Glossary of Merchant Services Terms

Address Verification Service (AVS): Service of credit card issuers and processors that validates the billing address given by a card customer when placing a telephone or Internet order and subsequently authorizes a charge. The AVS system is not foolproof and will, for example, authorize charges when the bill to address given by the customer is correct and the ship-to address is fraudulent.

Authorization: Authorization is the process by which card-issuing banks ultimately verify to merchants that cardholders have enough credit to cover purchases.

Authorization Code: These codes correspond specifically to each transaction. Authorization codes cause card-issuing banks to hold funds (which are immediately deducted from the cardholder's credit limit) until they are actually received at a later time (usually the end of the business day) by the merchant.

Basis Point: One one-hundredth of a percentage point. The difference between 3.05 percent and 3.06 percent is one basis point.

Batch: The accumulation of captured credit card transactions in the merchant's terminal or POS awaiting settlement. Merchants have a choice of settling manually or automatic.

Billing Statement: The monthly bill you receive from the credit card company. This statement includes summary of all account activity including purchases, payments, credit limit, available credit and finance charges.

Fraudulent User: An individual who is not the cardholder or designee and who uses a card to obtain goods or services without the cardholder's consent.

Merchant: An entity that contracts with merchant banks or ISO's to originate transactions.

Merchant Identification Number (MID): The identifying number of a merchant service account or a credit card processing account. This is a unique number used for reference and billing purposes.

Mail Order/Telephone Order (MOTO): MOTO refers to anything "card not present" or "non face-to-face'.

Processor: Third-party merchant services provider who handles the work associated with processing of credit card transactions between merchants, credit card issuers, and merchant account providers.

Terminal: Equipment (POS system): used to capture, transmit and store credit card transactions.

Transaction: Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.