Glossary of Terms A-B C-D E-F I-J L-M N-O P-R S-T U-Z

CheckGateway.com’s Glossary of Financial Terms (A-B)

Use CheckGateway.com as your information resource. Look through our glossary to get the details you need about merchant services, fraud protection and ACH processing.

Automated Clearing House

The U.S. Federal Reserve Bank’s system that allows for electronic funds transfer between banks. Direct deposits, monthly debits and other fund transfer transactions are handled by the automated clearing house. Operations are performed in batch mode, so the time it can take for money to be transmitted is up to 72 hours. Insufficient funds will result in a return notification.

ACH Fraud

Criminals use stolen bank account information for purchases or the account holder makes purchases for the purpose of returning it for a refund. ACH fraud also occurs when account holders falsely dispute authorized transactions.

ACH Network

The group of financial institutions and similar entities that work together on electronic check transactions. Processing, clearing, delivery and settlement services are handled by the ACH Network, which is governed by the National Automated Clearing House Association.

ACH Transaction

Any payment that is processed via the ACH Network and goes to or from a receiver, or customer. The originator, third-party processor, originating depository financial institution and receiving depository financial institution are also involved in an ACH transaction, in addition to the receiver and network.

Address Verification Services

Credit card processing associations use address verification services to verify customer billing addresses linked to e-commerce payment transactions. Merchants can use AVS to accept or decline transactions based on the validity of billing address information.

ABA Number

The account number assigned to a bank by the American Bankers Association. This number generally appears at the bottom of a check before the account number.

American Bankers Association (ABA)

An organization that represents US banks and financial institutions. The ABA assigns members unique identification numbers commonly called ABA or routing and transit numbers. A bank’s ABA number generally appears at the bottom of a check before the account number.

Application Program Interface (API)

A computer communication procedure that makes possible the transfer of or access to information between two separate software or computer applications.

Authentication

The process of verifying the identity of a person or association. There are varying degrees of authentication for accepting payments. Examples include checking a driver’s license when accepting payment for a retail transaction or validating a login and password at a merchant Web site.

Authorization

Verification from the bank that issued a credit card to a merchant’s transaction approval request. The authorization indicates that payment information is authentic and that the purchasing customer has sufficient credit on the credit card to cover the amount of a transaction.

Authorization Amount

The transaction amount submitted to a card issuing bank for funds approval.

Authorization Capture

A credit card transaction request to authorize and capture, or settle, funds for a purchase. A payment gateway submits a request to a card issuing bank for authorization and, if approved, automatically submits the transaction for settlement.

Authorization Code

The code a card issuing bank assigns to a credit card transaction once a transaction is approved.

Authorization Only

A credit card transaction request to just reserve funds for a purchase. A payment gateway submits the request to the card issuing bank for authorization, but takes no further processing action.

Authorization Request

A transaction request submitted by a merchant to verify the availability of funds on a customer’s credit card. Further action by the merchant depends on whether the transaction request type is an Authorization Capture or an Authorization Only, and whether the transaction request is authorized by the card issuing bank.

Automated Clearing House (ACH) Network

The group of financial institutions and similar entities within the banking industry that work together to facilitate the processing, clearing, delivery and settlement services for electronic check transactions.

Bank Card Association

A consortium of or banks that form an association to issue bank cards. Bank card associations generally work with other payment issuers to provide specific bank card offers.

Basis Points

A unit that is equal to 1/100th of 1%, and is used in denoting the change in a financial instrument. Basis points are commonly used for calculating changes in yield of a fixed-income security, interest rates and equity indexes.

Batch

A group of transactions submitted as a group to the appropriate processing networks for clearing and settlement.

Batch Upload

A Merchant Interface tool for uploading multiple transactions at once from a spreadsheet or proprietary business application.

Broadband

Refers to data transmission where multiple pieces of data are sent simultaneously to increase the effective rate of transmission.