Terms to Know

Pre-Approved

A conditional offer of credit from a credit card issuer based on a pre-qualification of the individual’s credit from an abbreviated credit bureau report. Upon acceptance of such an offer, the issuer makes a credit decision (usually after obtaining more detailed credit information) and assigns an annual percentage rate based on the most up to date credit profile of the customer.

Pre-Authorization (Pre-Auth)

Also called an Authorization Hold, pre-authorization occurs when the cardholder’s issuing institution immediately authorizes a credit card transaction but holds the funds as unavailable from the merchant until he or she officially clears (settles) or reverses (cancels) the transaction. This allows for changes in the sale amount that might occur between the time of authorization and settlement, as in hotel stays where last-minute phone calls or room service use could affect the amount of the final bill after checkout.

Primary Account Number (PAN)

The number that is embossed and/or encoded on a plastic card that identifies the issuer and the particular cardholder account.

Processing Date

The date on which the transaction is processed by the acquiring bank.

Processor

A company that handles all or some of the functions of a credit or debit transaction, ranging from providing terminals to managing back-end settlement.

Receipt

A document that records when a transaction took place at the point of sale (POS). The receipt contains a description of the transaction, which usually includes the date, the merchant name/location, the primary account number, the amount and the reference number. Receipts can be hardcopy (paper) or softcopy (digital/electronic), intended specifically for merchants, for customers, or for both.

Reference Number

Also known as Retrieval Reference Number or RRN. The unique number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.

Refund

The creation of a credit to a cardholder account, usually as a result of a product return or to correct an error.

Regulation Z (Reg Z)

Under Reg Z, credit card issuers are required to disclose the terms and conditions to potential and existing cardholders at the point of account opening and at regular intervals. Upon soliciting and opening new credit card accounts, credit card issuers must generally disclose key information relevant to the costs of using the card, including the applicable interest rate that will be assessed on any outstanding balances and several key fees or other charges that may apply, such as the fee for making a late payment. In addition, issuers must provide consumers with an initial disclosure statement, which is usually a component of the issuer’s card member agreement, before the first transaction is made with a card. The card member agreement is the governing document for the account and provides more comprehensive information about a card’s terms and conditions than would be provided as part of the application or a solicitation letter.

Retail Merchant

A merchant that provides goods and/or services in the retail industry, but that is not a mail/phone merchant, a recurring services merchant or a travel and entertainment (T&E) merchant.

Reversal

The process of a merchant reversing (canceling) a pre-authorized transaction. Similar to a chargeback, with the difference that merchant’s initiate a reversal, while customers initiate chargebacks.

RRN

Retrieval reference number. See Reference Number also.

SAQ

Acronym for “Self-Assessment Questionnaire.” Tool used by any entity to validate its own compliance with the PCI DSS.

Schumer Box

Named for the then-chairman of the Senate Banking Committee that passed landmark consumer protection legislation (Senator Charles Schumer, D – NY) this standardized disclosure “box” features relatively consistent terms and conditions for credit card offers. Specific terms and conditions such as purchase and cash advance interest rates, annual fees and rate calculation methods are required to be spelled out for consumers in conjunction with all new account solicitations.

Secured Credit Card

Credit card that requires collateral (property, such as a house, car or deposit of money) for approval. Generally, secured credit cards are for people with no credit or poor credit who are trying to build or rebuild their credit history.

Service Code

Three-digit or four-digit value in the magnetic-stripe that follows the expiration date of the payment card on the track data. It is used for various things such as defining service attributes, differentiating between international and national interchange, or identifying usage restrictions.

Service Provider

Business entity that is not a payment brand, directly involved in the processing, storage, or transmission of cardholder data. This also includes companies that provide services that control or could impact the security of cardholder data. Examples include managed service providers that provide managed firewalls, IDS and other services as well as hosting providers and other entities. Entities such as telecommunications companies that only provide communication links without access to the application layer of the communication link are excluded.

Settlement

The reporting of settlement amounts owed by one member to another, or to a card issuing concern, as a result of clearing. Settlement is the actual buying and selling of transactions between the merchants, processors and acquirers; along with the card-issuing entities.

Settlement Bank

A bank, including a correspondent or intermediary bank, that is both located in the country where a member’s settlement currency is the local currency, and is authorized to execute settlement of interchange on behalf of the member or the member’s bank.

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.

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