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ETA CPP EXAM STUDYGUIDE 2024
NABU, APF and FANF - ANSWER MasterCard implemented a new fee, the Network Access and Brand Usage fee (NABU). And following right on the heels of the MasterCard announcement, on July 1, 2009 Visa implemented their U.S. Acquirer Processing Fee (APF).
Card brand dues and assessments - ANSWER In addition to Interchange, each card brand includes additional fees based on the transaction amount and per transaction. These fees are called dues and assessments and typically range from 0.105% - 0.45% on the transaction amount [ $0.0025 - $0.04.] Like interchange, assessments are exactly the same for all credit card processors and no processor can give you a lower rate or a better deal on assessments.
AVS and switch fees - ANSWER The fee is charged when your business utilizes the Address Verification Service to check that the address provided by a cardholder matches the address on file with the credit card company.
Authorization fee - ANSWER The voice authorization fee applies when you use a telephone dial-up service for transaction authorization. A fee is charged for each call that is made. Voice authorization is useful in the event your terminal or software malfunctions or your internet connection isn't working.
Batch fee - ANSWER A fee that is charged when you settle your daily transactions (also known as the batch) with your credit card processor. If you have no credit card transactions to settle on a particular day, you are not charged this fee.
Clearing and settlement fees - ANSWER clearing denotes all activities from the time a commitment is made for a transaction until it is settled.
Chargeback and representment fees - ANSWER In short, a chargeback is a reversal of funds transferred.
Statement or reporting fees - ANSWER Fees that are charged for receiving statements or reports.
Rewards Cards - ANSWER A cashback reward program is an incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder.
Card Not Present transactions - ANSWER A card not present transaction (CNP, MO/TO, Mail Order / Telephone Order, MOTOEC) is a payment card transaction made where the
cardholder does not or cannot physically present the card for a merchant's visual examination at the time that an order is given and payment effected.
Quick Service Restaurants (QSR) - ANSWER a specific type of restaurant that serves fast food cuisine and has minimal table service.
Emerging Markets - ANSWER countries in the process of rapid growth & industrialization
Level 1 Data - ANSWER Level I purchasing card data includes the same information captured during a traditional credit card purchase transaction. This includes: total purchase amount, date, merchant category code and supplier/retailer name.
Level 2 Data - ANSWER Level II purchasing card data includes the same information captured at Level I, plus the following: sales tax amount, customer's accounting code, merchant's tax ID number, applicable minority - and women-owned business status and sales outlet ZIP code.
Level 3 Data - ANSWER Level III purchasing card data includes the same information captured at Levels I and II, plus the following: quantities, product codes, product descriptions, ship to ZIP, freight amount, duty amount, order/ticket number, unit of measure, extended item amount, discount indicator, discount amount, net/gross indicator, tax rate applied, tax type applied, debit or credit indicator and alternate tax identifier.
Discount Rate (Credit/Debit) - ANSWER The discount rate is the fee paid by merchants to credit card processors as a fee associated with accepting general-use credit cards (such as Visa, MasterCard, American Express and Discover). Typically this fee runs between 1 percent and 3 percent, depending on the nature of the transaction.
Daily or monthly discount - ANSWER With monthly discount, your processor deducts fees from your account in one lump sum once a month. With daily discount, your processor charges fees daily throughout the month as well as at the end of the month.
Surcharge - ANSWER A charge added to the usual cost
Billback - ANSWER Billback or bill back is an accounting service and/or suite of software that is used for cost recovery.
ERR Rates - ANSWER Enhanced Rate Recovery Pricing. As a merchant business with an ERR rate of 1.69% for your merchant account, you will be charged 1.69% for any transaction that qualifies on The Interchange Table at 1.69% or below.
Interchange Plus - ANSWER Interchange Plus pricing gets its name based on the fact that the rate charged for the transaction comes straight from the Interchange table "plus" a surcharge amount.
