Glossary

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A

account data compromise event (ADCE)

An event in which account data may have been compromised that could lead to unauthorized use of the cardholder's account. An account data compromise event does not mean that account data was wrongfully disclosed or used, but that account data may have been wrongfully disclosed or used.

Address Verification Service (AVS)

A MasterCard service to help combat fraud for non-face-to-face transactions by use of cardholder address information in the authorization request.

affiliate member

A type of MasterCard member that participates indirectly through an association member or a principal member in the activities of this corporation (for example, by issuing MasterCard® cards or by accepting transaction records from merchants).

authentication

In security, ensuring that the message is genuine, that it has arrived exactly as it was sent, and that it comes from the stated source.

authorization

Approval of a transaction by or on behalf of an issuer according to defined operations regulations. The merchant receives, via telephone or authorization terminal, this approval to process the transaction.

authorization code

A six-digit alphanumeric code assigned by the issuer to identify the approval for a specific authorization request. Also referred to as "issuer's response code," "authorization approval code," or "authorization response code."

authorization message

Within a payment system, any message between a card acceptor and an issuer serving to establish whether the issuer approves for a transaction to proceed.

authorization response

Answer to an authorization request, typically a code, that advises the acquirer or merchant how to proceed with the transaction.

Automated Clearing House System (ACH)

One of the group of processing institutions that have networked together to exchange (clear and settle) electronic transactions.

automated fuel dispenser (AFD)

A terminal device used to accept payment for fuel at a petroleum service station.

B

bank identification number (BIN)

A unique six-digit number assigned by MasterCard International to identify acquiring members. The BIN is contained in DE 31 (Acquirer Reference Data) positions two through seven.

bankcard

A payment card issued by a bank or other financial institution, such as a MasterCard® or Maestro® card.

batch processing

A type of data processing operation and data communications transmission where related transactions are grouped together and transmitted for processing, usually by the same computer and under the same application; generally regarded as non-real-time data traffic comprising large files; type of data traffic where response time is not critical.

brand mark or mark

The proprietary combination of names, symbols, and colors that visually conveys a brand's identity and personality.

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C

call referral

A generic term for the "refer to card issuer" authorization response. A call referral indicates that the acquirer or merchant must contact the issuer for further instructions. The issuer uses the call referral as a fraud prevention tool when it suspects or is attempting to prevent fraud at the point of interaction. See also referral call.

card acceptor

A merchant or an ATM that accepts a card and presents transaction data to an acquirer.

card acceptor business code (MCC)

A numerical representation of the type of business in which the card acceptor (merchant) engages. Formerly merchant category code (MCC).

card account

A credit line for deposit facility accessed by a card issued to a cardholder that enables the cardholder to purchase goods and services or obtain cash.

card payment system

A payment system supporting payments made by financial transaction cards.

card validation code (CVC)

A card security feature. CVC 1 is a three-digit value encoded on Tracks 1 and 2 in three contiguous positions in the discretionary data field of a magnetic stripe on a MasterCard card, Maestro branded card, or Cirrus branded card. CVC 2 is indent-printed into the tamper-evident signature panel on a MasterCard card. Chip CVC is a three-digit value encoded in the Track 2 Equivalent Data field in three contiguous positions within the discretionary data field of the chip on a MasterCard card, Maestro branded card, or Cirrus branded card. The CVC is intended to inhibit the alteration or misuse of card data and enhance the authentication of the card.

chargeback process

A dispute resolution process that members use to determine the responsible party in a chargeback related dispute. This process has three cycles in which the members can resolve the dispute themselves. If the members do not resolve the case within three cycles, they must send the case to arbitration. These three cycles are:

  • First chargeback (submitted by the issuer)
  • Second presentment (submitted by the acquirer)
  • Arbitration chargeback (submitted by the issuer)

Cirrus®

Cirrus System Incorporated, a wholly owned subsidiary of MasterCard International Incorporated, operates the international ATM sharing association known as the "MasterCard®ATM network," accepting MasterCard, Maestro®, and Cirrus®brands.

clearing

The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position.

co-branded card

A card issued by a member in association with a commercial company, typically bearing the brand of both.

credit card

A plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.

credit loss

The amount lost (charged off) as a result of failure of the cardholder to pay the amount owed on the account.

cross-border transaction

Any transaction on a MasterCard credit or debit card, Cirrus card, or Maestro card processed through the Global Clearing Management System (GCMS) or the MasterCard® Debit Switch (MDS) in which the country code of the merchant differs from the country code of the cardholder.

