Glossary

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3D Secure

A protocol which is designed to increase the security of online credit card transactions by requiring a PIN or password for credit card authentication. 3D Secure stands for ‘3 domain secure’; domain 1 = Acquiring Banks / Merchants, domain 2 = Credit Card Issuers / Cardholders and domain 3 = Credit Card Schemes.

A-G

Acquirer / Acquiring Bank

A bank that provides credit card acquiring services to Merchants in return for the payment of Merchant Service Charges (see MSC below).

Authentication

A process of verifying the identity of the originator of an online electronic transaction as well as the integrity of that electronic transaction E.g. Signature, Verified-by-Visa or MasterCard SecureCode, PIN, or password.

Bank Identification Number (BIN)

The digit identification number assigned to both Cardholder and Merchant Banks.

Base currency

Also known as the Merchant's local currency or the airline pricing currency, it is the currency of the country that the merchant is providing its service from. Can be different to the Merchant’s general ledger currency. For airlines it is typically, though not always, the currency of the country of the airport of departure.

Batch

A batch is a transaction file containing captures and credits accumulated over a given period of time (generally no more than 24 hours) which are waiting to be settled with the Merchant's Acquiring Bank.

Capture

The conversion of the authorisation amount into a billable transaction record within a Batch. Transactions cannot be captured unless previously authorised. Authorisations cannot be captured until the goods or services have been shipped or electronically transmitted to the consumer.

Card Associations

Organizations such as Visa, MasterCard, American Express, JCB and Diners Club, that, along with state governments, determine the rules with regard to acceptance of credit cards. These rules include fees that are charged for Interchange for Visa and MasterCard. American Express, Diners Club, and JCB are exceptions. They are both the issuer and acceptors, and require Merchants to have separate and individual agreements with each of them.

Cardholder Currency

The currency of the cardholder's credit card account, and the currency that is debited from or charged to his / her account to pay for goods and / or services. Also known as the Transaction Currency.

Card Issuer

Any association member, financial institution, bank, credit union, or company that issues, or facilitates the issuing of, Credit Cards to cardholders.

Card-Not-Present (CNP)

A transaction environment, for example the web, where Merchants can accept credit card payments without a cardholder's signature or without the need for the cardholder to be present.

Card-Present (CP)

A transaction where both the consumer and his / her credit card are required to be present at the same location. For a CP transaction, the credit card is typically swiped through a card reader (or physical Point-of-Sale terminal), and the consumer signs an authorisation slip, or sales receipt, or authorises payment for Chip enabled cards by entering a PIN.

Card Reader

Any device that is capable of reading the encoding on Credit Cards.

Card Schemes

See Card Associations

Chargeback

A credit card transaction that is in dispute either by the cardholder or the cardholder’s bank, where that transaction is reversed and funds paid back to the cardholder.

Chip and PIN

A chip card is an integrated circuit (IC) used in payment card. A chip card uses a personal identification number (PIN) as the preferred method of cardholder verification at the Point-of-Sale.

Clearing

See Capture.

CP / CNP

See Card Present / Card-not-Present.

DCC

See Dynamic Currency Conversion

Dynamic Currency Conversion (DCC)

Provides a cardholder with the ability to choose to pay in their own currency (i.e. the currency that the card was issued in) or in the Merchant's local currency. This service is applicable to both CP and CNP transactions.

EOD

End-of-Day; description typically applied to a transaction batch file that is accumulated at the end of each working day and transmitted as opposed to individual transactions being transmitted in realtime on an intra day basis

File analysis

The inaugural step within Continuum’s pre-project phase is termed ‘file analysis’. File analysis is the process that interrogates a sample merchant file containing (edited) credit cards used on a merchant’s website(s) and / or call centre(s). The outcome of the analysis is to define exactly how much DCC revenue is available for Visa and MasterCard card schemes. Typically this figure is then extrapolated forward to give an annul projection.

GDS

See Global Distribution Systems

Global Distribution Systems

Global Distribution Systems are computer reservation systems that book and sell tickets for a multitude of airlines almost invariably Full Service Airlines. Prior to online direct bookings they were the main distribution system for airline fares.

H-M

Interchange

The system through which Visa and MasterCard members exchange authorisation, processing and settlement information. Interchange is managed by Visa and MasterCard associations.

Interchange Fee

The amount paid by the merchant bank (acquirer) to the cardholder institution (issuer) on each sales transaction. Interchange rates vary according to the category of merchant and the method of processing. MasterCard and Visa independently establish interchange fees for their respective networks.

MasterCard SecureCode

The MasterCard process designed to authenticate cardholders by pass phrase or PIN associated with the card. SecureCode was introduced for added security and to prevent card holders subsequently repudiating the use of their card to purchase goods. SecureCode is also included within the general 3D Secure term.

Merchant

Any business that accepts as credit card payment.

Merchant Currency

See Base Currency.

Merchant Number

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

MID (Merchant Identification Number)

A unique number generated by a card processor acquiring bank that is specific to each individual merchant location. This number is used to identify the merchant during processing of daily transactions,

Management Information Systems

Merchant Service Charge (MSC)

Also known as Merchant Discount Fee or Merchant Discount Rate, MSC is the fee levied by the acquirer for processing a merchant's transactions. MSC charges and exception items including rejects, adjustments, chargebacks, reverse chargebacks, end-of-month processing fees, etc.

MSC

See Merchant Service Charge

N-S

Offline

A non-electronic authorisation payment environment.

Online

An electronic payments environment were transaction are authorised electronically across data networks. PIN Personal Identification Number. Point-of-Sale (POS) The location in a merchant establishment at which sale is completed typically via a Point-of-Sale terminal. Also refers generically to the payment page in an online environment POS System or Terminal Point-of-Sale machine that processes transactions.

PSP (Payment Service Provider)

The interface between merchant websites, Acquiring Banks, and DCC providers. PSPs will typically provide authentication, fraud screening and scoring, and authorisation services.

Reconciliation

The process in which a transaction is settled between the card issuing bank and merchant bank or third party processor. Also refers to the reconciliation of items on the merchant account. Within the Continuum environment DCC reconciliation refers to reconciling

SecureCode

See MasterCard SecureCode.

Settlement

The process by which Visa and MasterCard transfer funds between a cardholder's account at the issuing bank and the merchant account at the acquiring bank. Settlement of a transaction involves withdrawing funds from the cardholder's account and depositing them into the merchant account. In the case of a refund, or chargeback the process is reversed. American Express and Diners club also settle transactions, but as both issuer and acquirer settlement is undertaken within a ‘closed loop scheme’.

T-Z

Transaction

A transaction is an interaction between a cardholder and a merchant that results in a purchase, cash advance, debit or credit adjustment.

Transaction currency

The currency in which a transaction is authorised. Typically this will be the merchant’s local currency or within a DCC environment it is the currency of the customer's credit card. According to the Visa International Operating Principles and Continuum’s own terminology, it is given to mean the cardholder’s currency.

Uplift

Uplift is the margin added to the spot market foreign exchange rate by currency dealers in order to protect exchange rate movement exposure over a given period of time.

Verified-by-Visa

The Visa process designed to authenticate cardholders by pass phrase or PIN associated with the card. Introduced for added security and to prevent card holders subsequently repudiating the use of their card to purchase goods. Part of general 3D Secure term.