- ABA Routing Number
American Bankers Association (ABA). A unique, nine (9) digit Bank Identifying Number that directs electronic deposits to the proper bank. This number precedes the account number at the bottom of the check.
- ABC Analysis
An analysis of a range of items that have different levels of significance and should be handled or controlled differently. Items (such as activities, customers, documents, inventory items, sales territories) are grouped into three categories (A, B, and C) in order of their estimated importance. 'A' items are very important, 'B' items are important, 'C' items are marginally important. For example, retailers can split their SKU's into three categories (1) SKUs that should never be allowed to go out of stock are given the 'A' rating, (2) SKUs that may sometimes be allowed to go out of stock would receive a 'B' rating, and (3) SKUs that are less important and would be excluded from ordering analysis.
- Accounts Payable
Amounts owed to others (a liability) for goods or services purchased on credit.
- Accounts Receivable
Amounts owed to a business (an asset), usually by customers who purchased goods or services on credit.
- Acid Test Ratio
Measures the ability of a business to use its near cash or quick assets to immediately extinguish or retire its current liabilities. Also known as quick ratio or liquid ratio. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book values. Generally, the acid test ratio should be 1:1 or better, however this varies widely by industry. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets). Formula: Acid Test Ratio = Current Assets - Inventory ÷ Current liabilities
- Acquirer or Acquiring Bank
Also known as the Acquirer or Acquiring Bank, this is the bank that represents all the issuing banks and posts the funds to be deposited in the merchant's account prior to monies being collected and transferred via interchange from the various issuing banks. Merchant banks are compensated for providing these funds through the discount rate, a fee charged for the use of the money. It's called a 'discount rate' because the fee is usually subtracted from credit card funds as they are deposited with the merchant. Merchant banks also share in the Interchange Fee charged by the card associations.
- Acquirer Processing Fee (APF)
The Visa Acquirer Processing Fee applies to all U.S.-based VISA authorizations acquired in the U.S. regardless of where the issuer/cardholder is located. If your business is based in the U.S., the acquirer processing fee will be added to all Visa authorizations. Similar to MasterCard NABU fee.
- Acquirer Program Support Fee
MasterCard fee applies under the same circumstances as the Cross Border Assessment Fee (Domestic/Foreign), and nearly always combines with it,
- Adaptive Selling
A selling strategy in which the way a product or service is presented varies according to the type of consumer viewing it. Adaptive selling takes into account the situation in which the product or service is presented, the demographics of the consumer and feedback that has been received about the product or service. Opposite of formula selling.
- Address Verification Service (AVS)
A service that reduces credit card fraud by verifying the cardholder's address information when the physical card isn't available to swipe through an MSR device (such as with telephone orders). AVS processing doesn't affect whether the charge is approved. But, AVS does indicate whether or not the address provided by the customer matches the address on file with the credit card company so that the merchant can decide whether or not to process the charge. May impact credit card processing rates.
- Advanced Shipping Notice
Message that informs a retailer (or consignee) of the actual dispatch of a shipment and indicates its expected arrival date and other particulars.
- Affinity Marketing
A method of selling goods and services by creating partnerships with similar or compatible companies and brands. This increases brand loyalty for both companies and products and heightens market awareness of both. Opposite of competitive marketing.
A process that determines the age (usually measured in the number of days old) of customer open receivables.
- Allocated Purchase Order
A purchase order that includes items intended for delivery to multiple locations. Items ordered with an allocated purchase order can be shipped to a single location, and then transferred to their final locations, or they may be shipped to each individual location from the vendor.
Record consisting of letters, numbers, and/or special symbols (*, &, $, etc.) in any combination.
- Alternate Unit
Represents a secondary unit of measure for receiving or selling an item. For example, the stocking unit for an item might be 'each,' but you might receive an item by the alternate unit 'case.'
- Approval Code
A six digit alphanumeric code assigned by the Issuer to identify the approval for a specific authorization request. This guarantees the merchant that funds will be available for 30 days, and freezes the card holder’s funds for 10-21 days, presuming proper protocols are followed. A transaction resulting in an Approval Code is not final until the Batch containing the transaction is settled. Approval Codes containing letter characters are usually a result of a business, commercial, corporate, or purchasing credit card transaction. Once approved, the Approval Code should be saved as its needed to complete the sale later on a terminal, POS, software, online or directly with the Processor.
A licensing fee, like a royalty, which pays a percentage to the respective Association (brand of card) on every transaction. Additional assessments apply to international cards and currency conversions.
The association is the brand name of the Card which may be either the Visa Association, MasterCard (formerly MasterCharge) Association, Discover, American Express, Diners Club, Carte Blanche, JCB (Japan) and others. Associations charge a fee named “Assessment” on every transaction processed worldwide, whether or not this is reported on a Merchant statement. For example: if merchant is on Tiered billing, et al, actual processing fees may be hidden so that only the Tier qualification rate is shown.
- Audit Trail
A method of tracking transactions through the entire sequence of their history so that all financial information can be traced. Certain reports should be printed or stored electronically in the retail software as part of the business's permanent records.
The act of ensuring the cardholder has adequate funds available against his or her line of credit. If authorized, an authorization code will be generated and sufficient funds are set aside. The cardholder's available credit limit will also be reduced by the authorized amount.
- Authorization Code (also known as Approval code)
A code usually consisting of numbers which are provided to the Merchant when a credit card transaction is authorized.
- Automated Clearing House (ACH)
One of the group of processing institutions that have networked together to exchange (clear and settle) electronic transactions. Also a way of processing payment electronically like an eCheck (Electronic Check) in which the bank’s Routing number and Account Number are required and funds are transferred from the buyer to the seller account electronically.
1. having the capability of starting, operating, moving, etc.,independently:
an automatic sprinkler system; an automatic car wash.
2. Physiology. occurring independently of volition, as certain muscularactions; involuntary.
3. done unconsciously or from force of habit; mechanical:
an automatic application of the brakes.
4. occurring spontaneously:
5. (of a firearm, pistol, etc.) utilizing the recoil or part of the force of the explosive to eject the spent cartridge shell, introduce a new cartridge,cock the arm, and fire it repeatedly.
6. a machine that operates automatically.
- Available Quantity
The quantity of an item that is currently available for sale. Generally, the available quantity is equal to the on-hand quantity less any quantities set aside for open orders.
- Average Cost
Refers to the average amount that has been paid for the items that are currently on hand. Average cost is determined by calculating or recalculating a weighted average of the cost of all inventory items currently in stock. This cost is recalculated each time items are added to the inventory, and in certain situations, when items are removed from inventory. Prices for inventory items vary, so average cost gives a retailer an indication of the cost of a given item over time.
- Average Inventory
Refers to the typical or average quantity that is on hand for any given item. As on hand varies over time, and average quantity provides a more stable data point making it easier for the retailer to place strategic reorder points. So, when an item dips below the average quantity point, it usually needs to be reordered. Formula: Average Inventory (Month) = (Beginning of Month Inventory + End of Month Inventory) ÷ 2
Address Verification System. Validates the billing address of the credit card to make certain the ZIP code and/or Street number or other information matches what is on file. This can also decrease credit card fraud if the thief does not have access to the card holder’s actual billing address. Merchant may decide:
§ AVS match is ignored
§ AVS match is optional
§ AVS is required.
For best qualification rates on transactions, AVS should be used.
Hint: Remember, however, IF AVS Match is set to “required” and IF the customer has recently moved or does not remember which of his/her card is billed to which address and owns multiple addresses including homes and businesses, the transaction will not be approved until the address does match successfully. This may result in loss of sales. Required AVS Match only on large ticket sales will lower the transaction rate on matched AVS.
- AVS Response Code
Part of a transaction response code generates a single letter code in response to the Address Verfication System (AVS) check. Most terminals and POS systems also offer an “AVS Only Check” for verification before the transaction is actually run if a merchant chooses. Here are the definitions of the possible response code characters: - A — Street addresses matches, but the ZIP code does not. The first five numerical characters contained in the address match. However, the ZIP code does not match.
- E — Ineligible transaction. The card issuing institution is not supporting AVS on the card in question.
- N — Neither address nor ZIP matches. The first five numerical characters contained in the address do not match, and the ZIP code does not match.
- R — Retry (system unavailable or timed out).
- S — Card type not supported. The card type for this transaction is not supported by AVS. AVS can verify addresses for Visa cards, MasterCard, proprietary cards, and private label transactions.
- U — Address information unavailable. The address information was not available at the issuer.
- W — 9 digit ZIP code match, address does not. The nine digit ZIP code matches that stored at the issuer. However, the first five numerical characters contained in the address do not match.
- X — Exact match (9 digit zip and address) Both the nine digit postal ZIP code as well as the first five numerical characters contained in the address match.
- Y — Address and 5 digit zip match. Both the five digit postal ZIP code as well as the first five numerical characters contained in the address match.
- Z — 5 digit ZIP matches, but the address does not. The five digit postal ZIP code matches that stored at the VIC or card issuer's center. However, the first five numerical characters contained in the address do not match. FOREIGN CODES:
- B — Street address matches for international transaction. Postal Code not verified due to incompatible formats.
- C — Street address and Postal Code not verified for international transaction due to incompatible format.
- D — Street address and Postal Code match for international transaction.
- P — Postal Code match for international transaction. Street address not verified due to incompatible formats.
- B2B (Business-to-Business)
Business model focused on sales to other businesses. Manufacturers, wholesalers, and suppliers are typical B2B companies.
- B2B (Business-to-Consumer)
Business model focused on sales to consumers. Retailers are typical B2C companies.
- B2B (Business-to-Government)
Business model focused on sales to national, state, or local government agencies.
A type of order typically created when there is insufficient quantity available for a sale or order.
- Bank Identification Number (BIN)
An identification number consisting of a two-part code assigned to banks and savings associations; the first part shows the location and the second identifies the bank. This helps identify the institution that issued the card to the card holder, as well as the card type (i.e. debit, credit, gift card).
- Bar code
Information encoded into a pattern of varying-width parallel bars and spaces. The most common symbologies used in the retail environment are UPC-A for merchandise marking and Code 128 for shipping labels. Other symbologies used include EAN-13, EAN-8 and ITF-14.
- Bar Code Printer
Bar code printer is an electronic device for reading printed barcodes. Like a flatbed scanner, it consists of a light source, a lens and a light sensor translating optical impulses into electrical ones. Additionally, nearly all barcode readers contain decoder circuitry analyzing the barcode's image data provided by the sensor and sending the barcode's content to the scanner's output port.
- Bar Code Scanner
An electronic device for reading printed barcodes. Like a flatbed scanner, it consists of a light source, a lens and a light sensor translating optical impulses into electrical ones. Additionally, nearly all barcode readers contain decoder circuitry analyzing the barcode's image data provided by the sensor and sending the barcode's content to the scanner's output port.
Information encoded into a pattern of varying-width parallel bars and spaces used to provide a unique identifier for an inventory item or for a particular color/size combination for an item. It is typically used to scan the price of an item in a retail setting. A barcode may be printed in machine readable format using one of a number of common symbologies, such as UPC-A, Code 39, etc.
