ABA (American Bankers Association)
The national trade association of commercial banks.

ACH (automatic check handling):
A form of electronic payment. Funds or payments can be transferred electronically in two ways: by wire transfer or through an automated clearinghouse. Wire transfer is an online, real-time payment system designed to handle large-dollar, time-critical payments, mostly between large banks. ACH, in contrast, is designed to be an "electronic check." It is typically used to process high volumes of relatively small-dollar payments for settlement within one or two business days. ACH transactions are settled in a manner similar to the way checks are settled: The clearinghouse takes all ACH files received daily from its member banks, sorts them by the originating bank (the bank where the check was cashed or deposited) and the paying bank (the bank against which the check was drawn), totals the accounts, and credits or debits appropriate accounts accordingly.

Acquiring Bank or Acquirer
A financial institution that provides accounts for merchants. It is also called a merchant bank, or acquirer. The acquiring bank processes the merchant's transactions and credits payment to the merchant account. Your merchant account at the acquiring bank receives funds from a cardholder when a transaction is complete. Acquirers are so named because they acquire a merchant's sales tickets and credit the order value to the merchant's account.

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.

API (application program interface):
The specific method prescribed by a computer operating system, or by another application program, by which a programmer writing an application program can make requests of the operating system or another application. Unlike a GUI (graphical user interface), which is a direct user interface, the API interfaces with an operating system or a program.

Authentication
Identification of individuals and businesses through the use of digital certificates.

Authorization:
In multi-user computer systems, a system administrator defines for the system which users are allowed access to the system and their individual privileges of use (such as access to certain file directories, hours of access, amount of allocated storage space, and so forth). When users log in to a secured computer operating system or application program, the system or application identifies what resources the user can be given during this session. Authorization can mean both the preliminary establishment of permissions by a system administrator and the actual checking of the permission values that have been set up while a user is requesting access. On the Internet, authorizations are defined for "anonymous" users that are accessing a system via the Internet.

AVS (address verification system):
In 1996, VISA/MasterCard headquarters introduced a new regulation requiring all businesses who manually key in the majority of their credit card transactions to have a special fraud prevention feature on their credit card processing equipment. This feature is referred to as an address verification system (it checks to see that the billing address given by the customer matches the credit card). If you opt not to use AVS, VISA and MasterCard will not support your transactions and will charge you an additional 1.25% on those sales.

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 56.6 Kps (kilobits per second). Competent Web site operators strive to keep the size of Web page files low to conserve bandwidth and speed downloading.

Bank card:
A plastic card that is widely accepted by merchants as a result of a standard set of rules for the authorization of its use, clearing, and settlement of transactions, used to credit an account for processing a sales transaction. The most common bank card is a credit card. Transactions are usually not profitable for amounts of less than $5 (U.S.); micropayment schemes are designed for much smaller increments of payment.

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.

Batch Close
The process of sending a batch to the financial institution for settlement.

Browser:
A software program used for locating, requesting, and displaying Web pages. Examples include Netscape Navigator, Microsoft Internet Explorer, and Opera.

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.

Cardholder:
A person or company who has an active credit card account with which transactions can be processed.

Card Issuer:
Financial institution (or its agent) which issues the financial transaction card to the cardholder. The card issuer remains unchanged throughout a transaction.

Cascading Style Sheets (CSS):
A method used to attach styles such as specific fonts, colors, and spacing to HTML documents. Because they "cascade," some elements take precedence over others.

CFR (cost and freight):
Indicates that a quoted price includes the cost of the goods and transportation charges but not of insurance.

Chargeback:
A fee charged by a merchant services provider against a merchant account for transactions that are successfully challenged by a credit card holder. After a charge is disputed and adjudicated in the cardholder's favor, the transaction total and chargeback fee are deducted from the merchant account. CIF (cost, insurance, and 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 e-mail programs.

Commerce Server:
A Web server that contains the software necessary for processing customer orders via the Web, including shopping cart programs, dynamic inventory databases, and online payment systems. Commerce servers must be PCI Compliant secure servers.

Cookies:
Small files that are automatically downloaded from a Web server to 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:
Commonly referred to as a "Refund," this is a transaction that transfers money from the merchant to the cardholder's account

Credit Card:
A bank card establishing the privilege of the person to whom it is issued to present it as payment to a merchant; the card bearer must reimburse the credit card company the amount of the sale. Credit card transactions are usually not profitable for amounts of less than $5 (U.S.); micropayment schemes are designed for much smaller increments of payment.

Credit Card Processors (or third-party processors):
Merchant services providers that handle the details of processing credit card transactions between merchants, issuing banks, and merchant account providers. Web site operators usually must first establish their own merchant account before contracting for credit card processing services.