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D

debit card

A plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the cardholder's asset account is debited by the issuer.

debit transaction

A transaction initiated when a card is presented as payment for goods and services or at an ATM for cash withdrawals. The transaction amount is automatically deducted from the cardholder's demand deposit or other bank account.

E

e-commerce transaction

The non-face-to-face payment for goods or services by use of electronic media over a public network (such as the Internet) or private network (such as an extranet).

electronic commerce

The exchange of goods and services for payment between the cardholder and merchant. The transaction is performed (completely or partially) via electronic communication.

electronic draft capture (EDC)

(Generic) A system in which the transaction data is electronically captured at the merchant location for authorization and clearing processing.

electronic funds transfer (EFT)

A paperless transfer of funds initiated from a terminal, computer, telephone instrument, or magnetic tape.

Electronic Funds Transfer System (EFTS)

An electronically based system designed to eliminate the paper instruments that are normally associated with fund movement. For example, a cash withdrawal from an ATM that eliminates the check.

electronic point of sale

A point-of-sale merchant equipped with electronic equipment for pricing and recording transactions, but not necessarily incorporating functions for electronic funds transfer (EFT).

Emergency Card Replacement Service (ECR Service)

The MasterCard worldwide service designed to provide temporary cards to all MasterCard cardholders that do not have their cards in their possession. This card is issued to a cardholder that needs a temporary replacement card sooner than the typical five to 10 days that it takes to get a permanent card.

F

financial institution

Any commercial bank, federal or state savings and loan association, federal or state savings bank, or credit union.

First chargeback

A procedure in which an issuer charges all or part of the amount of an interchange transaction back to the acquirer in accordance with MasterCard regulations.

fraudulent merchant

A retailer, or any other person, firm, or corporation that agrees to accept credit cards, debit cards, or both; and engages in an unauthorized transaction occurring on any of the cards offered by MasterCard.

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G

guaranteed reservation

Use of a MasterCard account number to reserve accommodations at lodging merchants. For the cardholder, such reservations include a late arrival provision, penalties if cancellation rules are not met, and a provision for unavailable rooms upon arrival.

guest folio

A lodging merchant's guest record that contains the cardholder's transaction information, including check-in and departure dates, rate, anticipated length of stay at check-in time, applicable charges, and taxes. The check-in date and the dated amount and authorization approval code of each authorization must be included on the folio if not on the sales draft.

I

Independent Sales Organization (ISO)

An MSP that provides Program Services other than transaction and cardholder processing to a member in support of the member's program. Such program services include, but are not limited to, merchant solicitation, cardholder solicitation, customer service, and ATM deployment.

in-flight commerce

Transactions such as shopping or gaming activity that a cardholder initiates during a flight. In MasterCard applications, these transaction types also are referred to as Cardholder- Activated Terminal (CAT) Level 4.

interchange

The exchange of transaction data between acquirers and issuers in accordance with MasterCard rules.

interchange fee

A fee applied to an interchange transaction, applicable to the two members participating in the transaction as issuer and acquirer.

interchange program

A program that reimburses issuers for specific costs related to an incoming interchange transaction. These costs include processing costs, financial carrying costs, and risk costs. Interchange fees are payable to the issuer by the acquirer.

M

magnetic stripe

The magnetically encoded stripe on the bankcard plastic that contains information pertinent to the cardholder account. The physical and magnetic characteristics of the magnetic stripe are specified in ISO Standards 7810, 7811, and 7813.

magnetic stripe reader

A device that reads information recorded on the magnetic stripe of a card.

mail order/telephone order (MO/TO)

A transaction initiated by mail or telephone to be debited or credited to a bankcard account.