- Basic Retail Formulas
Simple formulas used by retailers to help determine Initial Pricing. Formulas: Retail Price = Cost of Goods + Markup; Markup = Retail Price - Cost of Goods; Cost of Goods = Retail Price - Markup
- Basis Point
Hundredth of a Percent. Also abbreviated BP. Examples: 1 basis point = 0.01% = 0.0001
50 basis points = 0.05% = 0.005
100 basis points = 1% = 0.01
2000 basis points = 20% = 0.2
30,000 basis points = 300% = 3.0
All of the credit card transactions (sales) occurring before Settlement (close of batch), which should be done at the close of the business day or when no more transactions are expected for the day. Batch close, also called Settlement, may be set to “Automatic” which is a preset time each day, or “Manual” which requires the Merchant to settle the transactions from the Terminal, software or POS system.
- Batch Header Fees
An optional charge, although there is really no cost relating to batch settlement. Some processors use this in lieu of a Statement fee but some processors even charge both.
- Batch Processing
A processing model for entering several transactions in sequence, then finalizing (or posting) all of these transactions at the same time. Batch processing allows multiple employees to enter and edit the same types of transactions simultaneously in their retail software. As it is not real-time, it is best used for data processes that does not need to be analyzed or accessed on a rapid basis.
- Batch scanner
A Portable data terminal that holds data internally so it can be downloaded later.
- BI (Business Intelligence)
Computer-based techniques used in identifying, extracting, and analyzing 'hard' business data, such as sales revenue by products or departments or associated costs and incomes. Objectives of a BI exercise include (1) understanding of a retailer's internal and external strengths and weaknesses, (2) understanding of the relationship between different data for better decision making, (3) detection of opportunities for improvement, and (4) cost reduction and better deployment of resources.
- Bill of Lading (BOL)
A shipping document that serves as evidence that the carrier received shipment and as a contract between carrier and shipper.
Represents a physical place to store inventory. Bins are subdivisions of a location and are used to locate items. Generally, bins refer to physical rows/shelves or to actual bins.
A measurable characteristic or unique trait, such as a fingerprint, used to recognize the identity of a person. Biometric devices can be used with retail point of sale systems as a secure log in mechanism.
- Blind Credit
A Credit (Refund) applied to a transaction for which a record is not currently accessible or available within the Merchant's records. The transaction ID number or original approval codes may not be known, but the credit can still be applied to the Cardholder's credit card. Note that a Merchant must be approved in advance for this capability and not all Processors support this function.
The brand of a card refers to the logo or type of card. Common brands include Visa, MasterCard, American Express and Discover.
- Break Even Analysis
The break-even point for a product is the point where total revenue received equals the total costs associated with the sale of the product. A break-even point is often calculated to determine if it would be profitable to sell a proposed product. Formula: Break-Even ($) = Fixed Costs ÷ Gross Margin Percentage
- Buffer Stock
Extra supply of products or items held as a reserve to safeguard against unforeseen shortages or demands. Holding buffer stock decreases the likelihood that an item will be out of stock and not available for sale.
- Bulk Order
An order to buy a large quantity of a product at once. This may occur at either the retail or the wholesale levels. For example, a stores often make larger orders because they want to minimize the costs to purchase and receive merchandise. Buying in bulk is usually less expensive per unit than buying in small quantities, because marginal costs tend to decrease the more a business produces or sells.
An retail employee or manager who is responsible for selecting, pricing, and purchasing merchandise. At larger retailers, the term "buyer" can also designate a department manager, whose responsibilities include, but are limited to, purchasing functions.
- C.O.D. (Collect On Delivery)
Refers to a shipping method where the buyer pays for the goods when they are delivered.
- Card Associations
These are organizations such as VISA and MasterCard that, along with the government, make the rules in regard to acceptance of credit cards. These rules include fees that are charged for interchange. American Express is different - as it is both the issuer and acceptor, and merchants must have a separate agreement with them.
- Card Verification Value (CVV) or Card Validation Code (CVC)
Often represented as CVV2/CVC2, this safety feature provides consumers with added credit card transaction security by requiring additional three or four non-embossed numbers that are only located on the actual credit card. CVV2/CVC2 processing does not affect whether the charge is approved, but it does reduce credit card fraud when the physical card isn't available to swipe through an MSR device (e.g., as with telephone orders) - so rates are often impacted. Visa refers to this as CVV2 (three digit code on back of card), MasterCard calls this CVC2 by (three digit code on back of card), and American Express calls this (four digit code on front of card).
The authorized user of a credit card who has established a line of credit with the card issuer and is financially responsible for transactions authorized to the card.
- Cardholder Verification Value or CVV2
A 3 or 4 digit number that is printed on the card to verify authenticity.
- Cash and Carry
Refers to a purchase process where the customer pays in full for the items purchased. No financing is provided.
A classification assigned to a retail item. Categories are useful for grouping similar items for pricing, merchandising and reporting purposes.
- CCD and CCD Scanners
A bar code reader that uses a CCD (Charge Coupled Device) chip to pick up the image of a bar code. These scanners can read bar codes without contacting the symbol much like a laser scanner, but they cannot usually read the symbol at distances greater than 4 inches. They are priced between contact scanners and laser scanners.
- Charge Back
The return of funds to a customer through a process that is forcibly begun by the customer's issuing bank. It involves the reversal of a previously authorized charge through a credit card, bank account or line of credit. Charge backs can occur for a variety of reasons, including customer disputes, potential or actual fraud (on the part of merchant, sales associate and/or customer), processing errors, and authorization issues. Merchants are typically assessed fees by the bank for charge backs.
- Chargeback Defense
A customer who does not receive his goods or services, or says he did not place an order, can ask his Issuing Bank to chargeback the Merchant. The Issuing Bank sends the chargeback request to the Merchant Bank, which forwards it to the Merchant asking to validate the charge. Information such as the amount, an invoice or folio, customer signature or shipping documents, as well as the shipping address (used in AVS during the authorization), is needed to defend against a chargeback.
Fees incurred when your customer refutes the validity of a transaction (by filing a Dispute) with his or her Issuing Bank who then forcibly reverses the transfer of funds. The Merchant may dispute the validity in which case Acquiring Bank and Issuing Bank shall reach an agreement. NOTE: frequent chargebacks adversely affect privilege to process credit cards, especially if more than 1% of all transactions result in chargebacks. There are Four Types of Chargebacks:
§ Technical — Expired authorization, non-sufficient funds or processing error.
§ Clerical — Duplicate billing, incorrect amount billed, or refund never issued.
§ Quality — Consumer claims goods never received as promised at time of purchase.
§ Fraud — Consumer claims they did not authorize purchase or identity theft.
- Chart of Accounts
A list of all of a business's accounts in numerical order, usually grouped by type.
- Check Digit
The last digit on a credit card is the Check Digit, for validation using an algorithm where all of the numbers are added up in specific combination. The beginning of the Primary Account Number (PAN) is the BIN.
- Check Printer
A peripheral device that can print sales total due and customer information onto a check at the POS.
- Check Reader
A peripheral device used to read encoded information on a check to be transmitted and processed by a computer or register for authorization and approval.
- Check Verification
An authorization service that allows merchants to look into a database to determine if customers have a history of returned checks. Merchants may also add checks that have been returned for nonsufficient funds (NSF).
- CIS, Center for Internet Security
Non-profit enterprise with mission to help organizations reduce the risk of business and e-commerce disruptions resulting from inadequate technical security controls.
- CIS Center for Internet Security
Non-profit enterprise with mission to help organizations reduce the risk of business and e-commerce disruptions resulting from inadequate technical security controls.
- Closing a Drawer
The process of recording the ending amount of cash and other payment types in a drawer (or register) before completing the end of day posting. It involves recording the total number of payments that have been received and other transactions that affect the balance of the drawer. Normally, a drawer or register is closed at the end of each day.
- Cloud-Based Software
End users access cloud-based applications through a web browser or a light-weight desktop or mobile app while the business software and user's data are stored on servers at a remote location. The name comes from the use of a cloud-shaped symbol as an abstraction for the complex infrastructure it contains in system diagrams. The advantages of cloud-based applications include: ability to get an applications up and running faster, improved manageability and less maintenance, ability to rapidly adjust resources to meet fluctuating and unpredictable business demand.
To allocate or commit inventory to a transaction (such as an open order, ticket, adjustment, etc.).
The Card Associations make regulations for each industry that accepts credit cards. These regulations are designed (according to the Card Associations) to prevent fraud.
- Contact Scanner
A bar code scanner that requires physical contact between the encoded medium and the scanner.
- Contribution Margin
The marginal profit per unit sale. Contribution margin can be viewed as the fraction of sales that contributes to the offset of fixed costs. Alternatively, unit contribution margin is the amount each unit sale adds to profit. Formula: Contribution Margin = Total Sales - Variable Costs
- Conversion Rate
Number of sales realized as a percentage of the number of sales calls (visits) or enquiries received. For ecommerce site, also refers to the number of click through or sales realized as a percentage of advertising impressions shown to online users. Also called batting average or hit rate.
- Cost Method
Refers to the process used by the retailer to determine the cost of each inventory item. Generally accepted methods of costing include average cost method, standard cost method, first-in, first-out method (FIFO), and last-in, first-out method (LIFO).
- Cost of Goods Sold
Includes the direct costs attributable to the production of the goods sold by a business. This includes the materials cost used in creating or buying the goods along with the direct labor costs used to producing or procuring the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Formula: COGS = Beginning Inventory + Purchases - Ending Inventory
- Counting a Drawer
The process of recording the amount of cash and other payment types in a drawer. Normally, the drawer is counted at the end of each business day. Also referred to as Closing a Drawer.
Custom Payment Service refers to Visa cards authorized electronically, requiring qualification validation for the lowest rates.
Can be either: (i) the ability to obtain goods, services, or money in exchange for a promise to pay later, or (ii) the right side of an account of any G/L account. In accounting terms, credits are normally increases to liability accounts and decreases to asset accounts.
- Credit Card Network
This is general term used by many merchant banks and processors to refer to their transaction networks. These can be everything from a real network owned and utilized by the processor, to a third party 800 service or Telco network of one of the major phone companies that the processor uses to transmit transactions. Some processors use private networks to transmit their transactions, while others use virtual-networks built and managed by wholesalers of the major networks for leased lines. Theoretically, the greater the ownership or control by the processor, the better the reliability and performance.
Also ‘Returns.’ A full or partial refund of a sale to the Cardholder for a previous transaction not made during the current Batch. If a refund is needed during the current batch, a void must be issued instead, which cancels the transaction as if it never took place. Only the authorization attempt will appear in the cardholder's records.
- Cross-Border Assessment Fee
§ Domestic — The domestic MasterCard Cross-Border Assessment Fee applies to U.S. acquired transactions paid for with a card issued outside of the U.S. and settled in USD (US Dollars). § Foreign — The foreign Cross-Border Assessment Fee applies to international transactions settled by U.S.-based merchants in a foreign currency, requiring conversion to USD (US Dollars).
This is nearly always combined with the Acquirer Program Support
The time span during which a specific cryptographic key can be used for its defined purpose based on, for example, a defined period of time and/or the amount of cipher-text that has been produced, and according to industry best practices and guidelines (for example, NIST Special Publication 800-57).
