Glossary
ADSL
(Asymmetric Digital Subscriber Line)
A communications protocol for connecting computers and
other electronic devices to a network, such as the Internet.
ADSL offers more bandwidth than current telephone modem
connections. ADSL can operate over most existing telephone
lines but is currently available in only a few areas
and generally costs more.
Address Verification Service (AVS)
An important fraud-prevention mechanism that verifies
customer addresses within the United States. This ensures
the identification of the cardholder and guarantees
that you ship merchandise to a legitimate customer.
Automated clearing house (ACH)
This is one acronym you'll want to remember. ACH is
a national electronic network that transfers and clears
funds between banking institutions on behalf of merchants
and their customers. In other words, ACH helps you get
your money from your customers' transactions.
Bandwidth
The amount of electronic data that can be transferred
through an electronic connection in a given time. For
modems connected by telephone to the Internet, the modem's
"speed" represents the maximum possible bandwidth of
the connection, such 56.6K.ps (kilobits per second).
Competent web site operators strive to keep the size
of web page files low to conserve bandwidth and speed
downloading.
Batch
A collection of credit card transactions saved for submitting
at one time, usually each day. Merchants who do not
have real-time verification systems must submit their
transactions manually through a POS terminal. Batch
fees are charged to encourage a merchant to submit his
or her transactions at one time, rather than throughout
the day.
Browser
A software package used for locating, requesting and
displaying web pages. Examples include Netscape Navigator,
Microsoft Internet Explorer, and Opera.
Business-to-business (B2B)
Commerce refers to businesses purchasing goods from
other businesses, generally over the Internet. It is
a strong Internet growth component, and B2B connects
companies' supply chains of companies through comprehensive
Internet communications and offers goods through online
catalog and portals. B2B is also known as BBP, or business-to-business
procurement.
Business-to-Consumer (B2C)
When customers purchase products or services from a
merchant - whether in an online or brick-and-mortar
environment - they conduct B2C commerce.
Capture
The submission of a credit card transaction for processing
and settlement. POS terminals and real-time processing
software capture transactions to submit to merchant
account providers or credit card processors.
Card Validation Code 2 (CVC2) and Card Verification
Value 2 (CVV2)
Important fraud prevention mechanisms initiated by MasterCard
and Visa to protect merchants. MasterCard's CVC2 and
Visa's CVV2 codes help merchants distinguish between
legitimate customers from those who try to commit fraud.
These codes are the three digits on the back of a MasterCard
or Visa credit card that follow the cardholder's credit
card number. These codes protect Internet merchants
by helping to identify a cardholder in anon- face-to-face
transaction.
CFR (Cost & Freight)
Indicates that a quoted price includes the cost of the
goods and transportation charges, but not insurance.
Chargeback
A procedure in which the bank that issues the credit
card returns a customer's disputed transaction to the
merchant - via the merchant's transaction processor
- for resolution. For example, the Cardservice International
Chargeback and Retrieval Department defends its merchants'
rights by making sure that the MasterCard or Visa dispute
resolution guidelines have been met when the cardholder-issuing
banks send us transaction receipt requests and contested
transactions. Having a dedicated, experienced chargeback
and retrieval department protects merchants and reaches
favorable resolutions for them by reviewing the merchant's
responses to transaction requests and contested transactions
for completeness and proper documentation.
CIF (Cost, Insurance & Freight)
A term indicating that a quoted price includes the cost
of the goods, insurance, and transportation charges.
Client
A computer that requests and receives data over a network,
including the Internet. The most common types of client
on the Internet are computers running browsers or email
programs.
Commerce Server
A web server which contains the software necessary for
processing customer orders via the web, including shopping
cart programs, dynamic inventory databases, and online
payment systems. Commerce servers are usually also secure
servers.
Commerce service provider (CSP)
Supplies businesses with the tools and services they
need to buy and sell products and services over the
Internet and manage their online enterprises. CSPs provide
service in areas such as hardware and software design,
risk management, online payment, brand recognition,
distribution control, taxes, site development and hosting,
site performance monitoring, fulfillment management,
online marketing, building a customer base and order
processing and delivery.