Gift and/or Loyalty cards - ANSWER Loyalty programs are structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.
Check conversion - ANSWER Check conversion is a reformatting service offered by banking merchants. Check conversion allows banks to convert paper checks into electronic ones and then send them to the appropriate receiving bank. The electronic check is forwarded on via the automated clearing house (ACH).
Cash advances - ANSWER A cash advance allows you to use your credit card to get a short- term cash loan at a bank or ATM. Unlike a cash withdrawal from a bank account, a cash advance has to be paid back — just like anything else you put on your credit card. Think of it as using your credit card to "buy" cash rather than goods or services.
ACH - ANSWER Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches.
The following information must be provided on the merchant application: - ANSWER - business name (DBA)
- physical location address
- business telephone number
- Tax Identification Number (TIN)
- Employer Identification Number (EIN)
- Contact information
- Cardholder Storage
- Copy of the merchant's voided check or bank letter with account name, account number and routing number
- A bank contact name and phone
Retail - ANSWER the selling of goods directly to the customer; face-to-face transaction
Restaurant - ANSWER an eating establishment where food and drink are being sold to customers
Mail Order/Telephone Order (MOTO) or Internet - ANSWER the selling of goods online; non- face-to-face transaction (ANY Card Not Present environment)
Supermarket - ANSWER large self-service retail store selling food and household goods
Lodging - ANSWER sleeping accommodations, furnished rooms to rent for the night
Landline terminal - ANSWER the card is swiped through a magnetic strip on the terminal, which connects to the processor's computer.
Dial UP Terminal - ANSWER A terminal that can read the track data on a magnetic stripe and communicate transaction information to the frontend platform and receives authorization instructions via the merchant's phone line usually by dialing a toll free number.
IP Terminal - ANSWER does the same thing as a dial terminal except that the terminal communicates transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's connection to the internet.
EMV Terminal - ANSWER has the ability to take cardholder data from a chip embedded within the card and communicate transaction information to the frontend platform and receives authorization instructions by utilizing the merchant's phone line or Inter- net connection.
Wireless terminal - ANSWER provides the ideal solution for businesses seeking the most effective way to complete credit card transactions off-site. Most wireless credit card terminals support credit and debit transactions and are equipped with an internal PIN pad. Wireless terminals can be used on the countertop or in a mobile environment.
Sale - ANSWER for a sale, swipe the customer card or manually enter the credit card number, input sale amount, then press enter. The terminal will then transmit information through the network for approval, and a merchant receipt will be printed.
Mobile solution - ANSWER allows a merchant to accept credit cards using a cell phone with or without a card swipe mechanism.
Internet solution - ANSWER a processing method using a secure web server that provides an interface for merchant websites and shopping carts that require real-time transaction processing. Depending on the merchant's software they can connect to a frontend via either an SSL server or payment gateway to get a real-time credit card authorization.
Checks - ANSWER a negotiable paper document drawn against deposited funds exchanged with a merchant for payment of products or services.
Check Guarantee - ANSWER this is the process of issuing approval codes for check acceptance for merchants. With Check Guarantee, if a check is returned to a merchant for any reason and they followed the proper acceptance procedures, they are automatically credited for the 'bad' check and collection efforts are pursued directly with the check writer. While this process is better than regular check verification, the cost is higher.
Check Verification - ANSWER this is the process of issuing verification codes for check acceptance for merchants. With Check Verifica- tion, if a check is returned to a merchant, they are typically not reimbursed by the processor. Collection efforts will be made on behalf of the merchant at an additional cost, however there is no 'guarantee' of payment on uncollected items. Therefore, this service is less expensive than Check Guarantee.
Check 21 - ANSWER this is the process of capturing a check at the point of entry (can be point of sale scanner or a picture on a mobile phone). The check image is transmitted to the issuer and paid through the settlement process.