Crawler: A software application that automatically finds and retrieves information from the Web. Also called a "spider" or "robot."

Database:
A file or file system containing organized information and, most commonly, a filing and retrieval system for storing information. Most database software also includes tools for data analysis. Examples of database software include Oracle, Sybase, and Microsoft Access.

Data Encryption:
The scrambling of information sent over the Internet. Data encryption ensures that only the intended recipient has the ability to read and understand the
information.

Debit Card:
A financial instrument used by consumers in place of cash. Unlike a credit card, debit card purchases are deducted automatically from the cardholder's account, like a check. Visa and MasterCard now offer debit cards through banks and other financial institutions.

Debit Transaction:
An approval by the cardholder of the debit to his account. At the same time it provides a claim of funds made by the acquirer (and/or the merchant) against the card issuer.

DCS (destination control statement):
A document that accompanies nearly all commercial shipments that declares the shipment's 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.

dHTML (dynamic HTML):
An extension of HTML that gives greater control over the layout of page elements and the ability to have Web pages that change and interact with the user without having to communicate with the server. The three components of DHTML pages are HTML, Java script, and cascading style sheets.

Digital Certificate
Online identification that authenticates a consumer, merchant and financial institution. Digital certificates are used during SET transactions.

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 an 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.

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. A domain, for example "ECmerchant.com," contains files that make up the content of Web pages under that address. ECmerchant.com/default.asp and ECmerchant.com/register.asp are different Web pages located within the same domain. Domain names are associated with IP addresses.

eCommerce:
The processing of economic transactions, such as buying and selling, through electronic communication. eCommerce often refers to transactions occurring on the Internet, such as credit card purchases at Web sites. See also Internet commerce.

EDC (electronic data capture):
The use of a POS terminal for validating and submitting credit card transactions to a merchant account provider or other credit card processor. In online credit card processing, software takes the place of the POS terminal.

EDI (electronic data interchange):
EDI is a global computer network, separate from the Internet, used to handle financial transactions between banks and other institutions.

EFT (Electronic Funds Transfer):
A method of transferring money from one bank account to another using a variety of electronic methods such as bank wire transfer, federal wire transfer,international wire transfer.

EIRF (Electronic Interchange Reimbursement Fee):
A VISA classification level that is charged to the merchant when a credit card is not present, swipe not read, card number is manually key entered.

Electronic Wallet:
Software that enables a cardholder to conduct online transactions, manage payment receipts and store digital certificates.

EMC (export management company):
A firm that provides exporting services to other firms. The export management firm will either take title to act as an intermediary merchant or provide export management services in exchange for fees or a commission.

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:
Permission granted to ship a product to a foreign recipient. In the United States, export licenses are either general licenses or IVLs (individual validated 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 ISOs that offer to process credit card transactions through their own merchant account rather than through an account established by the merchant, in exchange for a percentage of the transaction or other fee. Factoring of credit card debt is illegal.

FAQ (frequently asked questions):
A list of the answers to frequently asked questions, usually questions asked by visitors to a Web site.

FDIC (Federal Deposit Insurance Corporation):
The federal program that protects consumers by providing insurance for bank deposits in the event that a bank becomes insolvent. All funds from PPI merchant accounts, including credit, debit (ATM) and EFT transactions are FDIC insured throughout the entire transaction process from authorization and settlement through ACH deposit into the merchant's bank account

Financial Transaction:
A transaction from the acquirer to the card issuer containing all the necessary data elements for authorization, posting and reconciliation.

Freight Forwarder:
A firm that handles export shipments for other firms. front end: The user interface that appears on a Web page and 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 IVL (individual validated license).

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, the JPEG. GIFs tend to take less memory and bandwidth than JPEGs, and can contain animation. JPEGs offer greater image clarity, especially for photo images.

Gateway:
An application that accepts transactions from online merchant storefronts and routes them to a financial institution's processing system.

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. Note: Merchant account providers almost never pay interest on holdbacks.

HTML (hypertext markup language):
A set of codes that determine how a Web page will appear, including graphics, links, and text characteristics. Other code sets that build on HTML include dHTML, VRML, and XML.

ICS (Internet commerce services):
The services an Internet commerce provider offers to enable clients to handle many facets of their business on the Internet.

Interchange:
A standard format for sharing or transferring data electronically between parties that do not share a common application. Usually a format that is platform-independent is agreed upon as a standard. Examples of common interchange formats include EDI (electronic data interchange), ASCII (American Standard Code for Information Interchange), and GIF (graphics interchange format).

