MERCHANT ACCOUNTS,CREDIT CARD MACHINES. ELECTRONIC TRANSACTION PROVIDER

ABA Routing Number - Unique, nine -digit bank identifying number that directs electronic deposits to the proper bank - this number precedes the account number at the bottom of the check.

ACH - Automated Clearing House - A method of transferring money between banks via the Federal Reserve System

Amex - American Express

Acquiring Bank - Credit card processing bank

Approval - A code issued by the card issuing bank allowing a sale to be place against the cardholder's account. Approval means that the amount of the sale is within the cardholder's credit limit and the card has not been reported lost or stolen. An approval code will freeze cardholder funds for 10-21 days depending on the card issuing bank and will guarantee funds to the merchant for 30 days provided the merchant has followed all Visa and MC regulations regarding the sale. An approval may be obtained electronically (terminal) or by phone (voice) - also known as an Authorization.

Authorization - See Approval

Autho Log - bank file of all authorization obtained for a specific merchant number showing card number, dollar amount and how (electronically or voice) and where (network or in our case, FDR for voice) they were obtained.

Average Ticket - Average dollar amount of a merchant credit card transaction.

Basis Point - One one-hundredth of a percent. Merchant discount rates are billed in basis points.

Batch - A group of credit card transactions settled at the - time usually transactionsfor the same calendar date.

Bundled Rate - A discount rate that includes communications costs instead of being billed separately as transaction fees. A bundled rate may also be referred to as a flat rate.

Capture - Processing terminology for electronic deposit of credit card transactions. Unlike a transaction that is authorized only, a captured transaction resides in the terminal memory under terminal capture and in the host computer memory under host capture until settlement.

Card Limit - Credit limit established for a credit card by the card-issuing bank that may or may not be exceeded except with their permission. A "decline" message usually results when a transactionwill put the cardholder over his credit limit.

Card Reader - Device on a POS terminal that electronically reads the information contained in the magnetic stripe on a credit card.

Chargeback - Processing bank is forced to reverse a merchant sale because card-issuing bank (cardholder) disputes the sale. Merchant has the opportunity to appeal and prove the sale is valid.

Communication Network - Telecommunications network accessed by the terminal to communicate with host computer.

CVV Value - Computer value picked up from card magnetic stripe identifying transaction as mag-stripe read.

DDA - Demand Deposit Account (bank account)

Decline - Response to transaction authorization attempt that means card-issuing bank will not accept the charge - merchant must accept another form of payment.

Discount Rate - The percentage of each sale the merchant pays to processing bank to turn Visa and MasterCard funds into cash. The percentage may be billed on gross or net sales, depending on processing bank. Retriever bills on gross sales.

Draft - Processing slang for sales draft. A sales draft can be a receipt produced by an electronic printer or a manually imprinted muti-part sales receipt.

EDC - Electronic Draft Capture - Electronic authorization and deposit of credit card transactions without submission of paper drafts to bank for payment - may also be referred to as capture.

Fed Bank - A Federal Reserve Bank capable of receiving ACH deposits directly. Some smaller banks that are not part of the Federal Reserve system receive Ach deposits via a Fed Bank, sometimes delaying merchant deposits an additional day.

Force - Processing terminology for a previously authorized transaction that is entered into terminal/host memory for capture /deposit. Voice authorizations are entered for payment via this transaction which may also be known as a post-authorization.

Host Capture - Type of draft capture where each transaction approved and captured at the network host computer and a duplicate file (shadow file) is kept in the terminal so merchant has a record of the batch. Settlement occurs at the host computer only and is "automatic" requiring no additional function at the terminal level. Several batches may remain stored in the terminal at all times.

Issuing Bank - Credit card issuing bank.

Interchange - This is the portion of the discount rate that is paid to the card issuing bank.

Match - Member Alert To Control High Risk - A file maintained by MasterCard listing merchants whose processing accounts have been terminated by a processing bank for cause (fraud, high percentage of chargebacks, failure to pay processing fees, etc.).