ACH Debit - ANSWER this is the process whereby the consumer gives a pre-approval to have funds debited from either their checking or savings account. This is not a real-time transaction and can be subject to non-sufficient funds rejection.
cardholder - ANSWER an end user or consumercard issuer is any banking institution that provides credit or debit cards to a consumer. Examples of card issuers include Chase, Capital One, Bank of America and credit unions.
acquiring bank (or acquirer) - ANSWER the bank or financial institution that processes credit and/or debit card payments for a mer- chant. Examples of acquirers include HSBC and Wells Fargo.
payments processor - ANSWER a company (often a third party) appointed by a merchant to handle payment card transactions for acquiring banks. There are two types of processors: front-end and back-end. Front-end processors have connections to various card issuers and supply authorization and capture services to the acquiring banks' merchants. Back-end processors accept settle- ments from front-end processors and, via The Federal Reserve Bank, move the money from the issuing bank to the merchant bank. Examples of payments processors include Global Payments, First Data, Chase Paymentech, TSYS, and Elavon.
merchant - ANSWER any business that accepts credit or debit cards for payment in exchange for goods or services. Examples include Amazon, Target and Best Buy.
card brand - ANSWER a network of issuing banks and acquiring banks that processes brand- specific payments. The best known card brands are Visa, MasterCard, American Express, Discover, JCB and China UnionPay.
Independent Sales Organization (ISO) - ANSWER an organization or individual registered with a card brand (Visa or MasterCard), and has a payment card relationship with an acquirer or issuer to perform functions on behalf of the acquirer or issuer (i.e., the ISO soliciting merchant accounts, arranging for terminal purchases or leases, providing customer service, and soliciting cardholders). Examples of ISOs include Total Merchant Services and North American Bankcard.
service provider, more commonly known as a merchant service provider (MSP) - ANSWER a company or organization that provides transaction processing solutions to merchants; any sales office that offers payment services to merchants.
debit car - ANSWER provides the cardholder electronic access to his or her bank account(s) at a financial institution.
credit card - ANSWER allows the cardholder to buy goods and services based on the cardholder's promise to pay for these goods and ser- vices at a later date
Point of Sale (POS) terminal - ANSWER a device that processes transactions with a debit or a credit card, via a telephone line or Internet connection, typically powered by a power cord.
wireless terminal - ANSWER a device that processes transactions with a debit or a credit card via a cellular (wireless) data network, typi- cally powered by battery pack.
mobile payment solution - ANSWER consists of a device and software application (typically a smart phone application and card reader) that process transactions with a debit or a credit card via a cellular (wireless) data network. Examples include Payment Jack and Square.
virtual terminal - ANSWER a payment gateway service provider allowing merchants to accept credit card and electronic check pay- ments through their website over an IP (Internet Protocol) connection.
PIN Pads / PIN Entry Devices (PEDs) - ANSWER electronic devices used in debit or smart card- based transactions to input and encrypt the cardholder's Personal Identification Number (PIN)
Monthly volume - ANSWER applications typically request the average monthly volume and a peak season volume. Sales beyond these volumes may indicate risk problems or may warrant adjustments in account set up to off set merchant growth. Larger than expected volumes in the first month may be an indicator that the merchant has past sales they are trying to process, a bust-out scheme, or that the application was erroneous or false. The volume should also be balanced against similar merchants. Larger volumes than similar merchants may be an indicator of risk and should be investigated.
Large dollar or excessive credits - ANSWER monitoring credits is a good way to gauge the satisfaction of your merchant's customer with the products and/or services sold. Excessive credits may indicate money problems at your merchant. Large dollar credits may be an indicator of a merchant utilizing the card schemes to layer money amongst their various accounts. It is required that all credits have an offsetting sale. Credits without an offsetting sale may be an indicator of employee theft, merchant system hack, or a fraudulent merchant. Frequent credits for large amounts may be an indicator of money laundering.
