Industry Terms and Acronyms

Question: I’ve just started accepting credit cards online, and I’m confused by all the different terms, acronyms and abbreviations in the transaction processing industry. What do they mean, and why are they important for me to know?

Answer: You are absolutely correct: E-commerce and transaction processing have their own language, which can be intimidating at first. But once you’ve learned this new vocabulary, you will be very comfortable with payment processing. Learn the following e-commerce-related processing terms and acronyms, and use them as a guide to become a payment solutions expert.

Address Verification Service (AVS) is an important fraud-prevention mechanism that verifies customer addresses within the United States. This ensures the identification of the cardholder and guarantees that you ship merchandise to a legitimate customer.

Automated clearing house (ACH). This is one acronym you’ll want to remember. ACH is a national electronic network that transfers and clears funds between banking institutions on behalf of merchants and their customers. In other words, ACH helps you get your money from your customers’ transactions.

Business-to-business (B2B) commerce refers to businesses purchasing goods from other businesses, generally over the Internet. It is a strong Internet growth component, and B2B connects companies’ supply chains of companies through comprehensive Internet communications and offers goods through online catalog and portals. B2B is also known as BBP, or business-to-business procurement.

Business-to-consumer (B2C) commerce. When customers purchase products or services from a merchant — whether in an online or brick-and-mortar environment — they conduct B2C commerce.

Card validation code 2 (CVC2) and card verification value 2 (CVV2) are important fraud prevention mechanisms initiated by MasterCard and Visa to protect merchants. MasterCard’s CVC2 and Visa’s CVV2 codes help merchants distinguish between legitimate customers from those who try to commit fraud. These codes are the three digits on the back of a MasterCard or Visa credit card that follow the cardholder’s credit card number. These codes protect Internet merchants by helping to identify a cardholder in a non- face-to-face transaction.

Chargeback is a procedure in which the bank that issues the credit card returns a customer’s disputed transaction to the merchant—via the merchant’s transaction processor—for resolution. For example, the Cardservice International Chargeback and Retrieval Department defends its merchants’ rights by making sure that the MasterCard or Visa dispute resolution guidelines have been met when the cardholder- issuing banks send us transaction receipt requests and contested transactions. Having a dedicated, experienced chargeback and retrieval department protects merchants and reaches favorable resolutions for them by reviewing the merchant's responses to transaction requests and contested transactions for completeness and proper documentation.

Commerce service provider (CSP) supplies businesses with the tools and services they need to buy and sell products and services over the Internet and manage their online enterprises. CSPs provide service in areas such as hardware and software design, risk management, online payment, brand recognition, distribution control, taxes, site development and hosting, site performance monitoring, fulfillment management, online marketing, building a customer base and order processing and delivery.


Credit card processor is an organization that manages the process of transferring authorized and captured credit card funds between different financial accounts. Credit card processors charge merchants a discount rate and a transaction fee for this service, and these fees vary from processor to processor. Cardservice International is an example of a credit card processor.

Debit card is used similarly to a credit card, but the funds are transferred immediately from the customer’s bank account to the merchant’s account. The advantage of debit cards to merchants is instant access to funds. Watch for Internet and e-commerce debit card capabilities in the near future.


Direct deposit account (DDA) is the bank account you establish to receive the funds your credit card processor transmits directly to you for your customers’ purchases. It is the term that banks use for your checking account.

Electronic soft-good download (ESD) is the delivery of purchased merchandise (software programs, text, graphical images, music and information) by electronic means over the Internet.

Encryption is the process of scrambling a message so that a key, held by only authorized recipients, is needed to unscramble and read the message. This is an important security and fraud prevention measure for merchants conducting e-commerce.

Hypertext markup language (HTML) is the standard set of formatting codes, which are inserted into a text file that is published on the World Wide Web. If you develop a Web site, your developer will probably create it using HTML.

Hypertext transmission protocol (HTTP) transfers information, graphics and text over the Internet.

Interchange is the exchange of information, transaction data and money among banks. Interchange systems are managed by MasterCard and Visa associations and are very standardized so banks and merchants worldwide can use them.


Internet service provider (ISP) allows an online merchant to access and conduct business over the Internet. EarthLink and America Online are examples of ISPs, and—for a monthly fee—provide their members with a software package, user name, a password and access telephone numbers. Once merchants contract with an ISP, they are ready to host a Web site and conduct e-commerce.


JCB. This was originally Japanese Credit Bureau, but today only the acronym JCB is used. JCB is Japan’s leading credit card, and it is similar to MasterCard and Visa credit cards. Accepting JCB may be very important for merchants that conduct international ecommerce. You can apply for JCB through your transaction processor.

LinkPoint Secure Payment Gateway (LSPG) is Cardservice International’s secure payment gateway, and it is one of the most secure in the industry. A secure payment gateway translates information from a merchant’s Web site into a format that can be read by an electronic processing system. By operating in real time, a merchant can immediately capture funds upon delivery of goods to customers. The LinkPoint Secure Payment Gateway supports sales, returns, real- time authorizations, captures, batch settlement processing and refunds. State-of-the-art technology provides merchants with numerous benefits, including fraud screening for every transaction submitted and
providing real-time reporting via merchants’ Web browsers.


Mail order/telephone order (MOTO) businesses conduct transactio ns through the mail or over the telephone.

Personal identification number (PIN) is a cardholder’s unique identification number, which is used when making a debit card transaction.

Point of sale (POS) refers to anything that is used at the merchant’s point of sale, such as a credit card or debit card terminal or a computerized system that manages your inventory and transactions.


Secure Sockets Layer (SSL). This protocol, designed by Netscape Communications, allows encrypted, authenticated communications to travel safely and securely across the Internet. SSL provides merchants with privacy, authentication and message integrity. Advise your customers that your Web site is secure—show them the key or closed lock on the bottom left- hand corner of your site, which tells customers they are on a secure page when they make an online credit card transaction.

Secure hypertext transmission protocol (SHTTP or HTTPS) transfers credit card information safely and securely, using special encryption techniques. It is used to secure a Web site for electronic transactions and enables credit card users to make safe online purchases.


Uniform resource locator (URL) is the global address of different documents, Web sites and other resources found on the World Wide Web.

These are just a few of the terms associated with online transaction processing. Give yourself time to absorb the information. For other acronym translations, find an online Internet dictionary through your search engine, or call your transaction processor’s customer service department. For more information about Cardservice International’s transaction processing services, visit

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