Financial Institutions
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Glossary of Credit Card Industry Terms

Acquiring Bank
The financial institution that administers the deposit account for a merchant who accept credit cards.

Authorization
An approval code given by the card issuing bank or its processor for a transaction.

Batch
A set of transactions -- usually the credit card activity for one day.

Cardholder
And individual who has obtained a credit card from an issuing bank.

Chargeback
A disputed transaction from a consumer. Not to be confused with returns and credits, chargebacks occur when consumers indicate that a charge is false (fraudulent use of their credit card) or are dissatisfied with a product or service (primarily items that cannot be returned for a credit).

Discount Fee
A fee charged by the bankcard processing institution to process credit card transactions. The fee is based on a small percentage of the merchant's total sales volume.

Electronic Draft Capture (EDC)
The processing and financial settlement of credit card transactions through electronic means.

Encyrpt
The ciphering or scrambling of information for security purposes.

Host
The main computer of a network that processes data transmitted by credit card terminals.

Independent Sales Organziation (ISO)
An independent sales organization is registered through Visa and MasterCard to set up credit card merchant accounts. ISOs represent banks or third party processors.

Issuing Bank
Financial institutions that issue credit cards to individuals for personal and business use.

Merchant Service Representative (MSR)
A merchant service representative who contracts to an independent sales organization.

Magnetic Stripe
The black magnetic strip on the back of a credit card that contains customer and account information, which is read when a card is swiped through a terminal at point of sale.

Network
Companies that provide electronic credit card authorization responses for merchants.

Network Transaction Fee
The fee changed by the network when a credit card terminal dials in for authorization.

Retrieval Request
A request from a cardholder's bank for information about a disputed charge. Retrieval requests usually precede a chargeback.

Sales Draft
A receipt that was signed by the customer at time of purchase.

Terminal
An electronic device used by merchants to process credit card transactions. Terminals use phone lines to authorize, capture and settle credit card transactions.

Third-Party Processor
A company that processes credit card transactions and distributes funds. Many banks outsource credit card processing to third party processors instead of handling it in-house.

Transaction Fee
A fee that is charged by the bank for processing each transaction.

Voice Authorization
When a merchant calls an authorization vendor directly for authorization of a purchase and receives an authorization number.