Chargeback monitoring - ANSWER if your merchant is receiving a lot of chargebacks, you should quickly evaluate the reason codes behind the chargebacks and question the merchant's practices. Increased chargebacks may mean your merchant's business is in financial distress, is experiencing supplier issues, or has gone rogue and is committing fraud, potentially against the consumer. This is especially the case if the chargebacks are for unauthorized charges, services not received, or duplicate transactions.
Percentage keyed vs. swiped - ANSWER monitoring the percentage of swiped transactions vs. keyed transactions is a simple way to tell whether your merchant has shifted from retail to MOTO (mail or telephone order) or internet. If you see more keyed transactions than indicated and subsequently approved on the application, you should talk with your merchant to understand why transactions are being keyed. Increased key-entered transactions may also be an indicator of factoring or money laundering where the cards are not present.
Repeat or excessive authorizations - ANSWER evaluate authorization logs to help determine whether your merchant has software problems that cause repeated authorizations or whether your merchant is being targeted by a fraudster seeking to find good card numbers. Monitoring excessive authorizations is also a way to help your merchant avoid brand fees associated with non-settled transactions.
Merchant information changes - ANSWER another area to monitor is when merchants change checking accounts, contact information, or websites. It is important to understand why the changes are being made, how often, who is authorizing the changes, and what impact the changes might have on the business.
Financial strength of the business - ANSWER Periodically checking the financial health of your merchant and watching trends in processing volume can help protect against unexpected financial loss. If the merchant is struggling to cover their costs of goods it is possible owed fees may be returned as NSF (non-sufficient funds).
Future delivery - ANSWER The risk with transactions dependent on the future delivery of goods and services is that the chargeback period may be quite lengthy. Examples include household furniture and/or appliances, membership dues, home renovation/ remodeling, or service contracts. If the merchant goes out of business prior to delivery or completion of services and is not capable of covering the returns/chargebacks, the acquirer will absorb loss.
PIN debit transactions - ANSWER The regulations for PIN debit and the PIN debit network rules allow for cardholder disputes in certain instances. You should be aware of these regulations and understand the potential impact on your business.
Data security - ANSWER With the increase in merchants using point of sale systems (not just a terminal) comes an increase in the likeli- hood that you will experience a data breach at a retail merchant. Diligence should be used in ensuring software and hardware in use is PCI compliant and that your merchant follows proper procedures and guidelines for protecting cardholder data.
EMV Chip Card - ANSWER If a consumer presents a chip card and the merchant is not able to accept the card AND the consumer claims fraud, the liability is now held by the merchant. This is a new risk not previously faced by card present merchants. The details of this shift are below.
Address Verification Service (AVS) - ANSWER The Address Verification System (AVS) is a system used to verify the address of a person claiming to own a credit card.
A2A (Account-to-Account) - ANSWER The automatic transfer of funds from one account to another. An example is the Fedwire or wire transfer transaction.
AAV - ANSWER See Accountholder Authentication Value.
ABA - ANSWER See American Bankers Association.
ABA Transit Routing Number - ANSWER The unique number devised by the American Bankers Association (ABA) in 1910 that identifies the bank issuer of depository accounts. It is a 10 ‐digit number (nine digits and a verification digit) issued by the Federal Reserve Bank to
Account Funding Transaction - ANSWER A term used by Visa to indicate an electronic commerce purchase transaction for the purpose of adding funds to a Visa prepaid account that is posted to a Visa card and includes the transmission of the Account Funding Transaction Indicator.
Account History - ANSWER The payment history of an account over a specified period, including the number of times the account was past due or over the credit limit.
Accountholder Authentication Value (AAV) - ANSWER One type of security used in the smart card industry to describe a value on the chip that is used to authenticate the accountholder. (Source: Smart Card Alliance)
Account Maintenance - ANSWER For both the card issuer and the card acquirer, the operation involving nondollar changes to the database, such as name, address, and checking account changes, product profiles, billing information, and rate changes.