MasterCard account number

A 16-digit number, beginning with the number 5, assigned by an issuer to uniquely identify a MasterCard account that conforms to the MasterCard defined structure and check-digit specifications.

MasterCard Brand Mark

The interlocking circles used in conjunction with the MasterCard logotype, positioned and proportioned exactly as shown in authorized reproduction artwork.

MasterCard Payment Gateway (MPG)

A gateway hosted by MasterCard and used for routing and settling commercial e-payments between buyers and suppliers.

MasterCard® SecureCode™

MasterCard SecureCode is a program supporting cardholder authentication and guaranteed payments over the Internet for MasterCard and Maestro transactions.

merchant agreement

A written agreement between a merchant and an acquirer containing their respective rights and performance obligations with respect to card acceptance.

merchant authorization

The means of receiving sales validation for the merchant, by telephone or authorization terminal, to guarantee payment to the merchant.

merchant bank

A bank that has entered into an agreement with a merchant to accept deposits generated by bankcard transactions; also called the acquirer or acquiring bank.

merchant ID number

A unique number assigned by the acquirer to identify the merchant.

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O

offline

An operating mode in which a card acceptance device is not connected to a central computer source. Responses are governed by the parameters or guidelines set within the terminal or supporting device as defined by the issuer or MasterCard. The accessibility of information is not in a live environment, meaning that current active files are not being viewed during the time the transaction is conducted.

online

An operating mode in which a card acceptance device is connected to a central computer system and has access to the database for authorization, inquiry, and file changes. Live files are accessed for each transaction. For authorization, an operating mode in which members are directly connected to the Banknet network via a MIP or their host computer. Live files are accessed for each transaction.

P

personal identification number (PIN)

A four- to 12-character alphanumeric code that enables an issuer to authenticate the cardholder to approve an ATM or terminal transaction occurring at a point-of-interaction (POI) device.

point of interaction (POI)

The location where a transaction occurs (formerly point of sale or point of service).

point-of-sale system

An electronic system that accepts financial data at or near a retail selling location and transmits that data to a computer or authorization network for reporting activity, authorization, and transaction logging.

Portable Document Format (PDF)

A file format that allows files or documents saved using Adobe Acrobat software to be displayed and printed in exactly the same format on another platform.

prepaid card

A card that stores value and is used instead of cash to pay for a single service, such as pay telephones or public transportation. It cannot be reloaded and is a throw-away or collector card.

processing fee

Compensation paid by issuers or acquirers to a financial network organization for processing interchange transactions according to the business agreements established by that financial network. Fees are determined by each transaction type for issuers and acquirers participating within each individual financial network.

processor

An organization that is affiliated with MasterCard International Incorporated. The processor provides authorization and/or clearing and settlement services on behalf of a member.

promotion code

A code assigned by the issuer to identify transactions that apply to a promotional program run by the issuer to encourage card use.

proprietary card

A type of card that financial institutions or other organizations issue using the logo of the issuer instead of a national service mark or logo (such as MasterCard). A proprietary card allows the cardholder to access a credit or deposit account using ATM or POI terminals.

purchase

A financial transaction, if approved, in which funds are debited from an issuer and credited to an acquirer in payment for goods or services.

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Q

Quick Payment Service (QPS)

The MasterCard program designed to facilitate new penetration of card acceptance by targeting cash and convenience-oriented merchant segments, for example, fast food chains, movie theaters, and parking lots.

R

recurring payments

Payments by an issuer to an acquirer on behalf of a cardholder who authorizes a merchant to bill the cardholder's account on a recurring basis (such as monthly or quarterly). The amount of each payment may be the same or may fluctuate. See preauthorized order.

refund

Opposite of a purchase transaction, namely, the cardholder returns goods to the merchant and is credited for their value. Positive interchange and merchant service charge are reversed.

retail banking

The part of a bank's operations providing services at its branches for small or individual account holders.

retail sale transaction

Purchase of goods, services, or both, generally at a merchant establishment.

S

self-service terminal

A customer activated terminal, especially one including the functions both of delivering and paying for goods (for example, in an automatic fuel vending system).

store card

A financial transaction card associated with a particular retailer or group of retail stores that can be used only for purchases from that retailer or group of stores.

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