Payment Glossary

A

  • AAP

    An accredited ACH professional certified by the National Automated Clearing House Association (NACHA).

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  • ACH

    Automated Clearing House - ACH is a reliable electronic funds transfer (EFT) system governed by National Automated Clearing House Association (NACHA).

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  • ACH Credit

    An ACH credit occurs when the receiver’s account is credited.

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  • ACH Debit

    An ACH debit occurs when the receiver’s account is debited.

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  • ACH Operator

    ACH operator is the term used to describe the switching mechanism within the settlement network that provides information to the network participants. The ACH operator calculates the...

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  • ACK (ACH Payment Acknowledgement)

    An ACK entry is an acknowledgement by the receiving depository financial institution (RDFI) confirming the receipt of a corporate credit or debit (CCD) credit entry.

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  • Acquirer

    An acquirer is a bank that processes credit and debit card transactions for a merchant.

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  • ARC (Accounts Receivable Entry)

    An ARC entry is a one time debit entry to the account of a receiver whom has previously been notified that their check (source document) will be...

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  • ATX (Financial EDI Acknowledgement)

    An ATX entry is an acknowledgement by the receiving depository financial institution (RDFI) confirming the receipt of a corporate trade exchange (CTX) credit entry.

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  • Authorizations (Card Processing)

    All transactions must be authorized via terminal, cash register, voice authorization, or automated voice response phone system (IVR).

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  • Automated Teller Machine (ATM)

    An automated teller machine (ATM) is a device that allows for the withdrawal of cash without the need of a human teller or cashier.

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  • Auxiliary On-Us Field

    A field on the magnetic ink character recognition (MICR) line of a check or share draft. This is an optional field that can be found to the...

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B

  • Banking Day

    A day on which the development financial institution (DFI) is open to the public and performing a majority of their banking functions, or, in the case of...

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  • Basis Points

    Basis Points is a financial term that describes one one-hundreth of a percent (1 basis point = .0001 or .01%). Normally, the addition of basis points for...

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  • BOC (Back Office Conversion)

    A BOC entry is a one time debit entry to the account of a receiver whom has, at the point of purchase, been notified that their check...

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  • Business Day

    Refers to any weekday with the exception of federal holidays.

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C

  • Cardholder

    A cardholder refers to the person to whom a credit or debit card is issued.

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  • CBR (Cross Border Payments)

    A standard entry class code used for the transmission of corporate cross border ACH credit and ACH debit entries. The CBR format accommodates the exchange of information...

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  • CCD (Corporate Credit or Debit)

    A CCD entry is a credit or debit entry where funds are being transferred between two corporate entities.

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  • CFPB (Consumer Financial Protection Bureau)

    The Consumer Financial Protection Bureau (CFPB) is a government agency that is responsible for protecting consumers from questionable financial practices.

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  • Chargeback (Card Processing)

    A chargeback is a transaction that is returned by the card issuer to a merchant’s acquirer bank because of a dispute, processing or point-of-sale error, or fraudulent...

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  • Check-by-Phone

    Check by Phone or "checks by phone" is the patented process of recreating and printing a check without having the original paper check. Check by Phone payments...

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  • CIE (Customer Initiated Entry)

    A standard entry class code that enables a consumer to initiate an ACH credit into the ACH network whereby funds will be transferred to a company for...

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  • Consumer Account

    An account held at a development financial institution (DFI) which has been opened by a natural person and is used for personal needs.

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  • Convenience Fees

    These fees allow for the quick offset of transaction processing costs for methods of payment that are outside of a business’s traditional methods. Learn More

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  • COR (Notification of Change)

    A COR entry is initiated by a receiving depository financial institution (RDFI) to inform an originator of incorrect information submitted in an entry. The originator must correct...

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  • Corporate Trade Exchange (CTX)

    A corporate trade exchange (CTX) is a system used by corporations and agencies of the government for monetary transfer. They are primarily used to pay trading partners...

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D

  • Demand Deposit Account

    Traditional savings and checking accounts are generally demand deposit accounts.

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  • DFA (Dodd-Frank Act)

    The Dodd-Frank Act was made effective in 2010 to promote financial stability in the U.S. by increasing accountability and transparency.

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  • DFI (Development Finance Institution)

    A development finance institution (DFI) is an alternative type of financial institution that provides credit via loans, equity and more.

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  • Discount Rate

    Merchants are charged a fee for the processing services that enable them to accept cards as payment. This fee, called the “merchant discount” or “discount rate,” is...

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  • DNE (Death Notification Entry)

    A notice made only by the federal government to notify the receiving depository financial institution (RDFI) of the death of a receiver.

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  • DSO (Day Sales Outstanding)

    The total accounts receivables divided by average daily sales.