Account Mask Information - ANSWER Editing criteria used to verify the accuracy of a seller's account number in certain electronic payment transactions.
Account Number - ANSWER Issuing: An issuer‐assigned number that identifies a cardholder's account, the issuer, and the type of financial transaction card (e.g., commercial card or debit card). Acquiring: An acquirer‐assigned number that identifies a particular merchant or group of merchants. Note: The first six digits of each number identify the issuing and acquiring institutions. See BIN.
Account-Number-Verifying Terminal - ANSWER A point‐of‐transaction terminal that may be required by Visa at specified high‐risk locations. This terminal reads the account number encoded on the magnetic stripe or embedded in the chip (smart card), compares the last four digits of the encoded account number to the keyentered last four digits of the embossed account number, and transmits the full, unaltered contents of the magnetic stripe or chip in the authorization message.
Accounts Payable (A/P) - ANSWER Debts a business owes its creditors.
Accounts Receivable (A/R) - ANSWER Debts owed to a business.
Account Receivable Entry (ARC) - ANSWER A single-entry debit initiated by an automated clearinghouse (ACH) originator to a consumer account of an ACH receiver pursuant to a source document provided by the receiver via postal mail, or at a drop box location or via electronic means. When a paper check payment is converted to an ACH electronic payment and with ARC, the check is destroyed after conversion; in POP, the check is returned to the check writer at the time of payment. These transactions flow through the ACH Network. (Source www.NACHA.org)
Account Takeover - ANSWER See Cash Theft.
Account-to-Account - ANSWER See A2A
ACH - ANSWER See Automated Clearing House
ACH Fraud - ANSWER Utilizing the automated clearinghouse network to access funds illegally. Some ACH fraud categories include: unauthorized transactions; returns/60‐day right of recredit; consumer fraud against merchants; fraudulent use of stolen bank accounts; transaction‐level fraud; and merchant‐level fraud.
ACH Network - ANSWER The Automated Clearing House (ACH) Network facilitates commerce, electronically, by serving as an efficient, reliable and secure payments system. NACHA, led by member depository financial institutions and payments associations, fulfills this purpose by managing the development, administration, and governance of the ACH Network, and by providing superior services and value to its members as the industry association responsible
backend processor. It includes the bank identification number (BIN) and the acquirer's processing date.
Acquiring Bank - ANSWER The bank that contracts with a merchant, as required by card association rules enabling the merchant to accept the association‐branded bank cards. These cards may be consumer and/or corporate and credit and/or debit or prepaid. The merchant has an account with this bank and each day deposits the value of the day ʹ s credit card sales. Acquirers buy (acquire) the merchant ʹ s sales slips and credit the tickets ʹ value to the merchant ʹ s account. See Merchant Bank.
Acquiring Member - ANSWER The member of MasterCard or Visa that holds the liability for merchant relationships and in return receives all bank card transactions from the merchant. This term can also be used to describe the disburser of funds in a cash disbursement.
Acquiring Processor - ANSWER A third party contracted by an acquirer to provide credit card acquiring services, such as clearing, billing, reporting, settlement, and operational services. Some acquirers outsource this processing activity to gain cost‐effectiveness.
Acquisition - ANSWER One organization's purchase of another or the merger of two or more organizations. Acquisition has different consequences under corporate and tax law depending on whether it involves the assets or the capital stock of the target company.
Activation - ANSWER A card fraud prevention mechanism used by issuers. To activate a bank card received by mail, the cardholder must call a toll‐free telephone number. Operators or automatic prompts verify certain cardholder information, after which the card is activated and may be used by the cardholder.
Activity - ANSWER The transactions that appear on a cardholder's bill or a merchant's monthly statement.
Activity File - ANSWER Used by Visa's VisaNet Integrated Payments system (VIP) or MasterCard's BankNet system to track an issuer's stand‐in‐processing approval responses within a four‐day period.
