PCI Compliance Overview
A quick overview of what PCI Compliance is and what it means to your organization.
Glossary
ABA Transit Routing Number
A nine-digit identification number assigned to member financial institutions and banks by the American Banker’s Association (ABA). The number is used to identify the financial institution or bank associated with a customer’s bank account.
Acquirer
A financial institution or Merchant Service Provider (MSP) that facilitates and manages credit card processing on behalf of a merchant customer.
Acquiring Bank
The bank or financial institution that holds the merchant’s bank account that is used for collecting the proceeds for credit card processing.
Acquiring Processor
The credit card processing entity with which an Acquirer partners in order to provide merchants with transaction clearing, settlement, billing and reporting services. Also see “Processor”.
Address Verification Service (AVS)
A system established by the credit card processing associations to verify customer billing addresses submitted with e-commerce payment transactions. Though AVS does not verify the legitimacy of a transaction, Card Not Present merchants can use AVS to accept or decline transactions based on the validity of the billing address information provided by the customer.
Advanced Integration Method (AIM)
The preferred method for connecting a merchant Web site to the Authorize.Net Payment Gateway. AIM allows merchants to customize their own payment form (the Web page that collects the customer’s payment information) and receipt page (the Web page that reports a summary of the transaction back to the customer), as well as submit transactions over an end-to-end Secure Sockets Layer (SSL) connection.
Authentication
A practice or procedure to verify the identity of an individual or organization. There are varying levels of authentication for accepting payments. Examples include checking a customer’s driver’s license when accepting payment at retail or validating a customer login and password at a merchant Web site. In respect to payment gateway account authorization, Authorize.Net employs a number of electronic practices and procedures to verify that merchants accessing the payment gateway are authorized to do so.
Authorization
The response from a card issuing bank to a merchant’s transaction authorization request indicating that payment information is valid and funds are available on the customer’s credit card. Also called an Approval.
Also, for eCheck.Net® transactions, an Authorization is a paper or electronic document or record “signed” by the customer that authorizes a merchant to submit a charge transaction against their bank account.
Automated Clearing House (ACH) Network
The group of financial institutions and similar entities within the banking industry that work together to facilitate the processing, clearing, delivery and settlement services for electronic check transactions.
The ACH Network is governed by ACH Rules as defined by the National Automated Clearing House Association (NACHA).
Automated Recurring Billing™ (ARB)
An Authorize.Net value-add solution that allows merchants to create a recurring billing schedule or “subscription” for the purchase of goods or services. The merchant enters transaction and customer billing information, specifies a billing amount and billing interval and ARB does the rest, automatically generating subsequent transactions for the duration of the subscription. For more information about ARB, please see http://www.authorize.net/arb.
Back Office Conversion (BOC)
This eCheck.Net transaction type is a one-time charge transaction against a customer’s checking account. BOC allows merchants to collect a check written at a point of sale (checkout counter, manned bill payment location, service call location) and convert it to an ACH debit during back office processing. Payment authorization is obtained by posting required notices before accepting a customer’s check.
Bank Account Number
The account number assigned by a bank to a checking or savings account holder. This information must be provided to a merchant by a customer in order to make an electronic check payment.
Basis Point (BP)
Equivalent to .01 percent, or one hundredth of one percent, and is used as a measurement of fee rates. Rate changes are often expressed in basis points instead of hundredth percents, e.g., a fee rate increase of 1.95 percent to 2.0 percent is expressed as an increase of 5 basis points.
Batch
A group of transactions that have been gathered over a certain period of time and are submitted together to the appropriate processing networks for clearing and settlement.
Card Associations
Credit card issuing entities such as Visa and MasterCard that govern and oversee the use of credit cards for payment transactions.
Card Code
A Card Code is a three- or four-digit number that appears on the back of a credit card (on the front for American Express). This code may be used to validate customer information on file with the credit card association.
Card Not Present
Literally means that a cardholder’s credit card is not physically presented to a merchant at the time of the transaction. This term is used in the payments industry to distinguish e-commerce merchants, such as those that operate via Web sites or from mail order/telephone order locations, from “brick and mortar,” or retail merchants.
Card Present
Literally means that a credit card is physically presented to a merchant by a cardholder at the time of the transaction. This term is used in the payments industry to distinguish “brick and mortar,” or retail merchants from those that operate from mail order/telephone order locations or via Web sites.
Card Reader
A hardware device that facilitates the reading and transmission of payment information stored in the magnetic stripe on a credit, debit or stored-value card. Also known as a “Magnetic Stripe Reader.”
Cardholder
A consumer to which a credit or debit card is issued by the credit card associations or by the consumer’s bank.
Cardholder Authentication Programs
The cardholder authentication programs Verified by Visa and MasterCard® SecureCode™ are security programs created by the card associations to provide identity authentication for Visa and MasterCard cardholders, and transaction protection for merchants. By registering for these programs, merchants can minimize the risk of chargebacks and returns while providing optimal security for their Visa and MasterCard customers.