- CVV / CVV2
CVV, CVV2, or Card Verification Value. Refers to either magnetic stripe data or printed number security feature located on the back of payment card. If you require this CVV, it will cut down on the use of card numbers stolen from credit card statements or plucked off of the Internet. Of course, if the thief has the actual credit card, then requiring the CVV has no benefit. Data element on a card’s magnetic stripe that uses secure cryptographic process to protect data integrity on the stripe, and reveals any alteration or counterfeiting. Referred to as CAV, CVC, CVV, or CSC depending on payment card brand. The following list provides the terms for each card brand:
§ CAV - Card Authentication Value (JCB payment cards)
§ CVC - Card Authentication Value (JCB payment cards)
§ CVV - Card Validation Code (MasterCard payment cards)
§ CSC - Card Security Code (American Express)
For Discover, JCB, MasterCard, and Visa payment cards, the second type of card verification value or code is the rightmost three-digit value printed in the signature panel area on the back of the card. For American Express payment cards, the code is a four-digit unembossed number printed above the PAN on the face of the payment cards. The code is uniquely associated with each individual piece of plastic and ties the PAN to the plastic. The following list provides the terms for each card brand:
§ CID - Card Identification Number (Amex, Discover)
§ CAV2 - Card Authentication Value 2 (JCB payment cards)
§ CVC2 - Card Validation Code 2 (MasterCard payment cards)
§ CVV2 - Card Verification Value 2 (Visa payment cards)
MasterCard, Maestro & Cirrus call this a CVC, or Card Validation Code. 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.
CVV/CVV2 Response Code Definitions
§ Space — CVV2 processing not requested
§ M — CVV2/CVC2 Match
§ N — CVV2/CVC2 not matched
§ P — Not processed
§ S — CVV2 should be printed on the card, but it was indicated that the value was not present
§ U — Issuer does not support CVV2
§ X — Service provider did not respond
Abbreviation for Card Verification Value (see Cardholder Verification Value). The "2" refers to the printed code on the card. CVV1 refers to a code encoded on the magnetic stripe of the card.
- Data Mining
Sifting through and analyzing large amounts of data for useful information. Data mining uses artificial intelligence techniques and advanced statistical tools to reveal trends, patterns, and relationships, which might otherwise have remained undetected. In contrast to an expert system (which tries to find inferences from the given data based on a given set of rules) data mining uses these artificial intelligence techniques to discover hidden rules underlying the data that often are not apparent to users.
- Days Supply On Hand
A ratio measuring the average number of days an item is held in the inventory. Since inventory cost represents the opportunity cost of capital, this ratio indicates how well inventory is being managed, and is one of the elements in determining the operating cycle of a company. The general formula is: Number of units in inventory x 365 ÷ Annual usage in number of units.
- Dead Stock
Inventory that has not been sold for a long period of time. Some items are seasonable, however, and different rules apply to them. Different lengths of time are applied to determine whether or not various items have become dead stock.
- Debit Network
Debit networks transmit transaction data between the merchant bank and debit card issuer. There are a number of debit networks. The debit card of each network typically will have its logo printed on the debit cards that it supports.
- Demand Deposit Account (DDA)
Any bank account.
- Direct Thermal Paper
Label stock that darkens when heated. Direct thermal printers require no ink or ribbon and are typically used when a bar code label needs to endure for a year or less. Direct thermal labels yellow over time and are not resistant to water or other harsh conditions.
- Discount Rate
This is the fee paid by a merchant to the merchant bank to manage the deposit of credit card funds into their bank. It is usually quoted as a percentage to hundreds (or basis point) of the transaction value.
- Dollar Markup Method
A method of calculating an Initial Markup that takes into account the total amount of operating expenses and desired profit. These are then broke down on a per product unit basis, which is then added on to the total product cost. This addition onto the total cost is the dollar markup. This dollar markup is either expressed as a percentage of the total cost per unit or the selling price.
- Dots per inch (DPI)
Resolution of a printer or display. Higher DPI increases the quality of graphics and decreases the minimum size of bar codes a printer can produce
- Drawer fund
The amount of money left in a drawer after the drawer has been closed. The drawer fund is typically used to provide startup money (change) for the next business day.
Refers to an item that will be shipped directly from a store's supplier or vendor to the store's end customer.
Data Security Standards are the regulations and practices created and governed by the Payment Card Industry Security Standards Council or (P.C.I.). Also see PCI SSC.
- EBT (Electronic Benefit Transfer)
An electronic system that allows recipients to receive government benefits (such as food stamps) by means of a debit card. Retailers can only accept EBT cards for food items that have been authorized by the government.
'Electronic commerce', commonly known as 'e-commerce', is the buying and selling of product or service over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Ecommerce generally occurs using the Internet and web browser, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.
- EDC (Electronic Draft Capture)
An automatic method of authorizing, balancing, and settling credit card transactions entered in your retail software package.
Electronic Data Interchange or EDI is the process of electronically exchanging purchasing data between your POS system and a vendor's system. Data must conform to the published format in order for the date to be synced in a way that allows for automatic purchase order creation and other key transactions.
- Effective Rate
A simple but effective benchmark revealing the real, actual percentage of fees that a Merchant is charged on all transactions. It is calculated by dividing the Total Fees Paid by the Total Volume of credit card transactions. (volume ÷ fees)%. The Effective Rateis especially meaningful because it helps reveal hidden fees and inflated fees. Example: often a Discount Rate is low because “Back End” fees (surcharges, etc.) offset a low Front Rate.
Electronic Interchange Reimbursement Fee is a penalty assessed by Visa when address verification fails or transactions are settled (batched) late.
- Electronic Data Interchange
A computerized system that allows linked computers to conduct business transactions through a computer-to-computer exchange of standard business data according to agreed-upon data formats.
- Electronic Draft Capture (EDC)
Electronic authorization and deposit of credit card transactions without submission of paper drafts to bank for payment — may also be referred to as capture. This would apply especially to all eCommerce merchants.
- Elite Card
A MasterCard reserved for businesses or individuals with near perfect credit and high incomes and enjoy no Credit Limit on purchases, usually. These cost merchants a higher rate.
The technique of automatically scrambling credit card data in the point of sale system before the data is transmitted. Used for security and anti-fraud purposes.
- Ending Inventory
Merchandise or items on hand at the end of an accounting period.
- EndoEnd Encryption
A security feature that protects a consumer's sensitive credit card information by encrypting it both at the point of sale and at the processing end. Data is encrypted at the point of origination so that it can travel safely through public networks and other vulnerable networks to the secure point where it can be safely unencrypted and processed.
- Enhanced Card
A MasterCard reserved for people of high incomes and higher credit limits. These cards do cost the merchant slightly more on interchange rates.
- ESN, Electronic Serial Number
A permanent identification number used to recognize mobile devices.
- ESN Electronic Serial Number
A permanent identification number used to recognize mobile devices.
- ESO, Encryption & Support Organizations
An ESO is one that loads or injects software or encryption keys into ATMs, terminals or PIN pads.
- ESO Encryption & Support Organizations
An ESO is one that loads or injects software or encryption keys into ATMs terminals or PIN pads.
Merchants who sell retail goods or services through the Internet or an online shop.
Abbreviation for Early Termination Fee, which is a penalty Processors charge merchants for cancellation of contract or agreement prior to the expiration of the contract. The reasoning is usually that processors incur substantial expenses in signing up a new merchant including new equipment programming, file setup, billing administration, credit, background and TMF checks and network setup fees plus registration with associations. ETF fees are usually not more than $300 and may be prorated based on number of months left on contract. Under special circumstances these fees may be waived. It may be worth it to pay an ETF if the savings and improved service to switch is substantial. Some processors require 30 days advance notice in writing before the automatic renewal of a contract.
- Exception Reporting
Reporting that only includes information not meeting defined criteria. For example, if you plan to sell between 5% and 7% of your inventory each month, then exception reporting would allow you to report on sales outside your criteria limits (e.g., sales of items that fell below 5% or rose above 7%). As only information that falls outside your criteria limits appears on the report, exception reporting makes it easier to spot problem areas and concerns.
- F.O.B. (Freight On Board)
A shipping term indicating that freight charges are included to the specified destination.
A major violation of Association rules whereby one merchant processes credit cards for another merchant or another business not approved under the merchant’s processing application and agreement. This includes a business owner processing one's own personal or business credit cards to get cash from one's merchant account or for another business. If a merchant is found practicing factoring, the merchant will not only lose one's merchant services account and be liable for major penalties, but shall also be added to the Match list, also called the TMF list, making it impossible to process credit cards through any processor or bank. The merchant can easily be caught and found guilty due to a cardholder dispute or chargeback.
- Fill Rate
Percentage of customer orders fulfilled from inventory at hand. It is a measure of an inventory's ability to meet demand. Also called demand satisfaction rate.
- Fleet Cards
Fleet Cards are variation of commercial or corporate card to purchase goods and services for automobile/vehicle, aviation, or marine fleets.
- Floor Limit
An amount that Visa and MasterCard have established for single transactions at specific types of merchant outlets and branches that once it reaches a certain amount authorization is required.
- Forced Sale, Force Authorization, Force Transaction
The final step of a transaction from a Preapproved Authorization or Voice Authorization which requires an Approval Code to complete a transaction the merchant initiated up to 30 days earlier. This sale transaction is not final until Settlement of the Batch. Is also called Post Authorization, Offline Sale, Offline Transaction.
- Frequent Shopper Program (Customer Loyalty Program)
Program designed to reward customers for their continued business, promote loyalty, increase visitation, and encourage future purchases. Rewards may be in the form of discounts, awards, or other perks.
- Front Rate
A tactic some banks or processors use to lure in new merchants by offering a low qualified rate (like 1.69%) and inflating rates of the other cards, like rewards and business cards. The cards which do not fall under qualified rates may be lumped together as “mid qualified” or “non qualified.” Beware of suspiciously low rates. Some companies intentionally quote only their debit rate, neglecting to mention rates on all other card types.
- GAAP (Generally Accepted Accounting Principles)
A set of financial accounting standards and reporting guidelines. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements.
This is the middleman that provides communication between your company’s software, website or hardware and your Processor. Some Processors are the gateway. Most gateway companies make software or provide e-commerce solutions (either invisibly on your website or as the shopping cart). Examples of Gateways include Authorize.Net/CyberSource, TGate/BridgePay and Shift4.
- Gateway (also known as Internet Gateway)
Manages the electronic connection between consumers and financial institutions, and transmits data. An Internet gateway that processes credit cards is a point of connection between the point of sale system and the credit card processor.
- General Ledger (G/L)
Refers to either (i) the collection of all balance sheet, income, and expense accounts used to keep a business's financial records; (ii) a software package that uses accounts to summarize a company's fiscal records.
- Ghost Authorization
An authorization that is approved but never cleared or settled), resulting in additional fees to the merchant. Visa and MasterCard claim these can adversely impact a cardholder’s open-to-buy credit availability, leading to increased declines and confusion at the point of sale. Visa calls the fee for this the Misuse of Authorization Fee while MasterCard calls it a Processing Integrity Fee.
- Gift Certificate
A voucher for goods or services that is sold to one customer with the expectation that it will be redeemed by that customer or another.
