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Visa
Merchant Glossary of Terms
As a Visa/processing merchant, you will
need to know how to use an authorization code and Visa/processor Address
Verification Service.
But before you can use them, you need to know
what they are.
Such terms are listed here in our VISA Merchant
glossary.
Browse By Letter:
A
- Accounts Payable:
These are the debts your business owes to creditors.
- Accounts Receivable:
These are the debts owed to your business.
- Address Verification Service
(AVS):
Visa's fraud-reduction service. You use AVS to verify a cardholder's
billing address before you make a mail or phone transaction.
- Audit:
Inspection and verification of financial accounts, records, and
accounting procedures.
- Authorization:
This is the approval from the financial institution that issued the
cardholder's card that allows you to accept the transaction for a
given amount.
- Authorization Code:
A code that notifies you that you have obtained the authorization
for a specific Visa card transaction. Note: You should print this on
the sales draft.
B
- Better Business Bureau:
A national member organization that uses codes of ethics, news
alerts, databases, and other programs to maintain a high level of
trust between businesses and the public.
C
- Cancellation Code:
The code that a lodging or car rental merchant gives to a
cardholder. The cancellation code confirms that the cardholder did,
indeed, cancel a reservation.
- Cash Flow:
The difference between your incoming cash and your outgoing cash.
- Chargeback:
Also known as a "Debit Memo," a chargeback is a reversal of a sales
transaction. So if you deposited a $50 transaction in your merchant
bank account, a chargeback for that transaction means that the $50
has now been debited from your merchant account.
- "Code 10" Authorization:
This is a voice authorization code that you might initiate when you
suspect a card is stolen or fake, or when a customer is acting
suspiciously.
- Collateral:
Property that is provided to secure a loan or other credit and that
becomes subject to seizure upon default.
- Commercial Credit:
This is short-term credit that a seller gives to a buyer to pay for
a service or product.
- Credit Bureau:
Firms, like Experian or Equifax, that gather information about your
finances, especially loans you have taken out. In turn, they sell
the information to businesses and lenders, which helps them decide
if they will approve your loan or sell an item like a house or car
to you.
- Credit Rating:
This tracks your or your business' history of paying back loans.
Your credit rating determines your chances of getting future loans.
D
- Debit Memo:
See Chargeback.
- Disclosure:
These are the terms or conditions for refunds, cancellations, or
modifications made to reservations.
- Draft/Sales Draft:
A record (usually paper) used to document that a good or service was
purchased.
E
- Employer Identification Number
(EID):
This is an IRS-assigned number given to a business after it files an
application form called "SS-4." Once you receive it, put your EID on
all business tax returns and other significant documents.
- Equity:
When you subtract all your business' debts from its current market
value, that's your business' amount of equity. For example, if your
debts come to $75,000, but your business could sell today for
$275,000— you have $200,000 worth of equity.
- Escrow:
A kind of holding pen for money, which is released after a specific
event has occurred. A buyer might put money into an escrow account,
which is supervised by a neutral party, such as a financial
institution. The financial institution (which would be called the
"escrow agent" in this case) releases the money to the seller only
after the seller has carried out certain agreed-upon tasks (e.g.,
deliver a product, complete a work, or perform a service).
- Expense Account:
Account that business people use expressly to pay for
business-related travel and entertainment costs.
F
- Floor Limit:
A specific dollar limit used to determine which Visa card
transactions you must authorize. If your business has a floor limit
$1,000—you must get authorization for any transaction over that
amount.
Note: All airline, telephone, and mail order transactions must
be authorized, even if the amount is under your floor limit.
I
- Imprint:
This is a physical impression you make from a customer's card which
appears on the draft. This proves that the card was present when the
sale was made.
Note: An imprint can be created electronically if you use a
magnetic-stripe-reading terminal that includes the correct
point-of-sale (POS) entry code.
- Incubators:
These are organizations that offer entrepreneurs a variety of
resources, including mentoring, financing advice, technological
training, business space, and research facilities.
L
- Leverage:
A term for when you leverage your business by intentionally taking
on debt(s) to expand the size or scope of your company.
- Lien:
This is the legal right to hold onto a piece of intangible property
that secures someone's debt on personal or real property. If the
person or company owing the debt defaults, the property can be taken
or sold.
- Line of Credit:
This is a financial institution's commitment to lend your business
up to a certain amount of money during a specified period. For
example, your financial institution might extend you a $50,000 line
of credit during the first quarter of 2000.
M
- Merchant Identification Number:
This is the number a financial institution assigns to a merchant to
identify your business.
- MO/TO:
Short for mail order (MO) or telephone order (TO).
O
- Overhead:
Business expenses—such as property taxes, utilities, and
insurance—that are not directly connected to the goods or services
you produce.
S
- Service Corps of Retired
Executives (SCORE):
Experienced experts from a variety of fields, SCORE members can
advise you, whatever your business, on anything from advertising to
pricing to cold calling, and more.
- Small Business Administration
(SBA):
A government agency committed to helping entrepreneurs become
successful through programs ranging from counseling to financing.
- Sole Proprietorship:
A business in which you have complete control and responsibility.
T
- Tax Number:
Your state department of revenue assigns you your business tax
number. The number makes it possible for your business to buy items
at wholesale costs and not pay sales tax.
V
- Venture Capital:
Money available to invest in new, and/or risky, enterprises.
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