Hypertext Transfer Protocol - Secure)

A variant of HTTP for handling secure transactions. Browsers that support the URL access method, https, connect to HTTP servers using SSL. https is a unique protocol that is simply SSL underneath HTTP. Use https:// for HTTP URLs with SSL and http:// for HTTP URLs without SSL. The default https port number is 443.

Key

When used in the context of encryption, a series of numbers which are used by an encryption algorithm to transform plaintext data into encrypted (ciphertext) data, and vice versa.

Level 3

Level-3 (also known as Level III, Level 3, or Level-III) line-item detail is a data specification designed to support business-to-business and business-to-government credit card use. Level-3 line item detail provides specific purchase information such as Item Description, Quantity, Unit of Measure, Price, and more. This information is very useful to cardholding organizations to help streamline accounting and business practices and to merge payment data with electronic procurement systems.

Merchant Category Code

Four-digit classification codes used in the warning bulletin, authorisation, clearing, and settlement systems to identify the type of merchant business in various stages of transaction processing.

Multiple Transaction Processing (Multi-Trans)

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

NAICS Code

North American Industry Classification System. Common industry definitions for Canada, Mexico and the United States. This system is replacing the SIC Code system.

Public Key Infrastructure (PKI)

The total system used in verifying, enrolling and certifying users of a security application.

Plaintext

Data before the application of a cryptographic algorithm.

Private Key

A cryptographic key known only to the user, employed in public key cryptography in decrypting or signing information.

Public Key

A cryptographic key which is used for data encryption and which cannot be used for decryption. Public keys can be freely published.

Public Key Cryptography

A form of asymmetric encryption where all parties possess a pair of keys, one private and one public, for use in encryption and digital signing of data.

Regulation E

Electronic Funds Transfers - Establishes the rights, liabilities, and responsibilities of parties in electronic funds transfers and protects consumers when they use such systems

Regulation Z

Truth in Lending - 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.

Request Auth

Submits a transaction for Authorisation Only. (See Authorisation)

Standard Floor Limit

A floor limit that varies by merchant type. This refers to a currency limit on transactions above which authorisation requests are required.

TCP / IP

Transport Control Protocol/Internet Protocol. A standard format for transmitting data from one computer to another. TCP deals with the construction of the data. IP routes the data from one computer to another.

Transaction Identifier

A unique 15 character value that VISA assigns to each transaction and returns to the Acquirer in the authorisation 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.

Triple DES (DES3)

A data encryption algorithm based on DES in which information is processed through the DES algorithm three times.

User Authentication

Process of validating that a user is who the user represents himself/herself as.

Validation Code

A unique 4 character value that VISA includes as part of the CPS/ATM program in each authorisation response to ensure that key authorisation fields are preserved in the clearing or settlement record.

Visanet

The systems and services, including the V.I.P. system and BASE II, through which Visa delivers online financial processing, authorisation, clearing, and settlement services to members.

Financial terms

Annual Fee

Some issuers charge for the management of your credit card account. They sometimes provide access to a number of additional benefits as part of the charge. Expressed as % P.A.

Authorisation Amount

Currency amount approved.

Authorisation Code

A code that an issuer or its authorizing processor provides to indicate approval or denial for an authorisation request.

Authorisation Date

Date and Time that transaction was authorized.

Authorisation Only

A transaction created to reserve an amount against a credit card's available limit for intended purchases; the settlement may occur within three to five days, depending on the card type.

BIN

See Bank Identification Number.

Bad Credit

A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. "Bad Credit" can result in being denied credit.

Balance Transfer

The process of moving an unpaid credit card debt from one issuer to another. Transfers of the balance owed may occur through the use of special checks, or may be handled directly by the issuer on your behalf.

Bank Account

Bank account number for the merchant to which funds will be deposited. Bank Identification Number (BIN) - The first six digits of a Visa or MasterCard account number. This number is used to identify the card issuing institution.