- Gift Receipt
A receipt without prices that allows for easy exchanges of a gift. Gift receipts act as proof of purchase for the gift recipient and allow the purchaser of the gift to keep the original detailed receipt for his or her own records.
- Government Card
A generic term for commercial purchasing cards (purchase cards) issued to federal, state, or local government agencies. It can refer to a Purchase, Travel, or Fleet card.
A table or matrix of the available combinations of characteristics for an item, such as color, size, style, width, length, etc. Retail apparel grids are typically one-dimensional (e.g., color only or size only), two-dimensional (e.g., color/size), or three dimensional (e.g., color/size/style).
- Grid Cell
The intersection of two dimensions (e.g., color and size) in an item grid. Also referred to as a color/size combination, or simply color/size.
- Gross Billing
A method of pricing where the processor’s cost of the transaction (Interchange +Assessment) and the discount rate (processor’s charge) are blended, that is, combined together into one aggregate rate.
- Gross Margin (%)
The Gross Profit divided by the price expressed as a percent. Formula: Gross Margin = Total Sales - Cost of Goods
- Gross Profit ($)
The difference between an item or good's price and its Cost of Goods Sold, including direct-fixed and direct-variable unit costs, required direct overhead.
(Global Trade Item Number) - An identifier for trade items developed by an international standards group (GS1). GTIN identifiers are used to look up product information in a database (often by inputting the number through a bar code scanner pointed at an actual product) which may belong to a retailer, manufacturer or other entity. The uniqueness and universality of the GTIN's are useful in establishing which product in one database corresponds to which product in another database, especially across organizational boundaries. GTINs may be 8, 12, 13 or 14 digits long, and each of these 4 numbering structures are constructed in a similar fashion, combining Company Prefix, Item Reference and a calculated Check Digit.
Process of rendering cardholder data unreadable by converting data into a fixed-length message digest via Strong Cryptography. Hashing is a (mathematical) function in which a non-secret algorithm takes any arbitrary length message as input and produces a fixed length output (usually called a “hash code” or “message digest”). A hash function should have the following properties: § (1) It is computationally infeasible to determine the original input given only the hash code,
§ (2) It is computationally infeasible to find two inputs that give the same hash code.
In the context of PCI DSS, hashing must be applied to the entire PAN for the hash code to be considered rendered unreadable.
- Impact Printer (also known as dot matrix printer)
A printer that forms characters or images using a matrix of pins that strike an inked ribbon. Cheaper, slower and noisier than thermal receipt printers.
- Initial Markup (IMU)
The initial markup is the average markup required on all products to cover the cost of all items, incidental expenses, and to obtain a reasonable profit. The initial dollar markup is expressed as a percentage. Initial pricing of a product is an important step in merchandising. For example, the Keystone Method and Dollar Markup Method are techniques used to determine an initial mark-up. Care must be taken to make sure that the initial markup (IMU) on those products are optimized. When the markup is too low, retailers lose profits. When the markup is too high retailers lose sales. Formula: Initial Markup % = (Expenses + Reductions + Profit) ÷ (Net Sales + Reductions)
Think of this as a Price List, Fee Schedule or Menu each Card Association (Visa, MC, Discover, Amex) assesses for every variation of card that they create, based on risk. Since different industry types and businesses are naturally higher risks, Interchange rates reflect that.
Visa has 40+ card types ranging from debit, rewards, business and international while MasterCard carries 50+ with similar variations. Discover & Amex have much fewer. § All Visa Interchange Rates may be found atusa.visa.com/merchants/operations/interchange_rates.html
§ All MasterCard Interchange Rates may be found atwww.mastercard.com/us/merchant/support/interchange_rates.html
- Interchange Fee
This is the fee that the card association charges the merchant to arrange for the funds to be deposited into merchant's bank and to arrange for the billing information to be delivered to the cardholder's bank, also know as the issuing bank. Interchange fees are based on credit card regulations and vary by the amount of data captured from the transaction (including card swipe, address, and electronic signature as needed). These fees are also based on the timeliness of the settlement of transactions.
- Interchange Plus
A method of pricing rates where the Discount Rate (processor’s charge) is isolated from Interchange. Because the costs are transparent, it is more honest as it discloses where the fees are really going. However, it may confuse merchants who are not used to seeing “assessment” and “interchange.”
- Interchange Reimbursement Fee
§ 1.) A fee that an acquirer pays to an issuer in the clearing and settlement of an interchange transaction, based on either the standard (paper-based) rate or electronic rate. § Or 2.) A fee that an issuer pays to an acquirer for making a cash disbursement to a cardholder or check purchaser.
- International Acquirer Fee
Combined with the International Service Assessment Fee
- International Processing Fee
Is assessed on Discover transactions at US merchants, where the card issuing country is outside of the US.
- International Service Assessment Fee
Combined with the International Acquirer Fee on transactions paid for by a Visa card issued outside of the U.S.A.
- International Service Fee
Is assessed on Discover transactions, including Cash Advance, conducted at a merchant location in a country other than the country that the card was issued in.
Inventory is commonly used to describe the goods and materials that a business holds for the ultimate purpose of resale. For a retail store, inventory is the products and goods that are on the shelves and available for purchase by customers. It can also refer to the value of the products that are on hand.
- Inventory Adjustments
An increase or decrease made to inventory to match an item's actual on-hand quantity and the calculated quantity. This typically occurs after an inventory count. Adjustments are typically recorded to account for breakage, theft, loss, receiving errors, over shipments, etc.
- Inventory Cost
The actual or average value of on-hand merchandise.
- Inventory Count
The physical counting of the inventory or items that are on the shelves of a retail store. It is done to ensure that the inventory count in the POS system is accurate and matches the physical inventory. Inaccurate inventory counts can cause many issues for retailers.
- Inventory Turnover
A document detailing money owed from one entity to another.
- IP Address, IP4 , IP6
Also referred to as “Internet Protocol Address.” Numeric code that uniquely identifies a particular computer on the Internet. Since 1981, IPv4 (version 4) address contains 4 number sequences of 3 digits, each from 0 to 255, separated by a period "." so that the first possible number is 0.0.0.0 up to a maximum of 255.255.255.255. Although this allows for a maximum of 4.23 billion addresses (32 bits), this number is nearly exhausted and so this number system will be succeeded by IPv6 (or IP6), developed in 1998 and allows for up to 340 undecillion (thousand trillion trillion = 1036) unique addresses using 32 hexadecimals (a hexadecimal character has 16 possible digits: 0123456789ABCDEF).
Examples of each...
§ IP4: 22.214.171.124
§ IP6: 3ffe:1900:4545:3:200:f8ff:fe21:67cf
- IP Address Spoofing
Attack technique used by a malicious individual to gain unauthorized access to computers. The malicious individual sends deceptive messages to a computer with an IP address indicating that the message is coming from a trusted host.
- ISO or Independent Sales Organization
A company or individual contracted with a Processor to acquire new Merchants. Many ISOs provide customer support, technical support and installation support to its customers on behalf of the Processor. However, ISOs who sell off merchant accounts or who are prepaid an advanced commission have little incentive to continue customer service and support.
The bank or financial institution that issue credit cards to individuals and manage and enforce the contractual agreements with consumers. These financial institutions typically offer various branded cards and charge the cardholders interest and fees for their use. They also participate in the interchange fee charged cardholders by the card associations.
- Issuing Bank
(or Issuer)the bank who issues the cardholder the credit card and assumes the greatest risk. This banking entity approves the cardholder based on their credit, assesses his or her credit limit, sets his or her APR and terms, and then funds (advances) the Merchant money for the purchase in advance before actually being reimbursed by the cardholder within/after a grace period. (may or may not be where customer holds checking/savings, or institutions like Capital One, Discover, American Express, B of A, General Motors, Ford, Chase, Citibank, Shell Oil, etc.)
Electronic record of transactions, including drawer activity, tickets, inventory adjustments, transfers, purchase requests, and receivings.
- Keyboard Wedge
A type of interface. A “Y” style cable capable of connecting a keyboard and a scanner into a single computer keyboard port. Also describes the encoding of the data sent to the computer by the scanner. Data is encoded as keystrokes. The computer receives data from the scanner and keyboard in the same format. Scanner data is “typed” into the computers keyboard logic.
- Keystone Markup
An Initial Markup Method that doubles cost of an individual product to arrive at its selling price (2 x total product cost ). The markup is equal to the cost of the merchandise.
An open-fronted, compact area, booth, cart, cubicle or hut that sells smaller items such as tickets, magazines, gift items, jewelry and other products. Specialty kiosks are often found inside indoor malls and are often clustered together. Frequently an extension of a larger retail business.
A single inventory item that is assembled or constructed from other inventory items or components. For example, you might create a kit called "golf set" that includes a bag, clubs, putter, and balls. You could then sell the golf set as a single item.
- Landed Cost
The final cost per unit of items received into inventory. Landed cost = (Purchase cost + freight cost + miscellaneous charges) / quantity received
- Large Ticket
Visa and MasterCard have incentives for high price credit card transactions by offering special interchange rates. Large ticket transactions may be defined as those greater than $100,000, and may even exceed several million dollars. Large Ticket rates are lower rate than regular transactions but may only qualify if the business has been approved for such transaction volume in advance.
- Laser Scanner
A scanner which uses laser technology to read bar codes. Capable of reading bar codes from short distances away (6” to a few feet).
A method of deferred payment in which the item(s) being purchased is held for the customer until it is completely paid for. The customer can make periodic payments on the balance, or pay the entire amount at pick-up.
- Lead Time
Number of minutes, hours, or days that must be allowed for the completion of an operation or process, or must elapse before a desired action takes place.
- Level 1
Transactions which qualify as Level 1 and show on statement as L1 or Corporate Card L1 are business card transactions which did not qualify at the lowest rate due to missing or invalid information prompts when the sale was transacted. Prompts which were invalid or missing may include AVS (address verification), Sales Tax, P.O. number, or other fields left blank on a terminal or POS system.
- Level 2
Transactions qualifying Level 2, shown on statement as L2 or Corporate Card L2 are business card transactions which DID qualify at the lowest rate because all fields/prompts were filled in correctly when the sale was transacted. Prompts include AVS (address verification), Sales Tax, P.O. number, or other fields on the terminal or POS system. For even lower rates, Merchants can request special Level 3 processing where additional prompts are included, which reduces risk of chargeback.
- Level 3
Additional transaction prompts (questions required for electronic processing of each transaction). This supplemental information to achieve Level 3 qualification may include Customer Code, Invoice and Purchase Order number, Part Number, Item Description, Quantity, Unit of Measure, Unit Price, freight amount, duty amount, product or service ID, product or service description. Transactions which get approved as Level 3 are often a much lower rate and typically involve Business, Purchasing, Fleet, Government, Corporate and Commercial credit cards. Some Level 3 Large Ticket rates may benefit from flat rate transactions where no percentage is charged, only a transaction fee like $35.00, which is much cheaper than normal rates when transactions may be for $10,000 or more.
- Level II Purchase Cards
Purchase cards are Visa and MasterCard cards that look like normal credit cards, but are processed in a special way so that the cardholder (typically a large business or government agency) will receive additional information on the monthly statement regarding the type of goods or services purchased. Level II Purchase cards may also be referred to as Corporate cards, Business cards, or Commercial cards.