Internet commerce:
A broad term covering all commercial transactional activities on the Internet. Internet commerce can range from vendors selling software from a Web storefront (Web site) to large corporate procurement systems using an Internet-based VPN (virtual private network) to deal with trading partners. Internet commerce is not synonymous with e-commerce, which covers all electronic commercial activities.

IP address (Internet protocol address):
A designation for a particular location on the Internet, such as "140.23.719.6." IP addresses are associated with domain names.

ISO (independent service organization):
A firm or organization that offers to process online credit card transactions, usually in exchange for transaction fees or a percentage of sales. Merchants must generally establish a merchant account before contracting for ISO services, although some ISOs claim not to require separate merchant accounts. See also factoring.

ISO 9000:
A set of standards for electrical and electronic products, formulated by the International Standards Organization. Product quality standards in most nations must either meet or exceed ISO 9000 standards.

ISP (Internet service provider):
A firm that provides access to the Internet, including Web browsing and e-mail. ISPs often offer connections that can be accessed by dialing a telephone number through your computer's modem.

Issuing bank:
The bank that maintains the consumer's credit card account and must pay out to the merchant's account in a credit card purchase. The issuing bank then bills the customer for the debt.

IVL (individual validated license):
Written declaration by the U.S. Department of Commerce granting permission to export specified products to a specified foreign recipient. See also general license.

Java:
A programming language frequently used on Web sites. Some 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, such as PERL, that 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 GIFs of the same image but offer better color control and clarity. See also GIF.

LAN (local area network):
A network that connects computers that are close to each other, usually in the same building, linked by a cable.

MAP (merchant account provider):
A bank or other institution that hosts merchant accounts and processes online 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 valid credit card purchases in exchange for the right to collect on the debt owed by the consumer. Merchant Bank:
A bank that holds a 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. See also merchant account provider.

Merchant Services Provider:
A bank, ISO, or other firm that provides services for processing financial transactions, usually credit card sales. Many MSPs provide merchant accounts, while others require their clients to establish merchant accounts on their own. Some MSPs claim that they do not require merchant accounts; this may indicate factoring, which is illegal in many areas. See also holdback.

Micropayment:
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 (U.S.) or more. With micropayments, however, e-commerce merchants can sell products for far lower prices, such as charging small fees for downloading documents or charging per click for online advertising. Micropayment systems are still largely experimental and not widely available.

Monthly Minimum:
The minimum amount in fees and percentages charged by a merchant services provider in a given month. If account activity does not generate the monthly minimum, the account holder must make up the difference.

MOTO discount rate (mail order/telephone order discount rate):
The discount rate charged by the merchant account provider for credit card transaction in which the actual credit card was not available to the merchant. MOTO discount rates are generally higher than swipe discount rates to account for the increased chance of fraud or nonpayment.

MOTO:
Mail order, telephone order. A classification of merchant account with a specific set of rules that are more restrictive than retail merchants. Enables a merchant to accept credit card payment without a cardholder's signature. The merchant and the cardholder do not need to be in the same physical location. MOTO accounts are also known as Card Not Present or CNP accounts.

MSP (Merchant Services Provider):
A firm that is directly certified by an acquiring bank to provide credit card accounts

Notification
A message where the sender notifies the receiver of an activity taken, requiring no approval or response.

Online Storefront:
A commerce-enabled Web site available on a public network, such as the Internet, that offers goods and services for sale. An online storefront is the equivalent of a store or place of business that a customer would visit to purchase goods and services.

PCI (payment card industry) Security Standard:
a worldwide information security standard assembled by the Payment Card Industry Security Standards Council (PCI SSC). The standard was created to help organizations that process card payments prevent credit card fraud through increased controls around data and its exposure to compromise. The standard applies to all organizations which hold, process, or pass cardholder information from any card branded with the logo of one of the card brands.

PIN (personal identification number):
An alphanumeric or numeric code used to verify the identity of an individual attempting to use a credit card, debit card, or other account

POS terminal (point of sale terminal terminal):
An electronic device used for verifying and processing credit card transactions. If the credit card is available, the merchant can swipe the card through the terminal. See also swipe discount rate and MOTO discount rate.

Point of Service
Merchant location where the cardholder agrees the transaction takes place.

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 Authorization
Authorizes a credit card in real-time, as a customer makes their purchase.

Real-time Processing:
The verification and processing of credit card transactions immediately following a 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.

Reconciliation
An exchange of messages between two institutions (acquirer, card issuer, or their agents) to reach agreement on their financial totals.

Reserve Account: (or 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. Note: Merchant account providers almost never pay interest on holdbacks

Replacement Authorization
An authorization used when a previous authorization was approved and a subsequent authorization is required because the amount of the transaction is now different from the originally approved amount.