Activity File Parameters - ANSWER Issuer‐established maximum limits on the number and value of transactions that the Association may authorize on the issuer's behalf.
Activity Limits - ANSWER The maximum dollar amount, maximum transaction count, or both that can be authorized against a card.
ADA - ANSWER See Americans with Disabilities Act.
ADC - ANSWER See Account Data Compromises.
ADV - ANSWER See Automated Accounting Device.
Addenda Record - ANSWER An electronic record attached to an ACH payment entry, used for the purpose of transmitting payment‐related information.
Addendum - ANSWER A supplemental part or section added to a book or contract. Also called an appendix or schedule.
Additional Commercial Card Data - ANSWER Data required as part of a bank card transaction in addition to the normal data such as cardholder's name and billing address. Additional data — also called enhanced data or level 2 data — can include information relating to sales tax, accounting code, and fuel consumption for fleet cards as required by the card companies on business, corporate, purchasing, and fleet cards.
Advanced Encryption Standard (AES) - ANSWER A federal information processing standard (FIPS) outlined in FISPA Publication 197 that specifies a cryptographic algorithm for use by U.S. government agencies to protect sensitive, unclassified information. AES uses keys that are 128, 196, and 256 bits to encrypt and decrypt information in blocks of 128 bits. It can encrypt data much faster than 3DES (Triple DES), which it replaces.
Advance-Fee Loan - ANSWER A loan or line of credit calculated so that all of the fees and finance charges are deducted before the consumer receives the principal.
Advice - ANSWER A daily, weekly, or monthly report that alerts an acquirer that a merchant has experienced above‐average levels of suspect or fraud activity.
AES - ANSWER See Advanced Encryption Standard.
AF - ANSWER See Audio Frequency.
AFC - ANSWER See Automatic Fare Collection System.
AFDC - ANSWER See Aid for Dependent Children.
Affiliate - ANSWER A member or licensee of Visa International or Visa U.S.A. or an organization affiliated with a MasterCard member that participates under the member's rule or card plan on either the cardholder or merchant side.
Affinity Card - ANSWER A Visa, MasterCard, Discover or American Express card bearing the trade name or mark of an affinity partner. These cards are issued through marketing alliances, an organization, or a collective group (such as a professional association or special interest group). The affinity partner's name and logo are shown on the card, and the partner then solicits its membership or group for special rewards and promotions. Popular with sporting teams and university alumni groups, affinity cards work like regular credit/debit/prepaid
cards and can be used anywhere that the brand is accepted. The card issuer often pays the affinity organization a royalty on charge transactions.
Affinity Partner - ANSWER An entity that is not eligible for membership in either Visa or MasterCard and has a relationship with an issuer for the issuance of affinity cards.
Agent - ANSWER Under the law of agency, a person authorized by another (known as the "principal") to act for the principal. Agents can include processors, independent sales organizations, third‐party servicers, independent contractors, and financial institutions engaged by a bank card member to provide services or act on its behalf in connection with payment services. For example, an independent sales organization may have a contractual relationship with a bank card member to sell and service retail merchants, thus becoming an agent of the member.
Agent Agreement - ANSWER A contract with an agent under which the agent and the principal can be obligated. See Agent.
Agent Bank - ANSWER Issuing: Agent banks contract with larger issuing (or sponsoring) banks to issue cards that are branded with the agent bank's name. Cardholders are solicited through the agent. Shared revenue or fixed compensation may be negotiated, but the liability rests with the sponsoring bank, not the agent. Acquiring: Similar relationships exist in which the agent sells and services the merchants on behalf of the principal bank.
Agent member - ANSWER A member of Visa or MasterCard that by agreement, participates in another member's card program, usually by turning over its cardholder and merchant applications to the member administering the card program and by acting as a depository for merchants.
Agent Reference File - ANSWER A file maintained by Visa U.S.A. containing information about independent sales organizations, third‐party processors, third-party servicers, and independent contractors.