- Line Item
A single item on a receipt, order, ticket or PO.
- Line Tax
The sales tax associated with a line item on a receipt, order, ticket or PO.
- Loss Leader
A pricing strategy where a particular item is sold below cost in an effort to stimulate other, more profitable sales. For example, during Christmas, some retailers offer a limited number of popular items below cost in the hopes that the retailer will profit from other items purchased at the same time.
- Loss Prevention
Stopping or reducing inventory losses or shrinkage due to shoplifting, employee theft, accounting errors, and breakage.
- Lot-Controlled Items
Items which are tracked by unique lot numbers. Lot numbers are often used for chemicals, paints and pharmaceutical drugs.
- Loyalty Program
Programs designed and offered by retailers to reward customers for their continued loyalty. Special cards are often issued by retailers which allow retailers to more easily track purchases and to reward discounts and other perks through the programs.
Magento is an open source ecommerce web application. Magento was developed by Varien (now Magento Inc) with help from the programmers within the open source community. The Magento Community Edition is the only free version of Magento available. As of February 2, 2012 Magento passed 4 million downloads of its software platform.
- Magnetic Ink Character Recognition (MICR)
A character recognition technology used primarily by the banking industry to facilitate the processing of checks and makes up the routing number and account number at the bottom of a check. The technology allows computers to read information (such as account numbers) off printed documents. MICR processing eliminates manual data entry and is less prone to errors.
- Magnetic Stripe Reader (MSR)
A device that converts the information contained in the magnetic stripe of a credit card into data that can be understood by retail software.
- Maintained Markup (MMU)
The amount of markup that the retailer wishes to be maintained on a particular category of merchandise after allowing for markdowns or other reductions. So, MMU reflects how markdowns impact the Initial Markup (IMU). Can also defined as the differential between the cost of goods sold and net sales. Formula: MM $ = (Original Retail - Reductions) - Cost of Goods Sold
- Major Industry Identifier (MII)
The first digit of every credit card, debit, prepaid or gift card and also the first of six digits of the BIN (or IIN) number. § 0 — ISO/TC 68 and other industry assignments
§ 1 — Airlines
§ 2 — Airlines and other industry assignments
§ 3 — Travel and entertainment (Amex, Carte Blanche, Diners Club)
§ 4 — Banking and financial (Visa)
§ 5 — Banking and financial (MasterCard)
§ 6 — Merchandizing and banking (Discover)
§ 7 — Petroleum
§ 8 — Telecommunications, Healthcare or other industry assignments
§ 9 — National assignment (followed by a 3 digit country code)
The last digit on the card is the Check Digit, for validation using an algorithm where all of the numbers are added up in specific combination. For more information, see Anatomy of a Credit Card number.
- Margin ($ or %)
Indicator of profitability of the store. Usually expressed in dollars as the amount by which revenues from sales exceed costs. Formula: Margin % = (Retail Price - Cost) ÷ Retail Price
A reduction in the sales price of an item. This is usually done in order to move slow moving stock. Markdowns are also done to clear out inventory to make room for new versions of the product or for seasonal merchandise.
The amount that is added to the cost of an item in order to cover the general overhead of the store and to provide for profit.
- MATCH List
MATCH is an acronym for Member Alert to Control High-Risk. Also known as the Terminated Merchant File (TMF). The MATCH list provides a list of all merchants and individuals that have had accounts terminated with cause.
Merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase. This can include discounting, presentation of products and displays, and which products should be presented to which customers at what time.
The authorized acceptor of a credit card as payment for goods and services. This is typically the retailer.
- Merchant Agreement
A written contract between a merchant and the financial institution that details their respective rights, responsibilities, and warranties for credit card transactions.
- Merchant Bank
Also known as the Acquirer or Acquiring Bank, this is the bank that represents all the issuing banks and posts the funds to be deposited in the merchant's account prior to monies being collected and transferred via interchange from the various issuing banks. Merchant banks are compensated for providing these funds through the discount rate, a fee charged for the use of the money. It's called a 'discount rate' because the fee is usually subtracted from credit card funds as they are deposited with the merchant. Merchant banks also share in the Interchange Fee charged by the card associations.
- Merchant Category Codes (MCC)
(see also SIC codes.) A four-digit number assigned to a business by MasterCard or VISA when the business first starts accepting one of these cards as a form of payment. The MCC is used to classify the business by the type of goods or services it provides. In the US it can be used to determine if a payment needs to be reported to the IRS for tax purposes.
- Merchant Identification Number or MID
An identification number that represents the merchant's operating account with its Acquiring Bank for the purpose of processing credit card transactions.
- Merchant Services Provider
A Merchant Services Provider (MSP) is an organization that quotes a discount rate to the merchant and handles the setup and connections with the front-end and back-end processors to make sure that the merchant's funds are correctly routed to the merchant's. An MSP can be a merchant bank or an independent sales organization (ISO) for a merchant bank. The MSP is responsible for getting all the forms and information submitted to setup the merchant to accept credit cards and often provides software or other technology to allow the merchant to process the cards with the processor. In every case, the MSP is responsible for setting up the merchant with the processor to accept the different card types selected by the merchant. A MSP is usually responsible for the relationship between the merchant, card associations, processors and merchant bank.
Magnetic Ink Character Recognition, or MICR, is a character recognition technology used primarily by the banking industry to facilitate the processing of checks. The technology allows computers to read information (such as account numbers) off printed documents. Unlike barcodes or similar technologies, however, MICR codes can be easily read by humans. MICR, or Magnetic Ink Character Recognition characters are printed in special typefaces with a magnetic ink or toner, usually containing iron oxide. As a machine decodes the MICR text, it first magnetizes the characters in the plane of the paper. Then the characters are passed over a MICR read head, a device similar to the playback head of a tape recorder. As each character passes over the head it produces a unique waveform that can be easily identified by the system.
- Bar Code Printer
A printer used to produce bar codes on labels, tags and other printed materials. Usually different than receipt printer. Can use dot matrix, thermal printing and laser technology.
- Mid Qualified Rate
(see 2, 3, 4 Tier Pricing above.)
This fee is often referred to in the credit card processing industry as a “Mid-Qualified Transaction Fee,” or “Mid-Qualified Downgrade Fee,” or just as “Mid-Qual.” The Mid-Qualified fee is most often found in three-tier merchant account pricing schemes with the other two tiers referred to as “Qualified” and “Non-Qualified.” This fee is actually a surcharge that is added on top of the base tier (Qualified Rate) for certain card types. This rate usually applies to rewards cards (that award miles or points), key-entered transactions, transactions batched in 24-48 hours that would be Qualified had they been batched sooner, and transactions missing address verification. Generally, the Mid-Qualified surcharge costs merchants an additional 1%. However, merchant account providers can define the fee tiers however they choose because there are no industry standards dictating how fees must be defined. One provider may define Mid-Qualified transactions very differently than another, which makes comparing provider costs nearly impossible.
A software application or small computer hardware (or both) acting as a bridge between a Processor and another software application or POS system. A middleware program is usually sold by a third party to make a POS system compatible with other Processors which would not otherwise be. Essentially, it translates the credit card transaction language into another language used by other Networks.
- Model Stock
Represents the desired or targeted inventory stocking level of a particular item. The model stock assists in buying decisions and to make sure that there is a sufficient supply of merchandise on hand. A Model Stock Plan needs to be compiled for each line of merchandise. For example, women’s knits need to always include black and pink color options with a size distribution ratios of 2 4 6 8 10 12 14 16 18.
The merging of retail operations in such a manner that enables the transacting of a customer via many connected channels. Channels include: retail stores, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer. Transacting includes browsing, buying, returning as well as pre and post sale service.
Selling two or more of the same item at a unit price that is lower than the unit price of a single item. For example, $5.99 each or 2 for $10.00. Buy one get one free offers are also examples of multiple pricing schemes.
- Net Sales
Operating revenues earned by a business when it sells its products. In financial ratios that use income statement sales values, "sales" refers to net sales, not gross sales. From an accounting standpoint, sales do not occur until the product is delivered. Outstanding orders" refers to sales orders that have not been filled are generally referred to as bookings or outstanding orders. Formula: Net Sales = Gross Sales - Returns and Allowances
- Net Terms
Terms calling for the billed amount of the invoice with no discount allowed.
Many Merchant Banks and Processors talk about their credit card networks. These can be everything from a real network owned and utilized by the Processor, to utilizing the 800 service of AT&T, Sprint or MCI. Some Processors use private networks such as CompuServe to move their transactions, while others use pseudo-networks put together by wholesalers of the major networks for leased lines.
- Network Access and Brand Usage Fee (NABU)
Applies to all U.S.-based MasterCard settled transactions. The NABU fee is not assessed to authorizations that are not settled. Similar to VISA Acquirer Processing Fee (APF).
- Network Security Scan
Process by which an entity’s systems are remotely checked for vulnerabilities through use of manual or automated tools. Security scans that include probing internal and external systems and reporting on services exposed to the network. Scans may identify vulnerabilities in operating systems, services, and devices that could be used by malicious individuals.
- No Signature Required (NSR)
Visa, MasterCard, American Express & Discover now offer this program to speed up the transaction process for fast paced businesses. Benefits & restrictions include: § Transactions must be on U.S. issued cards of $25 or less from eligible MCCs (Merchant Category Codes)
§ Card must be magnetic swiped or contactless in face-to-face environment (or unattended environment if $15 or less)
§ Transaction receipt does not need to be given to customer unless requested.
This fee is often referred to in the credit card processing industry as a “Non-Qualified Transaction Fee,” or “Non-Qualified Downgrade Fee,” or just as “Non-Qual.” The Non-Qualified fee is most often found in three-tier merchant account pricing schemes with the other two tiers referred to as “Qualified” and “Mid-Qualified.” This fee is actually a surcharge that is added on top of the base tier (Qualified Rate) for certain card types, transaction methods, and merchant mistakes. The Non-Qualified surcharge is the most expensive of the tiers and can cost merchants an average or 1.5% -2.5% on top of the Qualified rate. Generally, merchant account providers apply Non-Qualified fees because of the customer used a corporate card, government card, foreign credit card, certain rewards card or was missing certain information (Missing address information, missing tax information, missing customer code or order number). The Non-Qualified is also often used as a “catch all” tier for card types that cannot be identified correctly during the transaction ' - processing. Additionally, the Non-Qualified surcharge may be applied to retail merchants that type in a transaction instead of swiping it, and/or to all transactions if a merchant fails to “batch out” within 48 hours of a transaction.
- Offline Debit
An off-line debit card does not deduct funds from the checking account immediately. Transactions are processed like a regular credit card and the funds are not deducted for approximately 24-72 hours. Off-line debit cards have a MasterCard, and Visa, or Discover logo.
- Omnichannel Retailing
Is very similar to, and an evolution of, multi-channel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels, i.e. mobile internet devices, computers, bricks-and-mortar, television, catalog, and so on.
- On Hand
Inventory that is physically present and can be sold to the customer that day.
- On Order
Merchandise that has been ordered but not yet received. When used in a store's inventory management system, can show the date where the item will be available to the customer.
