Alphabet Soup of Credit Card Processing
Acronyms — the abbreviations or words formed from the initial letters in a set phrase or series of words — abound in the credit card processing industry, so it’s important for merchants to learn and use them properly. Within a very short period of time, this shorthand will become as familiar as CEO, B2B and POS.
Here are a few credit card processing acronyms you are likely to encounter in credit card processing:
ACH (Automated Clearing House): A nationwide network that clears credit and debit transactions, allowing for the exchange and settlement of electronic payments between financial institutions. Its rules and regulations are set by the Federal Reserve and NACHA (the acronym for the organization formerly known as National Automated Clearing House Association).
AVS (Address Verification Service): A service that allows merchants to perform more secure credit card transactions in card-not-present transactions. AVS verifies that the shipping address provided by the customer is the same address that’s on file with the issuing bank. AVS is required for e-Commerce and mail order/telephone order merchants.
CNP (Card Not Present): A transaction where the card is not present at the time of the sale. Credit card data is manually entered into the terminal or on a website’s payment page, as opposed to swiping the card.
CVV2 /CVC2 (Card Verification Value/Card Verification Character): A three-digit number located on the back of a credit card that’s pre-printed on the signature line after the card number. Like AVS, CVV2/CVC2 is a form of fraud control for CNP transactions. It is much more difficult for a fraud to be perpetrated when both the card number and the CVV2/CVC2 code are required on transactions.
EBT (Electronic Benefits Transfer): A nationwide system that allows state government to electronically disburse benefits via debit cards. Typically the programs involved include unemployment and energy assistance benefits as well as SNAP (Supplemental Nutrition Assistance Program), formerly known as food stamps. These cards can be used to make purchases, just like a credit or debit card.
MID (Merchant Identification Number): A number generated by a third-party processor that is specific to each individual merchant location and is used to identify the merchant during processing of any and all transactions.
MOTO (Mail Order/Telephone Order): Credit card transactions initiated via mail, email, or telephone. These are CNP transactions that take place when neither the cardholder nor the physical card is present.
PCI SSC (Payment Card Industry Security Standards Council): An independent organization originally formed by American Express®, Discover®, JCP®, MasterCard® and Visa® with the goal of managing the ongoing evolution of the Payment Card Industry Data Security Standard.
PCI DSS (Payment Card Industry Data Security Standard): Requirements established to protect cardholder information and reduce data theft. PCI DSS applies to businesses, service providers and members.
SSL (Secure Sockets Layer): A protocol for transmitting private documents (including credit card data) via the Internet that uses a cryptographic system involving two keys to encrypt data: a public key known to everyone and a private or secret key known only to the recipient of the message.
TID (Terminal Identification Number): A unique number assigned to each point-of-sale terminal.
TXP (Transaction Express™): An electronic payment gateway from Merchant Express® for online card processing and third-party integration.