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E

  • E-Check (or echeck)

    E-Check payments are ACH payments that originate via the internet, telephone, point-of-sale (POS), or bill payment sent through the mail or unattended lockbox. For mail and lockbox...

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  • Effective Rate

    The effective rate shows the amount of volume a business pays in credit card processing fees to process a given amount. It is shown as a percentage,...

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  • EFT (Electronic Funds Transfer)

    The electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems.

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  • EFTA (Electronic Fund Transfer Act)

    The Electronic Fund Transfer Act establishes the rights and liabilities of consumers in addition to the responsibilities of anyone who participates in electronic funds transfers.

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  • ENR (Automated Enrollment Entry)

    ENR entries are initiated by an receiving depository financial institution (RDFI), at the request of a receiver, to enroll the receiver in direct deposit or direct payment...

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  • Existing Relationship

    There is an existing relationship between an originator and a receiver when there is either a written agreement in place or when the receiver has purchased goods...

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F

  • FACTA (Fair and Accurate Credit Transactions Act)

    Passed in 2003, the Fair and Accurate Credit Transactions Act enables consumers to request a free credit report from the top three credit reporting companies. These free...

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  • FCRA (Fair Credit Reporting Act)

    The Fair Credit Reporting Act protects consumers from inaccurate information that may be found within credit reports.

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  • FDCPA (Fair Debt Collection Practices Act)

    Approved in 1977, the Fair Debt Collection Practices Act allows for legal consumer protection against abusive debt collection practices.

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  • FDIC (Federal Deposit Insurance Corporation)

    The Federal Deposit Insurance Corporation provides deposit insurance to depositors within U.S. banks. Its primary source of funding is through member dues from included banks.

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  • File

    A group of batched entries.

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  • FISMA (Federal Information Security Management Act)

    The Federal Information Security Management Act requires all federal agencies to implement cybersecurity programs to protect the information from unauthorized access.

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  • FOIA (Freedom of Information Act)

    The Freedom of Information Act provides either full or partial disclosure of unreleased information that is controlled by the U.S. government.

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  • FTC (Federal Trade Commission)

    The Federal Trade Commission is an independent agency that advocates for consumer protection and the prevention anti-competitive business practices.

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H

  • HIPPA (Health Insurance Portability and Accountability Act)

    The Health Insurance Portability and Accountability Act attempts to fight again abuse, fraud and waste within health insurance and general health care delivery.

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  • Hosted Tokenization

    Hosted tokenization enables payments inside of software applications to be processed without exposing the actual payment information, such as a credit card number. Learn More

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I

  • Interchange

    Interchange is a small fee paid by a merchant's bank (acquirer) to a cardholder's bank (issuer) to compensate the issuer for the value and benefits that merchants...

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  • Issuer

    An issuer is the organization that issues a credit or debit card.

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  • IVR (Integrated Voice Response)

    Integrated voice response or integrated voice recognition are payment systems that use the telephone to automate the capture of transactional information from a payer. Payers may either...

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L

  • Lockbox

    Lockbox refers to banking in which the funds are placed in a physical storage unit (such as a post office box). A bank would then visit the...

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M

  • Merchant

    A merchant is business that exchanges goods for monetary funds.

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  • Merchant Account

    An account opened through a payment processor or financial institution that allows payees to accept credit card payments from a payer.

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  • MICR (Magnetic Ink Character Recognition)

    The information printed on a check in magnetic ink. The MICR information helps MICR scanners retrieve important information from the check including the routing number, account number...

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  • MICR (Magnetic Ink Character Recognition)

    Magnetic Ink Character Recognition refers to the recognition of the numbers that are typically found at the bottom of checks. Once recognized, the numbers can automatically be...

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  • Mobile Payments

    Mobile payments allow for anytime, anywhere payments using a mobile phone, tablet, and more. Learn More

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  • MTE (Machine Transfer Entry)

    An entry initiated at an electronic terminal, such as an automated teller machine (ATM). This entry can either be a debit or a credit.

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N

  • NACHA (National Automated Clearing House Association – The Electronic Payments Association)

    The national trade association responsible for developing and enforcing ACH rules and guidelines.

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  • NCUA (National Credit Union Administration)

    The National Credit Union Administration is an independent federal agency that regulates federal credit unions. It also operates the National Credit Union Share Insurance Fund.

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  • NPR (Notice of Proposed Rulemaking)

    A Notice of Proposed Rulemaking is a notice that is publicly issued when any independent agency decides to change, remove or add a rule.

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O

  • OCR (Optical Character Recognition)

    A technology that enables you to convert different types of documents into editable and searchable data.