- Online Debit
An on-line debit card deducts funds from the bank account immediately, as soon as the card is used. There is no delay for processing the transaction. On-line debit cards can either have the MasterCard, Visa, or Discover logo, or they can have only the user’s logo, like an ATM card.
- Online Shop
A virtual online whereby consumers directly buy goods or services from a seller over the Internet without an intermediary service. Also known as an ecommerce site, eshop, e-store, Internet shop, webshop, webstore, online store, or virtual store.
- Open Item
Can be either (i) a type of customer whose account balance is determined by keeping individual document detail and applying payments to specific documents. (ii) a specific A/R document (e.g., an invoice, finance charge, debit memo, payment, etc.) showing an individual transaction that occurs for an open item customer.
- Open Source
Software whose source code is published and made available to the public, enabling anyone to copy, modify and redistribute the source code without paying royalties or fees. Open-source code often is continually updated and enhances through community cooperation. These communities are composed of individual programmers as well as very large companies who work for free to improve the software code.
- Open-to-Buy (OTB)
The dollar amount of merchandise that a retailer can order for a particular period. Interim open-to-buy is calculated by subtracting the amount of merchandise already received and the amount of purchase orders planned for delivery within the period from the period’s planned purchases. Formula: OTB (retail) = Planned Sales + Planned Markdowns + Planned End of Month Inventory - Planned Beginning of Month Inventory
- Opening a Drawer
The process of recording the beginning amount of cash in a drawer before processing sale transactions. Normally, a drawer is opened at the start of each day.
- Order Point
Number of units of an item on hand when a purchase order for its replenishment is to be made. This number equals the lead-time quantity plus the safety (minimum) number of units. Also called order level.
- Original Markup
See Initial Markup
Can be either (i) The amount by which a physical inventory exceeds book inventory (or inventory in the retail management system); or (ii) the amount by which the actual drawer amount exceeds the reconciled amount at the time the drawer is closed.
The situation where a buyer has committed to purchases exceeding the planned purchase allotment for a defined merchandising period.
Abbreviation for “Payment Application Qualified Security Assessor,” company approved by the PCI SSC to conduct assessments on payment applications against the PA-DSS.
- Packing Slip
A contents list (or sometimes a copy of the invoice) included with a shipment to help reconcile the order with the delivery.
- Pass Through Pricing
Also referred to as Cost Plus, True Pricing or Pass Through pricing, this pricing scheme is based on a mark-up or per-transaction fee charged by your processor over the Interchange Fee. The markup can take the form of a per-item fee on settled transactions, authorizations, or both, as well as a discount on settled transactions. Exact interchange fee, set by Visa, MasterCard and Discover “passes through” at cost. A merchant's overall credit card processing cost is based on Pass Through Pricing is the sum of the product of the number of transactions that fall into each of the hundreds of Interchange categories multiplied by the effective processing rate (Interchange fee plus the mark-up) for that category.
- Payment Application
Any application that stores, processes, or transmits cardholder data as part of authorization or settlement.
- Payment Cards
For purposes of PCI DSS, any payment card/device that bears the logo of the founding members of PCI SSC, which are American Express, Discover Financial Services, JCB International, MasterCard Worldwide, or Visa, Inc.
A credit-card processing term that stands for Payment Card Industry.
- PCI Compliance
Major Issuing Banks created PCI (Payment Card Industry) compliance standards to protect personal information and ensure security when transactions are processed. Due to the acute rise in data breaches, hackers and identity theft prevalent, all processors now charge breach insurance or PCI Compliance fees to insure against such a breach, which could result in hundreds of thousands of dollars in damages and fines. Banks, Processors, Gateways and Merchants ALL must follow PCI standards in order to accept credit cards. Failure to comply could result in fines or revoking your ability to accept credit cards, although it is not governed by Law.
- PCI DSS (Payment Card Industry Data Security Standards)
Data Security Standards (DSS) is a strict set of guidelines designed to protect credit card data from fraud and misuse. DSS guidelines are established and maintained by the PCI Security Standards Council. PCI DSS may also be referred to as the Cardholder Information Security Program (CISP).
PIN Entry Device
- Periodic Inventory
A method of determining the count and value of inventory at periodic intervals by conducting a physical count of the items in stock.
- Peripheral Devices
POS-specific devices used with your retail point of sale workstation. Retail POS systems support a variety of peripheral devices, including cash drawers, barcode scanners, printers, credit card readers, electronic signature capture devices, check readers, customer displays, weight scales, and debit PIN pads.
- Perpetual Inventory
A method used to continually track and monitor the quantity on hand and value of inventory as adjusted for sales, returns, and receipts. When using a retail management system, perpetual inventory is continually adjusted for receipts, returns and sales - so that real-time inventory reports can be generated.
- Personal Identification Number
The unique number or code used by a cardholder to authenticate card ownership for POS debit transactions.
- Personally Identifiable Information, PII
Information that can be utilized to identify an individual including but not limited to name, address, social security number, phone number, etc.
- Personally Identifiable Information PII
Information that can be utilized to identify an individual including but not limited to name address social security number phone number etc.
- Picking Ticket
A list of items used for selecting and gathering items for shipment. Picking tickets typically include the customer, the item, its location (i.e. the bin), quantity ordered, and shipping address.
- PIN / P.I.N.
Personal Identification Number usually consisting of 4 numbers used to authenticate Debit (Check Card) transactions with no signature or AVS required. Secret numeric password known only to the user and a system to authenticate the user to the system. The user is only granted access if the PIN the user provided matches the PIN in the system. Typical PINs are used for automated teller machines for cash advance transactions. Another type of PIN is one used in EMV chip cards where the PIN replaces the cardholder’s signature.
- Planned Sales
Projection of achievable sales revenue, based on historical sales data, analysis of market surveys and trends, and salespersons' estimates. Also called sales budget, it forms the basis of a business plan because the level of sales revenue affects practically every aspect of a business.
Computerized or special diagrams that show the various fixtures of a store and can be used to make decisions about product placement and displays. The diagrams are scaled to accurately reflect the layout and dimensions of a store.
Abbreviation for “Point of Interaction,” the initial point where data is read from a card. An electronic transaction-acceptance product, a POI consists of hardware and software and is hosted in acceptance equipment to enable a cardholder to perform a card transaction. The POI may be attended or unattended. POI transactions are typically integrated circuit (chip) and/or magnetic-stripe card-based payment transactions.
- Point of Sale (POS)
Point of Sale (POS) is the location where a transaction occurs in exchange for goods or services. The point of sale often refers to the physical electronic cash register or dedicated POS terminal used for checkout, but the POS is simply the location where the sale is conducted, money changes hands and a receipt is given, which can also occur on a smartphone, tablet, laptop, or mobile POS device when the right hardware and POS software is combined with the mobile device.
- Pole Display
A peripheral device consisting of a smaller display screen used to display information during a transaction where the customer can view it - for example, the price on each item as it is rung up.
A temporary retail space that is used to sell products or services, often on a short term basis. Pop-ups can be used to sell promotional or seasonal items.
- Portable Data Terminal PDT
Used to describe a variety of devices that are 1) portable and handheld 2) collect data, usually with a bar code scanner; and 3) relay that information to a central system - either through a serial cable, a modem, Infrared, or radio transmission. These are use primary for inventory counts, inventory control, warehousing, etc.
- Post Authorization
Another name for Forced Authorization.
- Preapproval Authorization
An attempt to test a cardholder’s credit card for validity and credit limit before processing a sale transaction to protect the merchant who presumes the credit card to be valid before rendering service, as in the case of a hotel offering advance reservations or a bar offering a tab to patrons. Credit card terminals have this option, which may be called “Auth Only,” which generates an Approval Authorization Code if successful, and can later be used with a Forced Sale to complete the transaction.
- Primary Account Number, PAN
Numerical code consisting of 14 or 16 digits both embossed on a payment card and encoded on the magnetic strip. It identifies the Issuer of the card, the card holder’s account number, and a check digit for authentication.
- Prior Authorized Sale
Another name for Preapproval Authorization.
- Prior Stock
Items that have been in a retailer's inventory calculation for greater than six months.
- Processing Fees
Fees associated with processing credit card transactions.
- Processing Integrity Fee, PIF
Fee MasterCard charges to discourage merchants from authorizing a cardholder's MasterCard but never charging the customer and closing (settling) the batch. Authorizations, even if not ever completed or settled, affect the customer's "open to buy" available credit. Similar to Visa's Misuse of Authorization Fee. While both Visa and MasterCard assess fees when authorized (approved) transactions cannot be matched to a clearing settlement record or an authorization reversal, Visa allows 10 days (20 days for T & E merchants) while MasterCard provides a 120 day window (with T &E merchant segments initially exempt).
Both Visa and MasterCard now penalize the occurrence of “ghost authorizations” (authorizations that are approved but never cleared), as these can adversely impact a cardholder’s open-to-buy, leading to increased declines and confusion at the point of sale. However, within Visa’s program the authorization amount and settled amount do not have to match whereas MasterCard will apply its Processing Integrity Fee if the final transaction amount was less than the authorized amount or the authorized amount varies from the subsequent clearing message amount.
A bridge between your customer’s bank (that issued card) and your business bank account. The Processor must either be or also have an Acquiring Bank if it is a non-Bank Processor. Processors assume risk because they guarantee the Issuing Bank that the charge was secure, legitimate (no fraud involved) and assume additional risk because they cover network fees, gateway fees and Interchange fees while waiting to recoup expenses for these fees at the end of the statement period.
- Purchase Order (PO)
A record or report containing the detailed information on an order of merchandise from a supplier or vendor. Typically, the PO includes the items purchased, costs, discount terms, and shipping information.
- Purchase request
An unapproved purchase order. A purchase request contains all the information that will go into a purchase order after the purchase request is approved.
- Purchasing Card
(also P-Card) A business to business or business to government card usually used for small purchases which would normally require a Purchase Order, Invoices or Checks, thus saving unneeded paperwork and making companies more efficient. Advantages include: § Streamline efficiency, reduce paperwork.
§ Easy tracking and daily accounting where large companies can easily link purchases made to different vendors, to the proper departments within the company.
§ Cards can be issued to specific departments or employees with spending limits to help fight overspending and stay within budget. Limits can be set according to time periods, such as a week or a month, or per transaction.
For the best rates to merchants who receive Purchasing or Corporate cards, always enter the Sales Tax amount and/or Purchase Order number if prompted. The values entered are actually ignored, but if left blank or “0,” this may result in a downgraded transaction because Associations may presume it is higher risk. If your terminal or software does not prompt for these fields but you are sure you are receiving Corporate or Purchasing Cards, ask your Processor to include these prompts so you may enjoy lower rates on those transactions.
To remove or delete unnecessary or outdated records from your retail software.
Abbreviation for “PIN verification value.” Discretionary value encoded in magnetic stripe of payment card.
- PVV (PIN Verification Value)
The value encoded in the magnetic stripe on the back of a payment card.
- QSA, Qualified Security Assessor
company approved by the PCI SSC to conduct PCI DSS on-site assessments.