Representment
A financial transaction originated by an merchant to recover funds charged back by a card issuer.

Request
A message where the sender informs the receiver that a transaction is in progress and a response is required to complete the activity.

Reversal
A transaction from the acquirer to the card issuer informing the card issuer that the previously initiated transaction cannot be processed as instructed, i.e., is undeliverable, unprocessed or cancelled by the receiver.

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 1,024-bit encryption with digital certificates to ensure security. SET is still in development.

Settlement:
A process of completing fund transfers so that all parties in a transaction are paid for their goods or services.

SSL (secure socket layer):
A system for encrypting data sent over the Internet, including e-commerce transactions and passwords. With SSL, client and server computers exchange public keys, allowing them to encode and decode their communication.

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 the dollar amount its owner has already put into the card account. It's similar in function to a prepaid calling card but is available for all purchases.

Spam:
Unsolicited e-mail. There are two common usages: 1) mass e-mailings by commercial sites to recipients who have not requested any contact, and 2) e-mail sent to intentionally annoy or harass the recipient, including crashing his or her computer by overloading its e-mail capacity.

Spider:
A software application that automatically finds and retrieves information from the Web. Also called a "robot" or "crawler."

Swipe Discount Rate:
The discount rate charged by a merchant account provider for transactions in which a credit card is available for inspection by the merchant. Swipe discount rates are generally lower than MOTO discount rates because the merchant can match signatures and perform other checks for fraud or misuse.

T-1 (also T-2, T-3):
Commercial connections to the Internet. T-1 connections offer approximately 25 times the bandwidth of 56.6 Kps telephone modems.

Tag:
A code within a data structure that gives instructions for formatting or other actions. HTML documents are set up using HTML tags, which serve various functions, such as controlling the styling of text and placement of graphic elements and providing links to interactive programs and scripts.

Terminal:
An end-use device (usually with display monitor and keyboard) with little or no software of its own that relies on a mainframe or another computer (such as a PC server) for its "intelligence." A variation of this kind of terminal is being revived in the idea of the thin client or network computer. The term is sometimes used to mean any personal computer or user workstation that is hooked up to a network.

Ticket Size
The monetary value of an order placed by credit card.

Thin client:
A simple client program (not required to know how to interpret and display objects much more complex than menus and plain text ) or hardware device that relies on most of the function of the system being in the server.

Transaction Fee:
A charge for each credit card transaction, collected by the MAP (merchant account provider) or ISO. Transaction fees usually fall between $0.20 and $1 (U.S.).

Turnkey Application: Software that requires little or no modification when inserted into a Web site. In e-commerce, many MAPs (merchant account providers) and ISOs offer turnkey applications for processing credit card orders online.

URL (uniform resource locator):
An address for a file (or page) located on the Internet, usually the Web. Example: "www.ecware.com."

VPN (virtual private network):
A private network of computers that's at least partially connected by public phone lines. A good example would be a private office LAN that allows users to log in remotely over the Internet (an open, public system). VPNs use encryption and secure protocols like PPTP to ensure that data transmissions are not intercepted by unauthorized parties.

VRML (virtual reality modeling language, or virtual reality markup language):
A specification for displaying three-dimensional objects on the World Wide Web. You can think of it as the 3-D equivalent of HTML. It is used to create the illusion of three-dimensional objects for onscreen virtual reality environments. The computer shows an apparently three-dimensional object from a certain position, and then creates the illusion of movement by gradually changing the viewpoint. The objects can be programmed to respond to mouse clicks.

Web Host:
The computer which has your active website on it. To host a website, a host computer must have proper server software, connection capacity for the traffic that comes to the website and a unique and static internet protocol (IP) address. An IP address looks like 4 sets of numbers separated by periods, i.e. "201.111.123.1" A uniform resource locator, or URL, is a unique name that has been assigned to a static IP of a specific host computer making it easier to find a website.

Web Server:
A computer dedicated to storing the various files that make up Web pages and the protocols needed for communicating with other computers via the Internet.

World Wide Web (or simply Web):
The entire collection of files written in HTML and similar mark-up languages available on the Internet. Clients on the Internet use their browsers to request these files from Web servers and then display them as Web pages. The Web is only a portion of the Internet; other parts include e-mail communication and FTP.

XML (extensible markup language):
A metalanguage containing a set of rules for constructing other markup languages. With XML, people can make up their own tags, which expands the amount and kinds of information that can be provided about the data held in documents. It enables designers to create their own customized tags to provide functionality not available with HTML. For example, XML supports links that point to multiple documents, as opposed to HTML links, which can reference just one destination each.