Cookies
Small files that are automatically downloaded from a
web server and installed on the computer of someone
browsing a web site. Information stored in cookies can
then be accessed any time that computer returns to the
site. Cookies allow web sites to "personalize" their
appearance by identifying visitors, storing passwords,
tracking preferences, and other possibilities.
Credit Card Processor
An organization that manages the process of transferring
authorized and captured credit card funds between different
financial accounts. Credit card processors charge merchants
a discount rate and a transaction fee for this service,
and these fees vary from processor to processor. Cardservice
international is an example of a credit card processor.
Database
A file containing organized information and, most commonly,
a filing and retrieval system for storing information.
Most database software also include tools for data analysis.
Examples of database software include Oracle, Sybase,
and Microsoft Access.
Debit Card
Is used similarly to a credit card, but the funds are
transferred immediately from the customer's bank account
to the merchant's account. The advantage of debit cards
to merchants is instant access to funds. Watch for Internet
and e-commerce debit card capabilities in the near future.
Destination Control Statement (DCS)
A document that accompanies nearly all commercial shipments,
which declares that shipments contents are licensed
for export to a particular destination. The anti-diversion
clause in the DCS precludes the diversion of the shipment
to any other destination or use.
Digital Wallet
A consumer account set up to allow e-commerce transactions
through a particular credit card processing system.
Before the consumer can make a purchase, he or she must
first establish and account with the credit card processor,
who provides an ID and password. These can then be used
to make purchases at any web site that supports that
transaction system. CyberCash's "Digital Coin" system
is an example of a digital wallet system.
Direct Deposit Account (DDA)
The bank account you establish to receive the funds
your credit card processor transmits directly to you
for your customers' purchases. It is the term that banks
use for your checking account.
Discount Rate
A percentage fee paid to the merchant account provider
or ISO for handling an electronic transaction. Most
web merchants pay between two and 10 percent of their
revenue from online credit card or electronic check
orders.
Domain
A designation for particular location on the Internet.
Domain names work alongside IP Addresses
E-Commerce
The processing of economic transactions, such as buying
and selling, through electronic communication. E-commerce
often refers to transactions occurring on the Internet,
such as credit card purchases at web sites.
EDI (Electronic Data Interchange)
EDI is a global computer network, separate from the
Internet, used to handle financial transactions between
banks and other institutions, including large businesses.
Electronic Soft-Good Download (ESD)
Is the delivery of purchased merchandise (software programs,
text, graphical images, music and information) by electronic
meansover the Internet.
Encryption
Is the process of scrambling a message so that a key,
held by only authorized recipients, is needed to unscramble
and read the message. This is an important security
and fraud prevention measure for merchants conducting
e-commerce.
Euro
The common currency shared by most of the members of
the European Union (Britain, Greece and Denmark are
not participating). Introduced in January 1999, the
Euro will eventually replace national currencies, such
as the German Mark, French Franc, and Italian Lira.
Export License
A permission granted to ship a product to a foreign
recipient. In the U.S., export licenses are either general
licenses or individual export licenses.
Factoring
The purchase of debts owed or accounts receivable in
exchange for immediate payment at a discount. In e-commerce,
the term is often applied to a merchant that offers
to process credit cards for another business, usually
in exchange for a percentage of the transaction or some
other fee. Factoring of credit card debt is illegal.
FAQ (Frequently Asked Questions)
A file or location containing basic information and,
not surprisingly, the answers to frequently asked questions.
Freight Forwarder
A firm which handles export shipments for other firms.
Front-End
The user interface that appears on a web page, which
allows a visitor to the site to interact with dynamic
features, including databases, shopping-cart programs,
and online purchase processing software.
FTP (File Transfer Protocol)
A set of standard codes for transferring files over
the Internet. FTP is usually used for retrieving large
files or files that cannot be displayed through a browser.
Windows FTP and Fetch are examples of FTP software.
General License
A declaration by the U.S. Bureau of Export Administration
that permits the open export of certain nonstrategic
goods and services to designated countries. Exporters
of these goods need not acquire an individual validated
license (IVL). GIF (Graphic Interchange File): a file
type that contains a graphic, photo or other image.
GIFs are commonly found on the Web, along with another
graphic file format called JPEG. GIFs tend to take less
memory and bandwidth than JPEGs, and can contain animation.
JPEGs offer greater image clarity, especially for photo
images.