- Qualified Rate
Also referred to in the credit card processing industry as a “Qualified Discount Rate” or “Qualified Transaction Fee,” this fee is found in tiered/bucket merchant account pricing schemes. The Qualified Rate is usually part of a three-tier fee model with the other two tiers most often called “Mid-Qualified” and “Non-Qualified.” Merchant account providers primarily determine which rate tier a merchant will incur based on a customer’s card type. The Qualified Rate is typically the lowest rate. Generally, the only cards that fall into the Qualified tier are credit cards that do not have an attached reward program such as miles or points, and signature debit transactions where the debit card does not have an attached rewards program - generally subject to these cards being swiped through a terminal or credit card reader and the transactions being batched by the merchant within 24 hours. There are many variations of these tiers and associated names because there is no industry standard on how rates and fees can be structured or what they must be called. Many of the more 'sketchy' payment processors only advertise or quote the Qualified Rate to merchants because it is the lowest and most attractive fee. The quotes often look something like “1.59% + $0.10 per transaction,” but fail to mention that 50%, or less, of a merchants transactions will experience this low rate. The other 50+% will be charge at the higher Mid- and Non-Qualified tiers.
- Quantity Discount
A reduction in price based on the volume or composition of the sale.
- Quick Ratio
See Acid Ratio
- RDC, Remote Deposit Capture
Remote deposit refers to the ability to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank. This is typically accomplished by scanning a digital image of a check into a computer, then transmitting that image to the bank, a practice that became legal in the United States when the Check Clearing for the 21st Century Act (or Check 21 Act) took effect. This service is typically used by businesses, though a remote deposit application for consumers has been developed and has begun to be implemented by a handful of banks. It should not be confused with: § Direct deposit, which refers to the practice of posting an employee's weekly earnings directly to his or her bank account.
§ Online deposit, which refers to a retail banking service allowing an authorized customer to record a check via a web application and have it posted, then mail in the physical check, giving the customer access to the funds before the check clears in the usual way. While this type of service does not involve a scanner nor take advantage of the Check 21 Act, it is also sometimes called remote deposit.
A portion of the debit rate reimbursed to processors when customers pay merchants with a debit card, because debit cards carry very little risk (since the funds are immediately charged to customer’s bank account). The processor may or may not pass this rebate on to the merchant. Often, banks and processors keep this rebate as an extra profit for themselves.
- Receipt Printer
A class of POS printers used for printing sales receipts, credit card receipts, etc. Typically these feature 40 columns, thermal printing (although some are still dot matrix), small footprint, USB interface (although serial and parallel versions are also available). They print on blank rolls of paper. Some have 2 color ribbons, check imprinting (ability to print on the back of customer checks), etc. There are a variety of options tailored for various applications.
Money owed by customers who have deferred payments to a retailer.
Reductions is the amount or rate by which a product is reduced. Formula: Reductions = Markdowns + Employee Discounts + Customer Discounts + Stock Shortages
- Release Order
An order issued by an authorized party directing another party within the same supply distribution chain to release and ship the products or goods.
To remove quantity from inventory due to an adjustment, sale, etc.
- Report on Validation
Also referred to as “ROV.” Report containing details documenting a payment application’s compliance with the PCI PA-DSS.
- Response Code
A number provided by a card issuing bank to a merchant explaining why a particular transaction was declined, or verifying the transactions acceptance. Also see Approval Code.
A business that sells products at retail. Retailers purchase goods or products from manufacturers directly or through a wholesaler, and then resells the items to the consumer for a profit.
- Retrieval Request
A retrieval request constitutes an issuer’s request for a transaction receipt, which could include the original, a paper copy or facsimile, or an electronic version of a transaction.
A transaction in which the customer returns or gives back a purchased item in exchange for a refund of the amount paid for the item. Depending on the store policy, the refund could be cash, reversal of the charge on the purchasing credit card or store credit. A store's return policy should be prominently displayed for the benefit of the customers.
- Return to Manufacturer (RTM)
Can be either (i) The process of returning to a manufacturer or vendor any items that were previously received on a PO; or (ii) T document authorizing the return of items to a manufacturer or vendor.
- Revenue per Employee
Ratio of sales at a business compared to the number of current employees. The figure is calculated by taking the total revenue of a business and dividing it by the number of current employees.
When an acquirer successfully validates a transaction contested through a chargeback request from the issuer. The chargeback is reversed and the funds are returned to the merchant.
- RFID (Radio Frequency ID)
A wireless non-contact identification system that uses radio-frequency electromagnetic fields to transfer data from a tag attached to an object, for the purposes of automatic identification and tracking. The tag contains electronically stored information which can be read from up to several meters (yards) away. Unlike a bar code, the tag does not need to be within line of sight of the reader and may be embedded in the tracked object. RFID technology has significant value for inventory systems, and can also reduce labor costs, simplify business processes, and increase accuracy of inventory counts.
- Risk Analysis / Risk Assessment
Process that identifies valuable system resources and threats; quantifies loss exposures (that is, loss potential) based on estimated frequencies and costs of occurrence; and (optionally) recommends how to allocate resources to countermeasures so as to minimize total exposure.
- ROC, Report on Compliance
Also referred to as “ROC.” Report containing details documenting an entity’s compliance status with the PCI DSS.
- ROI (Return on Investment)
The earning power of assets measured as the ratio of the income (revenue less cost) to the average investment in or cost of an project or product. Expressed usually as a percentage, return on investment is a measure of profitability that indicates whether or not a business is using its resources in an efficient manner. For example, if the long-term return on investment of a business is lower than its cost-of-capital, then the business will be better off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.
- Rotating Stock
Method of stocking new merchandise behind or in place of old merchandise. Technique to keep inventory fresh and current.
Hardware or software that connects two or more networks. Functions as sorter and interpreter by looking at addresses and passing bits of information to proper destinations. Software routers are sometimes referred to as gateways.
Algorithm for public-key encryption described in 1977 by Ron Rivest, Adi Shamir, and Len Adleman at Massachusetts Institute of Technology (MIT); letters RSA are the initials of their surnames.
- Sales Per Square Foot
Standard measurement of store success. The unit of area is usually square meters in the metric system or square feet in U.S. customary units. Formula: Sales per Square Foot = Total Net Sales ÷ Square Feet of Selling Space
- SAQ, Self-Assessment Questionnaire
Tool used by any entity to validate its own compliance with the PCI DSS.
- SAQ Self-Assessment Questionnaire
Tool used by any entity to validate its own compliance with the PCI DSS.
- Seasonal merchandise
Merchandise purchased and offered for a specific season. Tends to be only in demand for a limited period of time (e.g., Easter, summer, Christmas, back to school, etc.).
- Security Policy
Set of laws, rules, and practices that regulate how an organization manages, protects, and distributes sensitive information.
- Security Protocols
Network communications protocols designed to secure the transmission of data. Examples of security protocols include, but are not limited to SSL / TLS, IPSEC, SSH, etc.
- Sell Through Rate (%)
In general retail, the amount of product or inventory sold. For ecommerce, percentage of available page views sold to internet advertisers during a specific period. Formula: Sell-Through (%) = Units Sold ÷ Units Received
- Serial Number
A number that identifies a unique unit of an item. Serial numbers are used to track specific items from acquisition to sale to history.
- Serialized Item
Items whose individual units are assigned unique serial numbers.
All transactions are not final for processing or payment until settlement, which occurs when all credit card transactions in the current Batch have been closed. Usually, a batch begins with the first transaction of the business day, and ends with the last transaction of the day before the Batch is closed (settled). During settlement, a report is electronically submitted to the processor finalizing the day’s sales as complete. Funds are deposited in the merchant’s account usually 48 business hours after the batch settlement. Voids can not be issued after settlement. Instead, a Credit must be issued within 90 days to refund the cardholder. (see also batch header fee).
- Settlement Network Access Fee
Applies to all U.S.-based settlement transactions. If your business is based in the U.S., the settlement network access fee will apply to all Visa settlement transactions.
- Shrinkage (Shrink)
The difference between actual stock and book records of stock. Shrinkage represents the aggregate of errors in stock record keeping, plus actual losses of merchandise through shoplifting, employee theft, paperwork errors, breakage, etc.
- Signature Capture
Electronic signature, or e-signature, is any electronic means of capturing a signature or confirmation electronically. Electronic signature capture is a powerful tool for chargeback defense. At the point of sale, the customer is asked to sign the receipt, invoice or charge slip using a digital device that turns the signature into a data set which can reproduce the signature reliably. A card swipe when combined with an electronic signature at the point of sale provided strong assurance that the customer and card were physically present at the time an authorization was obtained for the purchase of goods and/or services. In many countries, including the United States, the European Union and Australia, electronic signatures have the same legal consequences as the more traditional forms of executing of documents.
- SKU (Stock Keeping Unit)
A number used to identify each unique item. SKUs are used in retail software to identify items and may be tied to the item's UPC or EAN barcode. The SKU is often imprinted on the tag and is used to look up price and also for replenishment.
- Smart Card
Also referred to as “chip card” or “IC card (integrated circuit card).” A type of payment card that has integrated circuits embedded within. The circuits, also referred to as the “chip,” contain payment card data including but not limited to data equivalent to the magnetic-stripe data.
- Special Order
A type of order made for merchandise not generally kept in inventory. Retailers often place special orders with a vendor on behalf of a particular customer.
- SPIFF (Sales Promotion Incentive Fund or Sales Person Incentive Fund)
Cash, reward, or additional commission paid to salespeople for increasing sales of a particular item or brand of merchandise.
Acronym for “Structured Query Language.” Computer language used to create, modify, and retrieve data from relational database management systems.
- SSH, Secure Shell
Protocol suite providing encryption for network services like remote login or remote file transfer.
- SSH Secure Shell
Protocol suite providing encryption for network services like remote login or remote file transfer.
- SSL, Secure Sockets Layer
Established industry standard that encrypts the channel between a web browser and web server to ensure the privacy and reliability of data transmitted over this channel. Replaced by TLS.
A higher transaction rate penalized for verification failure or missed data entry.
- Standard Industrial Classification (SIC)
Developed by the US Department of Commerce in 1937, a four-digit code established to classify each industry type. SIC is now being supplanted by the six-digit North American Industry Classification System (NAICS code), which was released in 1997. Some branches of government, including the Securities and Exchange Commission (SEC), still use SIC codes.
A notice sent to a customer describing monies owed. Statements may include details of invoices, payments, credit memos, debit memos, and/or aging along with the current balance of the account. Statements serve as a reminder about the money that a customer owes the retailer.
A retail point of sale workstation at which transactions and orders are entered and processed.
- Stock Keeping Unit (SKU)
In inventory control and POS, each product is usually assigned an SKU or product number. This number is imprinted on the tag (see bar codes) and is used to look up price (see PLU) and also for replenishment, etc.
- Stock Outs
A situation in which the demand or and order for an item cannot be fulfilled from the current inventory at the store.
- Stock to Sales Ratio
The stock to sales ratio is a way to determine the relationship between how much stock or inventory is on hand and how much is selling. Ideally, retailers want to keep this rations low as possible - but if the ratio is too low the likelihood of Stock Out increases. For example, if a stock to sales ratio is 5:1, there is $100 worth of inventory for every $20 worth of merchandise sold. Formula: Stock-to-Sales = Beginning of Month Stock ÷ Sales for the Month
- Store Credit
A record that represents money owed by a retailer to a customer. Store credits are often used when a customer returns merchandise that is not eligible for a refund. Store credits can in the form of printed statements or gift or loyalty cards issued by the retailer and be redeemed (tendered) by the customer for future purchases.
