Merchant Account Glossary of Terms

Here are some of the most common terms you are likely to come across when looking for a merchant account and their meanings.

ACH - Automated Clearing House

Addenda Record- A record of the ACH payment formats that contains payment-related information. This information, sent in standard formats, accompanies payments exchanged through the ACH Network.

American National Standards Institute - The national standards body for the United States. ANSI, through its accredited standards committees, keeps the standards for all applications of technology and mechanics for U.S. industry.

ANSI - Acronym for the American National Standards Institute.

ANSI Standard- A document published by ANSI that has been approved through the consensus process of public announcement and review. Each such standard must have been developed by an ANSI committee and must be revisited by the committee within 5 years for updating.

ASC X12 - Accredited Standards Committee, X12. It comprises government and industry members who create electronic data interchange (EDI) standards for submission to ANSI for subsequent approval and dissemination.

Authentication - a mechanism that allows the receiver of an electronic transmission to verify the sender and the integrity of the content of the transmission through the use of an electronic "key" or algorithm shared by the trading partner. That algorithm is sometimes referred to as an electronic signature.

Bankers EDI Council - The Bankers EDI Council was formed in 1989 by NACHA to assist the banking industry in meeting the financial EDI needs of their corporate customers.

Communications - The means of electronically linking two computers to exchange information in EDI.

Communication Software - Programs that allow computers to communicate through MODEMS. Some are capable of automatic communications, such as auto-dial and auto-answer.

Data Dictionary - A listing of all the data elements, and sometimes the segments and messages, unique to the specific system of EDI Standards being used.

Data Element - One or more data items, forming a unit or piece of information as defined in the data dictionary of a system of EDI Standards, and contained in an EDI message or transaction set. The term "data element" is often abbreviated as "DE" followed immediately by the data element number (i.e., data element 128 would be abbreviated as DE128) in some texts.

Data Element, Composite - Two or more related data items separated by a delimiter character, grouped together to form a unit or piece of information as defined in the data dictionary of a system of EDI Standards, and contained in an EDI message or transaction set.

DISA - Data Interchange Standards Association. A nonprofit organization funded by ASC X12 members to serve as the Secretariat for X12.

Download - The process of receiving data from another computer at a remote site onto the computer under the control of the operator.

EDI - Electronic Data Interchange - the computer-application- to-computer-application exchange of business information in a standard electronic format. Translation software aids in the exchange by converting data extracted from the application data base into standard EDI format for transmission to one or more trading partners.

EDI Translation - the conversion of application data to and from the X12 standard format.

EFT - Electronic Funds Transfer (EFT) is the transfer of funds from one account to another electronically usually through an EFT software program run on a computer.

EFTPS - Electronic Federal Tax Payment System. EFTPS is the Federal Government's electronic tax collection system that is being developed for the payment of business and individual taxes. Business Federal tax deposits can currently be paid electronically through the Federal Government's prototype tax payment system, TAXLINK.

Electronic Commerce - is the integration of electronic mail, Electronic Funds Transfer (EFT), Electronic Data Interchange (EDI), Internet, and similar techniques into a comprehensive, electronic-based system encompassing business functions such as grant application, procurement, payment, supply management, transportation and facility operations.

ERA - Electronic Research Administration - is a set of tools and systems that enable the electronic reporting and submission of grant and contract information.

Envelope - The combination of header, trailer, and sometimes other control segments, that define the start and end of an individual EDI message.

Encryption - a process of transforming clear text (data in its original form) into cipher text (encryption output of a cryptographic algorithm) for security or privacy.

FMS - Financial Management Service. FMS is the bureau of the U.S. Department of Treasury that serves as the Federal Government's financial manager. Its responsibilities include managing Federal payments and collections, designating depositaries and financial agents of the Government, managing the Government's commercial and Federal Reserve bank relationships, overseeing the Government's central accounting.

Functional Acknowledgment - a transaction set (997) transmitted by the receiver of an EDI transmission to the sender, indicating receipt and syntactical acceptability of data transmitted according to the ASC X12 standards. The functional acknowledgment allows the receiving party to report back to the sending party problems encountered by the syntax analyzer as the data are interpreted. It is not intended to serve as an acknowledgement of data content.

Implementation Guide - A publication listing the EDI messages that are in use in a particular industry or application, and indicates how the information in those messages should be presented on a segment by segment, and data element by data element basis, indicating which segments and data elements are needed, which ones need not be used, and what code values will be expected in the application of that particular message.

Receiver - The party to whom the EDI message or transaction set is transmitted.

Segment - A part of an EDI message or transaction set, made up of a number of related data elements separated by a delimiter, conveying a part of the business transaction being made.

Seller - The party in a business transaction who sells goods or services to a buyer for good and valuable consideration.

Sender - The party who transmits the EDI messages.

Software - The programs residing on disk, tape, or other storage media used by the computer to accomplish its tasks.

TDCC - Acronym for the Transportation Data Coordinating Committee. This is the original EDI organization for the United States. Through its efforts, the original EDI Standards were developed, published, and maintained. It has now changed its name to EDIA, and has become the national EDI user group for the United States. [See: EDIA]

TMA - Treasury Management Association. TMA is the principal organization representing private sector treasury professionals. The Association is dedicated to the advancement of the treasury management profession and the men and women who are actively involved within it. In addition to offering a wide range of professional development, professional certification, industry standards programs, and publications, TMA is invaluable to every discipline represented in the organization/corporate treasury.

Trading Partner - The entity with which EDI is carried on. This may be either the sender or the receiver of information in EDI.Trailer: The specific segment that, in simplest terms, tells the receiving computer where an individual EDI message ends.

Transaction Set - A block of information in EDI, making up a business transaction, or part of a business transaction. Outside North America, this is normally called a message.

UN/EDIFACT - Electronic Data Interchange For Administration, Commerce and Transportation. EDIFACT is a set of message standards approved by the United Nations for international electronic data interchange.

VAB - Value-Added Bank. A financial institution that facilitates the transmission of electronic data among multiple trading partners as well as provides financial settlement of payment and remittance detail transactions.

Value-Added Network - A system where a network leases communication lines from a communications common carrier, enhances them by adding improvements such as error detection and/or faster response time, and then allows others to use this service on those lines for a fee. This is often abbreviated as VAN

VAN - Standard abbreviation for Value-Added Network.

Vendor Express - The U.S. Treasury's program which utilizes the ACH Network for making Federal government vendor and other commercial payments. The Vendor Express program uses the CCD+ and CTX payment formats, and the CTP format to a limited extent.

X12 - the ANSI committee responsible for the development and maintenance of standards for EDI.