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  • ODFI (Originating Depository Financial Institution)

    Financial institutions that originate ACH transactions on behalf of its customers. ODFI's must abide by the National Automated Clearing House Association (NACHA) Operating Rules.

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  • OFAC (Office of Foreign Asset Control)

    The part of the US Treasury Department responsible for enforcing United States economic and trade sanctions.

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  • On-Us Entry

    Occurs when both the receiver and originator of a transaction have depository accounts at the same depository financial institution.

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  • Originator

    A company, individual or entity that initiates entries into the ACH network.

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  • Originator

    As it relates to check processing, the originator is the person who originally wrote a check.

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  • OTS (Office of Thrift Supervision)

    The Office of Thrift Supervision, between 1989 and 2011, was a federal agency that regulated all savings banks (chartered and state-chartered), savings associations, and loans associations.

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P

  • Payment Gateway

    A payment gateway is an application service provider that authorizes credit card and electronic check payments for businesses. A payment gateway facilitates the transfer of information between...

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  • PBR (Consumer Cross-Border Payment)

    A PBR entry is a debit or a credit entry to or from the account of a consumer where the participants are in two different countries.

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  • POP (Point-of-Purchase)

    A one time debit entry to the account of a receiver whom is notified, at the point of purchase, that their check (source document) will be converted...

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  • POS (Point-of-Sale)

    A one time debit entry to the account of a receiver where the entry is initiated at an electronic terminal. POS transactions are generally initiated with a...

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  • PPD (Prearranged Payment and Deposit)

    A credit or debit entry to the account of a receiver where there is either a standing or one time written authorization that has been signed or...

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R

  • RCK (Re-presented Check)

    An additional presentment of an eligible returned paper check through the ACH network.

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  • RDFI (Receiving Depository Financial Institutions)

    A financial institution qualified by the National Automated Clearing House Association (NACHA) to receive ACH transactions.

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  • Receiver

    Any company, organization or entity authorizing an originator to initiate an ACH credit or ACH debit transaction.

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  • Receiver

    For check processing, the receiver is the person or business that a check is written to.

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  • Regulation E (Reg-E)

    Regulation E details procedures for the processing of electronic funds transfers (EFTs) in addition to debit cards.

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  • Remote Deposit

    Remote deposit (or remote deposit capture) is the process of converting paper or mailed-in checks to an electronic file for processing.

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  • Risk Management

    Risk management is the act of carefully examining business processes to prevent the possible loss of revenue and other assets. Learn More

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S

  • Settlement Date

    The date an exchange of funds will be reflected on the books of the Federal Reserve Bank.

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  • SHR (Shared Network Transaction)

    A one time debit entry to the account of a receiver where the entry is initiated at an electronic terminal. The entry is initiated into a shared...

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  • Single Entry

    A one-time transfer of funds.

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  • SSL (Secure Sockets Layer)

    SSL, proceeded by TLS, is a security protocol that encrypts data and enabled authentication between applications over a network.

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  • Surcharge

    A surcharge is an extra fee that’s added to the regular total amount.

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T

  • TCPA (Telephone Consumer Protection Act)

    The Telephone Consumer Protection Act limits the amount of telemarketing and overall use of automated phone calls. The act applies to automated phone calls (including pre-recorded messages),...

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  • TEL (Telephone Initiated Entries)

    A standard entry class code that enables the originator to initiate a single entry debit to a consumer’s account pursuant to a consumer’s oral authorization obtained over...

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  • TILA (Truth in Lending Act)

    The Truth in Lending Act requires the full disclosure of finance charges and terms with regard to costs associated with borrowing.

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  • TLS (Transport Layer Security)

    TLS refers to a cryptographic protocol to secure information sent over a computer data network. Connections using TLS typically have multiple authentication methods in place to secure...

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  • Tokenization

    Tokenization replaces sensitive financial account information with a random string of characters, called a token. Learn More

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U

  • UDAP (Unfair or Deceptive Acts or Practices)

    Unfair or Deceptive Acts of Practices (UDAP) is a collection of rules for banking regulations, aiming to protect credit card users while adding to card-related disclosures.

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V

  • Value Added Reseller (VAR)

    A value added reseller is a company that sells products and / or services that are repackaged for specific needs.

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  • VAR Sheet

    A VAR Sheet is a file containing information, such as merchant account information, bank account information, processor information, etc. This file is typically given to a payment...

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  • Virtual Terminal

    A virtual terminal enables the ability to accept electronic credit card, debit card, and ACH transactions over nearly any Internet-enabled device. Learn More

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W

  • WEB (Internet Initiated Entries)

    A standard entry class code that enables an originator to debit a consumer’s account pursuant to an authorization obtained from the receiver via the internet.

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