Download ETA CPP Study Guide for Exams| 100% Correct| Grade A+ 2026 and more Summaries Advanced Education in PDF only on Docsity!
ETA CPP Study Guide for Exams| 100%
Correct| Grade A+ 2026
Module 1: The Payments Ecosystem
(Roles & Entities)
Understanding the "whoโs who" of credit card processing.
Core Participants
โ Merchant: Any business that accepts credit or debit cards in exchange for goods or services (e.g., Amazon, Target). โ Cardholder: An end user or consumer who uses a card to make a purchase. โ Card Issuer: The banking institution that provides cards to consumers (e.g., Chase, Capital One, Credit Unions). โ Acquiring Bank (Acquirer): The financial institution that processes payments for a merchant (e.g., HSBC, Wells Fargo). โ Card Brand: A network of issuing and acquiring banks that processes brand-specific payments (e.g., Visa, MasterCard, American Express, Discover, JCB, China UnionPay).
Service Providers
โ Payments Processor: A company (often third-party) appointed by a merchant to handle transactions for acquiring banks. โ Front-end: Handles authorization and capture services. โ Back-end: Moves money from the issuing bank to the merchant bank via the Federal Reserve. โ Independent Sales Organization (ISO): An organization registered with a card brand that performs functions on behalf of an acquirer, such as soliciting merchant accounts or providing customer service. โ Merchant Service Provider (MSP): A company providing transaction processing solutions; often used interchangeably with ISO.
Module 2: The Transaction Lifecycle
The technical path a payment takes from "Swipe to Settlement."
vaeenma/Indiapicture Explore
Step 1: Authorization
The merchant submits the transaction to the acquirer. The acquirer verifies the card number and amount with the issuer. The issuer reserves the amount (Authorization Code) against the cardholder's limit.
Step 2: Batching
โ AVS Fee: Charged for using the Address Verification Service to prevent fraud. โ Chargeback Fee: Charged when a cardholder disputes a transaction, leading to a reversal of funds.
Module 4: Purchasing Card Data Levels
Special requirements for Business-to-Business (B2B) and Corporate cards. Higher levels often result in lower interchange rates.
Level Data Included
Level 1 Standard purchase info: Total amount, date, Merchant Category Code (MCC), and supplier name.
Level 2 Level 1 info plus : Sales tax amount, customer accounting code, tax ID, and ZIP code.
Level 3 Level 2 info plus : Product descriptions, quantities, unit of measure, freight/duty amounts, and discount indicators.
Module 5: Terminal & Software Solutions
Methods and hardware used to capture payment data.
Physical Terminals
โ Landline Terminal: Connects via a standard phone strip. โ IP Terminal: Connects via the internet (faster than dial-up). โ EMV Terminal: Reads embedded "Chips" in cards to reduce fraud liability. โ Wireless Terminal: Uses cellular data; ideal for mobile businesses or off-site sales.
Digital & Online Solutions
โ Internet Gateway: A service for e-commerce sites that authorizes online payments. โ Virtual Terminal: A web-based version of a physical terminal; card data is typed into a browser.
โ Mobile Solution: Using a smartphone app and a card reader (e.g., Square).
Peripherals
โ PIN Pad: Used to encrypt a cardholder's PIN for debit transactions. โ Check Reader: Reads MICR (Magnetic Ink) on paper checks for conversion. โ Contactless Reader: Communicates with cards/phones via radio waves (NFC).
Module 6: Risk Management &
Compliance
Protecting the merchant and the acquirer from financial loss.
Risk Metrics to Monitor
โ Average Ticket: The average sales amount. Significant spikes (e.g., $30 to $400) may indicate fraud. โ Maximum Ticket: The highest single transaction allowed; amounts above this trigger review. โ Monthly Volume: Total sales processed. Excessive volume in the first month can indicate a "bust-out" scheme. โ Chargeback Activity: Excessive disputes may indicate a failing business or fraudulent practices. โ Keyed vs. Swiped %: Higher keyed-entry percentages increase risk of fraud and higher fees.
Security & Protections
โ PCI Compliance: A set of standards (PCI DSS) to ensure a secure environment for card data. โ AVS (Address Verification): Checking the cardholder's address against the issuer's file. โ Check Guarantee vs. Verification: * Guarantee: Processor covers "bad" checks if procedures were followed (more expensive). โ Verification: Processor only checks history; merchant is not reimbursed for returns (less expensive).