- Stored Value Card (SVC )
The most common type of gift card. Each card is uniquely numbered and represents a specific dollar amount. SVCs typically include a magnetic stripe encoded with a unique ID number allowing them to be processed with a standard MSR device. Alternatively, the card may have a unique bar code. The "value" of each SVC is typically stored in a central database accessed by the POS system.
- Straight Pass Through
Pricing/billing style like Gross billing or Interchange Plus Pricing where all Interchange rates are “Passed Through” at actual cost to the Merchant, so that the Processor charges only fixed rate, without inflating Surcharges or withholding Rebates from the Merchant.
- Strong Cryptography
Cryptography based on industry-tested and accepted algorithms, along with strong key lengths and proper key-management practices. Cryptography is a method to protect data and includes both encryption (which is reversible) and hashing (which is not reversible, or “one way”). Examples of industry-tested and accepted standards and algorithms for encryption include AES (128 bits and higher), TDES (minimum double-length keys), RSA (1024 bits and higher), ECC (160 bits and higher), and ElGamal (1024 bits and higher). See NIST Special Publication 800-57 (www.csrc.nist.gov/publications/) for more information.
- Subscription Service
A method of delivering periodic retail software updates that may include product updates, new features, and bug fixes. Very popular with software as a service (SaaS) applications. Subscription services can have a monthly, quarterly or annual fee.
An a gross statement refers to the difference between a basic consumer card at its lowest rate (commonly called vanilla or plain card) and the rate of the actual card used. NOTE: Surcharges only apply to Gross billing statements because Interchange Plus lists all card types separately, without reference to other cards.
A physical label attached to items for sale, such as an adhesive price tag, hang tag, or butterfly tag.
- Target Market
A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards. The target market and the marketing mix variables of product, place(distribution), promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace.
An actual copy of a retail advertisement.
Any form of payment that is presented to purchase goods or services.
- Terminated Merchant List (TMF)
Also called Match List. When you apply for a merchant account, the processor will check to see if you are on the Terminated Merchant File (TMF). If you’re on it, this means that another processor has terminated a merchant account with you, and sends up a red flag to processors and banks that you’re a credit risk. The chances are slim to none of getting a merchant account once your name hits the Match List. Getting on the TMF list is the equivalent of getting blacklisted. It is nearly impossible to be removed from this list and it lasts forever. Here are some reasons a Merchant may be put on the Match List:
§ Credit card fraud — If your fraud detection controls aren’t strong enough you could end up with too many chargebacks.
§ Friendly fraud — This is when a consumer disputes a legitimate charge such as from an adult website.
§ Factoring — Factoring is when a merchant deposits transactions for sales generated by another business.
§ Excessive chargebacks — When chargeback rate is >1% of total sales, calculated monthly and cumulatively.
§ Fraud — Types of fraud include not delivering products or misrepresenting products or services.
§ Violating the merchant agreement.
§ Owing money to a Processor.
A set of payment requirements for an invoice. For example, terms of 2/15, net 30 means that an invoice paid within 15 days receives a 2.0% discount, and if not paid within that period, the undiscounted amount must be paid within 30 days.
- Thermal Printer
A thermal printer uses special, chemically treated paper that changes colors when heated. The printer uses a set of pins which are electrically heated and in contact with the paper. As the paper is moved over the pins and the pins are selectively heated, the chemical turns dark and the bar code is formed. Sometimes called direct thermal printing.
- Thermal transfer printer
Thermal printer that uses heat to bond a thin film of wax or resin coating onto a label. These printers can also print direct thermal labels, but the print head may wear out faster.
- TID, Terminal ID
A unique identification number assigned to a specific point of sale (POS) device by the Acquirer.
- Tiered Pricing
Also referred to as Bucket Pricing, this pricing scheme groups the hundreds of different interchange programs into a handful of buckets with different rates, commonly called Qualified, Mid-Qualified and Non-Qualified tiers. Processors group cards in tiers and set tier rates at their discretion in an attempt to simplify the pricing methodology and merchant statements. A merchant's overall credit card processing cost is based on Tiered Pricing is the sum of the product of the number of transactions that fall into each of the buckets multiplied by the effective processing rate for that bucket.
Abbreviation for “Transport Layer Security.” Designed with goal of providing data secrecy and data integrity between two communicating applications. TLS is successor of SSL.
- TPA - Third Party Agent (or Agency)
An entity, not registered with Visa or MasterCard that provides payment related services, directly or indirectly, to the Visa or MasterCard client and stores, processes or transmits account numbers. TPAs perform multiple functions on the issuing and acquiring side of a Visa/MC client's business. This term is inclusive and replaces the old terminology of ISO, TPS, ESO, and Merchant Services (MS).
A TPA can perform any or all of the functions of an ISO, TPS, ESO, and MS. Each function performed by the TPA must be registered by each Visa client that is utilizing those services. TPA functions that require registration include but are not limited to:
§ Merchant or cardholder solicitation activities and/or customer service — ISO
§ Prepaid program solicitation activities and/or customer service — ISO
- TPS - Third Party Servicer
see TPA, Third Party Agent
- Track 1/2/3
Track one is a “track” of information on a credit card that has a 79 character alphanumeric field for information. Track two is a “track” of information on a credit card that has a 40-character field for information. Track three is a “track” of information on a credit card that has a 107-character field for alphanumeric information.
- Travel & Entertainment (T & E) Card
A rewards card issued with incentives for making purchases where cash back or extra points are rewarded to the Cardholder when used at certain businesses including restaurants, airlines, hotels, car rental or tourism merchants. These merchants will pay a slightly higher interchange rate for these transactions. May be called “Perk” or “Perquisite” cards and some examples include Visa Rewards, Visa Signature Preferred, MasterCard World, Diners Club, Carte Blanche, American Express, etc.
Method of rendering the full PAN unreadable by permanently removing a segment of PAN data. Truncation relates to protection of PAN when stored in files, databases, etc. See Index Token for protection of PAN when displayed on screens, paper receipts, etc.
A metric indicating how quickly a retailer's inventory sells. For example, a stock turnover rate of 9 indicates that the merchandise is selling quickly enough that it will need to be replenished nine times per year. Formula: Turnover = Net Sales ÷ Average Retail Stock
- Unallocated Stock
Goods that are intended for a warehouse or distribution facility and held temporarily without being assigned to a specific store. These goods are then used to fill stores based on individual store demand.
- Uniform Code Council (UCC)
A private standards entity in the U.S. with a goal of substantial uniformity in commercial laws within states. The UCC issues unique merchant codes to manufacturers for inclusion in UPC labeling to ensure that UPC labeling is consistent across the US. The UPC is a member organization of the global UCC/EAN system
- Uniform Product Code (UPC)
The UPC is a standard bar code symbology used to label products. It is numeric only and is of fixed length (there are a couple of different lengths, depending upon use), combining a merchant code with a SKU. Check digits are used in UPC decoding.
- Universal Serial Bus (USB)
A recognized computer bus standard used primarily for the interfacing of computer peripheral devices. USB frequently replaces serial and parallel connections for PC peripherals with a standard plug and cable carrying both data and power.
- UPS (Uninterruptible Power Supply)
A UPS is primarily used as a back up power source for computers and computer networks to ensure ongoing operation in the event of a power failure.
- USB (Universal Serial Bus)
A current computer bus standard used primarily for the interfacing of computer peripheral devices. USB frequently replaces serial and parallel connections for PC peripherals with a standard plug and cable carrying both data and power.
- Value Added Reseller (VAR)
A classification of business that resells items and adds some value to the sale, either in training, support, integration services, etc. In the POS context, it is a general term for the distribution channel for POS specific hardware and software.
- Value Added Tax (VAT)
A form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.
- VAR Sheet
A sheet used by Value Added Resellers to assist in setting up the account.
- Virtual Terminal
See also POS. A credit card terminal run from the computer screen, iPhone or other smartphone or handheld device which runs in a window via web browser or other software application, rather than using dedicated hardware like a physical credit card terminal.
- Visa Signature Preferred (VSP)
A Rewards card from Visa offering cash back or points incentives. These cards are a higher rate to merchants. See Travel & Entertainment Cards.
- Voice Authorization
A Preapproval Authorization performed over the phone by a Merchant to verify funds on a card holder’s credit card or the validity of a customer credit card prior to charging the transaction. This is often done when a credit card terminal is not working or the phone or network connection is down, preventing an electronic approval. Note that this guarantees funds to merchant for up to 30 days and places a hold on the customer’s funds for 10-21 days unless the authorization is Voided. This is NOT the same as processing the transaction and will not result in a sale until this is followed by a Forced Authorization and Settlement of the Batch.
To do a Voice Authorization, you will require the Voice Auth phone number from your Processor, your Merchant ID number (MID#), the credit card number, expiration date and the purchase amount. Once approved, you should save the Approval Code as you will need this to complete the sale later on your terminal, POS, software, online or directly with your Processor. The call may or may not be with a live operator, as it could be an automated service requiring touch tone prompts or utilizing voice recognition.
A void transaction describes a credit card transaction that has been deleted before settlement (close of batch). The transaction amount has only been authorized to the card holder’s account, therefore the cardholder should see that no funds were removed and card holder’s balance will clear the authorization amount within 24-48 hours. This is much faster than issuing a Credit, which may take 48-72 hours or more for funds to be reversed back to the cardholder’s account.
the sale of goods in quantity, as to retailers or jobbers, for resale(opposed to retail ).
2. of, relating to, or engaged in sale by wholesale.
3. extensive; broadly indiscriminate: wholesale discharge of workers.
4. in a wholesale way; on wholesale terms: I can get it for you wholesale.
5. in large quantities; on a large scale, especially without discrimination: Wild horses were slaughtered wholesale.
verb (used with or without object), wholesaled, wholesaling.
6. to sell by wholesale.
In general, it is a distributor or middleman who sells goods to anyone other than a standard consumer. Wholesalers tend to sell items in larger quantities than are sold by a retail to consumers. The items are sold at wholesale prices, which are designed to be discounted from retail prices.
- X/Z Report
Reports that provide current and up to date information on point of sale transactions and related activities for the current sales period. These reports can be used to get an update on store activities (X Report) or when closing out the drawer at the end of the day (Z Report). These reports allow retailers to reconcile sales activities to the financials records to ensure that everything is accounted for and accurate.
- Zero Floor Limit Fee
Visa's Zero Floor Limit applies to cleared transactions that can’t be matched to a previously approved or partially-approved authorization. In short, it applies to settlement transactions submitted without a proper authorization. From Visa: A merchant settles a transaction without a valid approval code (or makes up an approval code).
- Zero Interchange Program
MasterCard has defined a Zero Interchange Program under MasterCard's Business Service Arrangement. They will anticipate the need to use the zero interchange logic in the event of an exceptional circumstance that would warrant an immediate adjustment to merchant level fees, such as a natural disaster. To support this program, we will be adding a Zero Interchange Program Flag and will house a Zero Interchange Start Date and a Zero Interchange End Date. These dates will define the period of time for which interchange fees would not be applied to the eligible merchant.