Mag Strip - Magnetic strip located on the back of credit cards that contains cardholder information such as account number, expiration date, (track II) and name of cardholder (track I).

MCC Code - Merchant Category Code - Four digit codes established by Visa and MasterCard that are transmitted by network to describe the merchant's type of business, may also be known as SIC (Standard Industry Code).

Member Bank - Bank that is a member of Visa or MasterCard. Visa and MasterCard are associations.

MICR Encoding - Special encoding of the account androuting number at the bottom of a check.

MID - Merchant Identification Number - Unique number identifying a merchant.

NACHA - National Automated Clearing House Association - Banking Association (part of the Federal Reserve system) that governs the ACH system.

Negative File - Computer file of lost or stolen credit cards. Terminal will respond with "pic up or "PU" asking merchant to return the credit card to their processing bank for reward ($50).

POS - Point of Sale

Post Authorization - Processing terminology for a previously authorized transaction that is entered into terminal/host memory for capture/deposit. Voice authorized transactions are entered for payment via this transaction which may also be known as a force.

Processor - Large computer center that processes data from Visa and MasterCard sales and settles funds to merchants. A processor may be owned and operated by a single bank such as First of Omaha, or may be run by an association of banks.

Reference Number - eight -digit number assigned to each transaction in a batch under host capture system. First three digits are the Julian date, second two digits are the batch number (01, 02, etc.) and last three are the transaction number (001, 002, etc.).

Rejects - Processing slang for transactions rejected by processing banks. Transactions may be rejected when merchant ID is not active at processing bank but is active at the network, or network information does not match bank information. These transaction must be reentered for merchant to receive funding.

Residual - Term for a basis point commission on a merchant's Visa and MasterCard business.

Retrieval Request - Written request to merchant (via First National Bank of Omaha) from card issuing bank/cardholder for a copy of a particular sales draft - proof of sale.

Routing Number - Unique, nine-digit bank identifying number directing electronic ACH deposits to a particular bank. This number precedes account account number at the bottom of a check - also known as the ABA Routing Number.

Sale - Processing slang for a credit card sale (money debited from cardholder account and paid to merchant).

Settlement - Process of transmitting authorized transactions for capture by host computer in terminal capture system. Settlement requires a particular procedure on the part of the merchant, so transaction, are merely stored in terminal memory until settlement occurs. Upon settlement, terminal memory is cleared, and unique nine-digit "OK" number appears on the terminal screen (terminal only) or is printed on a settlement report (terminal with printer). First three digits of "OK" number are the Julian calendar date of settlement.

SIC Code - Standard Industry Code - Four-digit code established by Visa and MasterCard that is transmitted by network to describe the merchant's type of business, may also be known as MCC (Merchant Category Code).

T & E Cards - Travel & Entertainment Cards - American Express, Carte Blanche, and Dinner's Club cards.

Terminal Based Capture - Type of EDC where each transaction is approved and resides in the terminal memory only until settlement (transmission to host computer) - See Settlement.

Terminal Memory - Memory capacity for an EDC terminal - number of transactions it will hold before batch is full and must be settled.

Transaction Billing - Unbundled Rate - Merchant discountrate as a percentage plus a fee for each transaction that usually includes the communications charges.

Void - Processing terminology for a transaction deleting a previous sale. This transaction can only be completed within the same batch as the original sale and the authorization or approval code is not deleted so cardholder funds are stillfrozen. Another transaction may be forced or post-authorized using the same auth code, or merchant may phone center or card issuing bank to request funds be released. Volume - Processing slang for a merchant's annual Visa and MsaterCard processing volume.

Wire Transfer - Faster method of transferring funds through the Federal Reserve system (usually same day). There is almost always a fee attached to this service, either from the transferring or receiving bank, or sometimes both. This is not to be confused with ACH transfer.