PAYMENT PROCESSING TERMS

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Address Verification Service (AVS)
A fraud-reduction service that allows the Merchant to verify a Cardholder’s billing address prior to completing a Card Not Present Transaction.

 

Bank Identification Number (BIN)
The identification number assigned to a Member that is used for card issuing, Authorization, clearing and Settlement processing.

 

Cardholder
The consumer/owner of the card used to make a purchase.

 

Card Organization or Card Network
A network (such as Visa® and Mastercard®) that acts as a conduit between the acquirer and issuer for authorizing and funding transactions.

 

Contactless Payment
Customers can use credit cards, debit cards, smart phones and other mobile devices equipped with radio-frequency identification (RFID), near field communication (NFC) or Magnetic Secure Transmission (MST) to make secure payments with just a tap against a card reader.

 

Dips, swipes and taps
A card reader accepts payment information when a chip card is inserted (dipped) into a terminal, a magnetic stripe is swiped, or data is exchanged with a chip in close proximity (tapped).

 

Interchange
The clearing and settlement system for Visa® and MasterCard® Credit Cards and Debit Cards where data is exchanged between the Servicer and the Issuer.

 

Interchange Fees
Interchange is a laundry list of different percentage and transaction fees that an Issuing Bank (Cardholder’s Bank) charges an Acquiring Bank (Merchants Bank)
to process one of their cardholder’s credit cards. A common misconception is that Visa and MasterCard profit from interchange, which is not the case. Visa and
MasterCard charge Dues and Assessments on transactions.

There are hundreds of different interchange fees, what is important is to understand that interchange is essentially the wholesale rate that banks charge
each other in order to process a credit card transaction. In order to pay the lowest fees when processing credit cards, a merchant’s goal is to pay as close to
interchange as possible.

 

Interchange Pass Through (IPT)
A merchant account that uses an Interchange Pass Through pricing method applies processing fees by adding a small percentage to the actual interchange
(Wholesale) rate for every transaction and all dues and assessments are passed through directly at cost. This ensures that a merchant only pays the wholesale
rate in addition to a small mark-up that goes to their merchant service provider. Interchange Pass Through is the most economical merchant account pricing in
the industry today and is usually only offered to the nation's largest retailers, but at Luminosity Group we offer this program to ALL of our merchants.

 

Issuer (Issuing Bank)
The financial institution or other organization that issued the payment card to the cardholder.

 

Merchant
The business accepting card payments for products or services sold to the cardholder.

 

Merchant Account
A merchant account allows you to accept and process card payments, and get funded for your transactions. Your merchant account also allows issuing banks to challenge disputed and fraudulent transactions and take back funds for those transactions in accordance with the card network rules.

 

Merchant Classification Code (MCC)
A category code that identifies the merchant by type of business as well as processing, authorization and settlement method.

 

Merchant Identification Number (MID)
A unique account number supplied by your member service provider that identifies the merchant.

 

Merchant Processing Agreement (MPA)
The written agreement between merchant and acquirer that details their rates, rights and regulations in the contract.

 

Payment Processor
A payment processor is a company — contracted by the merchant — to handle credit, debit and gift card transactions. The processor provides services to support authorization, capture, and other related processing services.

 

PCI Data Security Standard (PCI-DSS)
The PCI DSS, a set of comprehensive requirements for enhancing payment account data security, was developed by the founding payment brands of the PCI Security Standards Council, including American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa Inc. Inc. International, to help facilitate the broad adoption of consistent data security measures on a global basis.

The PCI DSS is a multifaceted security standard that includes requirements for security management, policies, procedures, network architecture, software
design and other critical protective measures. This comprehensive standard is intended to help organizations proactively protect customer account data.

 

Processing Fees
These fees are set by the payment processor and charged to the merchant in exchange for card processing services.

 

Settlement
Settlement is the process through which a merchant receives funds for a transaction with a customer. It is the exchange of funds between a card issuer
and an acquiring bank to complete a cleared transaction, and the payment to a merchant for the amount of each card sale that has been submitted into the network.

 

Terminal Identification (TID) Number
In the payment card industry, a number provided to a Merchant by a Credit Card Processor when that Merchant retains the services of that Credit Card Processor to uniquely identify a Terminal. Also known as a Terminal Number. A Credit Card Processor may assign several terminal IDs to a given Merchant’s  Terminals although that Merchant has a single Merchant ID with that Processor.

 

Voice Authorization
An authorization process whereby a Merchant calls the Voice Authorization Center and provides Cardholder and purchase information over the telephone. The Voice Authorization Center then provides an Authorization Code to the Merchant.