Holdback
A portion of the revenue from a merchant's credit card
transactions, held in reserve by the merchant account
provider to cover possible disputed charges, chargeback
fees, and other expenses. After a predetermined time,
holdbacks are turned over to the merchant.
Hypertext markup language (HTML)
Is the standard set of formatting codes, which are inserted
into a text file that is published on the World Wide
Web. If you develop a Website, your developer will probably
create it using HTML.
Hypertext transmission protocol (HTTP)
Transfers information, graphics and text over the Internet.
Individual Validated License (IVL)
Written declaration by the U.S. Dept. of Commerce granting
permission to export specified products to a specified
foreign recipient. See General License.
Interchange
The exchange of information, transaction data and money
among banks. Interchange systems are managed by MasterCard
and Visa associations 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 fees are roughly 1.37% and
ten cents per transaction for a typical swiped business
and 1.8% and ten cents per transaction for a MOTO or
internet business. This is the money that for the most
part goes to the bank that issued the credit card. You
could say this is the Merchant Account Provider's cost
of sales.
IP (Internet Protocol) Address
A designation for a particular location on the Internet,
such as 216.35.46.16. IP addresses often operate in
parallel to domains, but domain names used are more
often since they are generally easier to remember.
IPSP (Internet Payment Service Provider)
A firm or organization which offers to process online
credit card transactions, usually in exchange for transaction
fees or a percentage of sales. See Factoring.
ISP (Internet Service Provider)
Allows an online merchant to access and conduct business
over the Internet. EarthLink and America Online are
examples of ISPs, which, for a monthly fee, provide
their members with a software package, user name, a
password and access telephone numbers. Once merchants
contract with an ISP, they are ready to host a Web site
and conduct e-commerce.
ISO 9000
A set of standards for electrical and electronic products,
formulated by the International Standards Organization.
Product quality standards in most nations either meet
or exceed IS09000 standards.
Issuing Bank
The bank that maintains the consumer's credit card account
and which must pay out to the merchant's account in
a credit card purchase. The issuing back then bills
the customer for the debt.
JCB
Originally the Japanese Credit Bureau, but today only
the acronym JCB is used. JCB is Japan's leading credit
card, and it is similar to MasterCard and Visa credit
cards. Accepting JCB may be very important for merchants
that conduct international ecommerce. You can apply
for JCB through your transaction processor.
Java
A programming language frequently used on web sites.
Java programs (or "applets") are downloaded from the
web server to the visitor's own computer, which then
runs them. This distinguishes Java programs from other
web programming languages, like PERL, which reside and
run on the web server. Only the results are downloaded
to the visitor's computer.
JPEG or JPG
A file format used for storing graphic images, usually
photographs. JPEG files are larger than GIF files of
the same image, but offer better color control and clarity.
See GIF.
Keyed Discount Rate
The discount rate charged by the merchant account provider
for credit card transaction where no actual credit card
was available to the merchant. MOTO rates are generally
higher than swipe rates to account for the increased
chance of fraud or nonpayment.
First Data Secure Payment Gateway (Previously Linkpoint
or LSPG)
FDIS's secure payment gateway - one of the most secure
in the industry. A secure payment gateway translates
information from a merchant's Web site into a format
that can be read by an electronic processing system.
By operating in real time, a merchant can immediately
capture funds upon delivery of goods to customers. The
First Data Secure Payment Gateway supports sales, returns,
real-time authorizations, captures, batch settlement
processing and refunds. State-of-the-art technology
provides merchants with numerous benefits, including
fraud screening for every transaction submitted and
providing real-time reporting via merchants' Web browsers.
Mail Order/Telephone Order (MOTO)
Businesses that conduct transactions through the mail
or over the telephone.
MAP (Merchant Account Provider)
A bank or other institution that hosts merchant accounts
and processes credit card transactions. The term is
also often used broadly to include any credit card processing
service, including ISOs.
Merchant Account
A bank account established by a merchant to receive
the proceeds of credit card purchases. By establishing
a merchant account, the merchant bank agrees to pay
the merchant for credit card purchases in exchange for
the right to collect on the debt owed by the consumer.
Merchant Bank
The bank that holds the merchant account. After a consumer
buys a product using a credit card, the merchant bank
places funds into a merchant account in exchange for
the right to collect on the debt owed by a consumer.