Credit History

A partial profile of your financial life given within a particular time frame (usually measured in years). It shows the extent to which you pay your bills on time and how much you may owe particular parties. Credit card issuers use this information to decide whether to provide customers with credit cards. If you have been turned down in the past due to a bad credit history you can sometimes still obtain a credit card - see Adverse Credit Cards.

Custom Payment Service (CPS)

Visas 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 MasterCards Merit system.

Customer Code

A 17 character alphanumeric field that is used with Purchase Card transactions. The code is typically defined by the customer (cardholder) and used for accounting or project tracking purposes.

CV2

The CV2 code (also know as card security code) is the 3 digit security code on the back of credit and debit cards that cardholders are prompted to input when purchasing something online.

Deposit

Process of transmitting a batch of transactions from the merchant to the acquiring institution in preparation for settlement.

Electronic Draft Capture (EDC)

EDC is a point-of-sale terminal that reads the information encoded in the magnetic stripe of bankcards. These terminals electronically authorize and capture transaction data, eliminating the need for a paper deposit.

Expired Card

A card on which the embossed, encoded, or printed expiration date has passed.

Interchange

The exchange of information, transaction data and money among banks. Interchange systems are managed by Visa and MasterCard associations according to their requirements and are very standardized so banks and merchants worldwide can use them.

Interchange Fee

A fee paid by the acquiring bank/merchant bank to the issuing bank. The fee compensates the issuer for the time after settlement with the acquiring bank/merchant bank and before it recoups the settlement value from the cardholder

Interchange Reimbursement Fee

One of the following: A fee that an acquirer pays to an issuer in the clearing and settlement of an interchange transaction, based on either the standard (paper-based) rate or electronic rate. A fee that an issuer pays to an acquirer for making a cash disbursement to a cardholder or check purchaser.

Introductory Rate

Various credit cards offer a low introductory rate that switches to a higher variable or fixed rate in order to attract customers. It could be described as a special offer, or discount. Make sure that you know how long the introductory rate is applicable and what APR the card will carry after the introductory period elapses. Be aware that the introductory rate for some cards may be very different to the actual standard rate.

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.

Merit

MasterCards requirements for obtaining favorable interchange rates. Similar to CPS requirements by Visa.

On-us Transaction

A transaction where the issuer and the acquirer are the same. An "on-us" check would be one in which a depositors check is presented for payment at the same financial institution that carries the account on which the check is written

Online Financial Transaction

A transaction that is authorized, cleared, and settled in a single online message.

Order Number

A 17 character alphanumeric field that may be used between the Cardholder and the Merchant for accounting or tracking purposes.

Overlimit

This refers to a cardholders account that has surpassed its credit limit with a transaction. (Their outstanding balance is beyond their credit limit.)

Per Transaction Fees

Fees paid by the merchant to the merchant bank or other contracted party on a per transaction basis.

Posting

The process of updating individual cardholder account balances to reflect merchandise sales, instant cash, cash advances, adjustments, payments, and any other charges or credits.

Presentment

A clearing record that an acquirer presents to an issuer through interchange, either initially (a first presentment) or after a chargeback (a re-presentment).

Prior Authorisation

An authorisation usually done before a transaction takes place. The approved authorisation request may be held for an extended length of time before a card is present or not.

Processing Date

The date on which the transaction is processed by the acquiring bank.

Reference Number

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.

Retrieval Request

An issuers request for a transaction receipt, which could include the original, a paper copy or facsimile, or an electronic version thereof.

Reversal

An online financial transaction used to negate or cancel a transaction that has been sent through interchange in error.

Service Charge

A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Unbundled Fees

Other fees paid by the merchant to the merchant bank or other contracted party for transaction processing.

Void Transaction

Delete the transaction information.

Void(ed)

Nullifies a transaction that has been recorded for settlement, but not yet settled. This removes the transaction from the batch of transactions to be settled.

 

 

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