Customer IP Address
Indicates the Internet Protocol (IP) address of a customer’s Web browser, or the IP address from which a transaction is submitted to the payment gateway.
Discount Fee
The percent of each credit card or eCheck.Net® transaction and batch settlement processed that is billed to the merchant by the payment gateway. The transaction types for which the discount fee is charged are: charges, refunds, voids and declines.
eCheck.Net®
Authorize.Net’s exclusive electronic check payment solution. eCheck.Net® allows merchants to post charge and refund transactions directly to a customer’s bank account.
Electronic Check
Describes a check or bank account payment that is submitted and/or processed electronically.
Independent Sales Organization (ISO)
An organization that sells business products or services to merchants and/or acquires merchants on behalf of various types of merchant service providers.
Interchange
The process by which all parties involved in a credit card transaction (i.e., processors, acquirers, issuers, etc.) manage the processing, clearing and settlement of credit card transactions, including the assessment, and collection and/or distribution of fees between parties. Also known as Credit Card Interchange.
Internet Protocol (IP)
A method of transmitting information and communications between computer systems and networks via the Internet.
Mail Order/Telephone Order (MOTO)
A business, or merchant, that sells merchandise or services to consumers via mail or telephone initiated orders. MOTO merchants operate from call or fulfillment centers.
Merchant Account
A financial institution or bank account that is used by a merchant specifically for the purpose of collecting proceeds consumer bank account or credit card payment transactions. A Card Present (CP) merchant account is used by merchants that receive payments in a physical location where payment is physically presented to the merchant by the customer at the time of the transaction. A Card Not Present (CNP) merchant account is used by merchants that receive payments electronically or in situations where payment is not physically presented to the merchant by the consumer at the time of the transaction.
Merchant Identification Number (MID)
An identification number assigned to each member merchant of an acquiring organization, such as a financial institution, Independent Sales Organization (ISO), Merchant Service Provider (MSP) or processor.
Merchant Service Provider (MSP)
A company or sales organization that provides transaction processing solutions to its merchant clients.
Not Sufficient Funds (NSF)
A type of ACH return indicating that a customer’s bank account does not have sufficient funds to cover a specific eCheck.Net® transaction.
Payment Gateway
A system of technologies and processes that allow merchants to electronically submit payment transactions to the payment processing networks (i.e., the Credit Card Interchange and the ACH Network). Payment gateways also provide merchants with transaction management, reporting, and billing services.
Personal Digital Assistant (PDA)
A pocket-sized electronic device, similar in function to a personal computer, for storing and managing electronic information. In relationship to a payment gateway, PDAs enabled with a wireless data service may be used by merchants to submit payment transactions.
Personal Identification Number (PIN)
A unique number that is issued to an individual or organization by a financial organization or related service—or other type of service provider—for the purpose of authenticating user identity and granting secure access to accounts or information.
Point of Sale (POS)
A term used in the payments industry that refers to the physical location where a payment transaction takes place. POS is also used to describe credit card payment acceptance systems that are designed for the place of sale, such as card swipe terminals.
Point of Sale (POS) Device
A piece of electronic equipment that is used by a merchant to submit credit card payment information to the processing network. Like terminals, these devices are connected to the credit card processing network via dial-up telephone connection or Broadband. POS devices also include Personal Digital Assistants (PDAs), Smartphones, and wireless electronic devices capable of transmitting credit card payment information via wireless Broadband connection.
Prearranged Payment and Deposit Entry (PPD)
This eCheck.Net® transaction type is a charge or refund against a customer checking or savings account. PPD transactions may only be originated when payment and deposit terms between the merchant and the customer are prearranged, for example, with Automated Recurring Billing™ (ARB) transactions.
Processor
An entity in the credit card processing network that handles the posting of transactions for authorization, clearing and settlement to consumer credit card accounts at the card associations, and the settlement of funds to merchant bank accounts. Processors may also provide merchants with billing and reporting services.
Stored-Value Card
A payment card, similar to a debit card, attached to a limited monetary value, held either in an account by a card issuer, or in an electronic chip embedded within the card. Gift credit cards are a type of stored-value card.
Terminal Identification Number (TID)
An identification number assigned to each POS device by a merchant’s processor. This number provides the processor with information about the device’s configuration and capabilities.
Underwriting
The process of evaluating a service applicant’s financial history and credit trustworthiness to determine whether to grant a service account. In some cases, underwriting may also determine an applicant’s financial obligations, such as services pricing.
Value-Add Reseller (VAR)
An independent or other sales organization that provides merchants with various services and/or solutions for enhancing their business practices or transaction management.
Verified by Visa
A security program created by Visa to provide identity authentication for cardholders and transaction protection for merchants. By registering for Verified by Visa, merchants can minimize the risk of chargebacks and returns while providing additional security for their Visa customers.
Virtual Point-of-Sale (VPOS) Terminal
A secure, easy-to-use Authorize.Net solution that allows retail, or “brick and mortar” merchants, to manually submit transactions using a computer with Windows Internet Explorer, and a MagTek USB HID card reader.