Micropayments
Very small charges, perhaps even less than a penny,
processed through e-commerce systems. Until this time,
E-commerce has been largely limited to purchases of
$10.00 or more. With micropayment systems, however,
e-commerce merchants can sell products for far lower
prices, such as small fees for downloading documents
or charges per click for online advertising. Micropayment
systems are still largely experimental and not widely
available.
MOTO (Mail Order/Telephone Order)
Businesses that operate via mail or telephone, such
as catalogue businesses. Merchants who advertise on
the internet but who do not actually accept payments
on their websites are also MOTO merchants, as they must
receive the credit card information via mail order or
telephone order.
Personal Identification Number (PIN)
Is a cardholder's unique identification number that
is used when making a debit card transaction.
Point of sale (POS)
Refers to anything that is used at the merchant's point
of sale, such as a credit card or debit card terminal.
Public Key Encryption
A method of encrypting electronic data. Developed to
account for weaknesses in symmetric encryption, public
key encryption does not require the transmission of
decoding keys themselves.
Recurring Fees
Regular, usually monthly, charges for maintaining a
merchant account. Recurring fees include the discount
rate, transaction fees, statement fee, and monthly minimum.
Real Time Verification and Capture
The verification and processing of credit card transactions
immediately following purchase. Real time verification
on the Web usually takes less than five minutes. Real
time verification is especially important for web sites
that sell products and services that consumers expect
immediately, such as memberships to the site or software
downloads.
Reserve Account
See Holdback.
Robot
A software application that automatically finds and
retrieves information from the Web. Also called a "spider"
or "crawler"
SET (Secure Electronic Transaction)
A system for encrypting e-commerce transactions, such
as online credit card purchases. Developed by Visa,
MasterCard, Microsoft and several major banks, SET combines
1024-bit encryption with digital certificates to ensure
security. SET is still in development.
Secure Sockets Layer (SSL)
This protocol, designed by Netscape Communications,
allows encrypted, authenticated communications to travel
safely and securely across the Internet. SSL provides
merchants with privacy, authentication and message integrity.
Advise your customers that your Web site is secure -
show them the key or closed lock on the bottom left-
hand corner of your site, which tells customers they
are on a secure page when they make an online credit
card transaction.
Secure Hypertext Transmission Protocol (SHTTP or
HTTPS)
Transfers credit card information safely and securely,
using special encryption techniques. It is used to secure
a Web site for electronic transactions and enables credit
card users to make safe online purchases.
Secure Server
A web server or other computer connected to the Internet
that is capable of establishing encrypted communication
with clients, generally using SSL or SET.
Setup Fees
Fees charged for establishing a merchant account, including
application fees, software licensing fees, and equipment
purchases.
Shopping Cart Program
A software package that runs as part of a web site to
collect and record purchasing decisions by a visitor.
Shopping cart programs are stored on web servers.
Smart Card
A plastic card containing a computer chip that can store
electronic "money." Unlike a credit card, a smart card
can only spend out what the owner has already put into
the card. Similar in function to a pre-paid calling
card, but available for all purchases. Trail runs of
smart cards have returned mixed results.
Spam
Unsolicited emails. There are two common usages: 1)
mass emailings by commercial sites to recipients who
have not requested any contact, and 2) emails sent to
intentionally annoy or harass the recipient, including
crashing their computer my overloading its email capacity.
The former often provokes that latter.
Swiped Discount Rate
The discount rate charged by a merchant account provider
for transactions where a credit card is available for
inspection by the merchant. Swiped rates are generally
lower than keyed rates since the merchant can match
signatures and other checks on fraud or misuse. See
Keyed Discount Rate.
T-1 (also T-2, T-3)
Commercial-sized connections to the Internet. T-1 connections
offer approximately 25 times the bandwidth of 56.6K
telephone modems.
Transaction Fee
A charge for each credit card transaction, collected
by the merchant account provider or ISO. Transaction
fees usually fall between US$0.10 and US$0.25.
Turn-Key Application
Computer software which requires little or no modification
when inserted into a web site. In e-commerce, many merchant
account providers and ISOs offer turn-key applications
for processing credit card orders online. a portion
of the Internet; other parts include email communication,
FTP, and gopher.
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