A federal tax law in the United States that requires an organization (payor) to report to the Internal Revenue Service (IRS) suppliers it has used during the tax year that meet certain criteria, as set forth in the Internal Revenue Code (IRC); for example, collective annual payments at or above a certain dollar threshold to a particular supplier (payee) for services rendered. Card payments are reported by payees’ merchant acquirers/processors—not by the payors—via Form 1099-K.
Entity that serves merchants (i.e., suppliers) regarding card acceptance, setting up the merchant account, and facilitating payment authorization and settlement. Also called a merchant acquirer or referred to as a merchant’s bank.
address verification service (AVS)
System to help prevent fraud, whereby the billing address provided by a cardholder is verified against the address on file with the issuer as part of the transaction authorization process.
Describes payments made between two businesses/organizations. In contrast, consumer-to-business (C2B) refers to a consumer making a payment to a business.
bank identification number (BIN)
The first six digits of a credit or debit card number, representing the card issuer and brand, and potentially the type of card product (e.g., a P-Card). Also called the issuer identification number (IIN).
basis points (bps)
Unit of measure common in the finance industry that equates to 1/100th of 1%; therefore, 100 bps equals 1%. Rebate incentives associated with Commercial Card programs might be expressed as basis points.
When a merchant’s fee for a particular transaction amount basically equals the offsetting benefits of card acceptance, thereby providing no monetary advantage or disadvantage to the merchant for accepting the card payment.
Type of credit card product issued to/used by smaller organizations (e.g., fewer than 50 employees) for all types of expenses; the issuer typically allows the organization to carry a balance—unlike a P-Card program that requires payment in full each month. Learn more...
card verification value (CVV)
The three- or four-digit code printed on the back of a card that helps prevent fraud, whereby the CVV provided by a cardholder is verified against the one on file with the issuer as part of the transaction authorization process; also called card security code (CSC).
Purchase for which a plastic card is not present at the point of sale; for example, purchases made online, and via telephone and mail.
Individual to whom a card is issued; in B2B payments, the cardholder is an employee of the end-user organization.
Generic/broadest term for a variety of card types used for B2B payments. Learn more...
A card with an embedded chip for which the required card data is transmitted to the card reader (point-of-sale device) as a result of close contact (through a radio frequency); card does not have to be swiped.
Checks that an issuer provides to an end-user organization to use in lieu of a card when making a payment to a merchant that does not accept cards; settles against the organization’s account with the issuer.
A flat, fixed fee that a merchant adds to a customer’s order regardless of the purchase amount—different than a checkout fee/surcharge; for example, a utility might add a $10 convenience fee for any customer payments made online.
Type of Commercial Card used by organizations to pay for business travel and entertainment (T&E) expenses.
See levels of data.
Declining Balance Card
Similar to a Purchasing Card, but spend limits do not refresh each month; rather, a spending limit and/or expiration date are established up-front, giving it a specific “shelf life” to accommodate a special project, budget or spend allowance. Also referred to as a Controlled Value Card. Learn more...
Card type used by some end-user organizations in which the card account is issued to an internal department rather than to a specific employee.
See merchant discount.
Unlike an early pay discount with a stagnate percentage off (see below), dynamic discounting provides the customer a sliding discount scale in conjunction with accelerated payments; the quicker the payment, the greater the discount. For example, a customer might be able to take a 2.5% discount off the invoice total if paid within five days, but the discount might drop to 2% on days 6 through 9, etc.
early pay discount
A merchant’s payment terms that allow the customer to take a discount off the invoice total if paid within a certain number of days. For example, terms of “2% 10 net 30” mean that a customer can take a 2% discount off the invoice if they pay the merchant within 10 days; otherwise, they must pay the full invoice amount within 30 days.
electronic payables (ePayables)
Alternative type of Commercial Card solution; no plastic cards. Is a form of electronic payment, utilizing the card infrastructure, managed centrally within an organization, typically AP. Also known as Virtual Cards, electronic accounts payable (EAP), push payments, straight through payments (STP), buyer initiated payments (BIP), single-use accounts, etc. Each provider has a proprietary name for its particular solution; functionality and processes vary for each. Learn more...
EMV (Europay, MasterCard, Visa)
Specifications/standards designed to improve the security of card transactions; the term “EMV Card” generally refers to cards with an embedded chip that adhere to these standards. Learn more...
An added layer of security for card transactions that masks card data to prevent a breach; “end-to-end encryption” refers to when the data is masked by the merchant’s system through the entire transmission process until decrypted at the end point to complete the transaction.
end-user organization ("end-user")
The buying organization/business (e.g., company, government agency, school district, higher education institution, etc.) that makes B2B payments for the goods and services it purchases from suppliers.
ERP system (enterprise resource planning system)
A technology solution that supports an organization’s procure-to-pay processes and related accounting/finance functions; typically includes various modules and/or functionality related to requisitions, purchase orders, invoices, payments, fixed assets, inventory, etc.
Type of Commercial Card used by organizations to pay for fuel and vehicle maintenance that allows specialized reporting and tracking by vehicle. Also called a Vehicle Card. Read about a Fleet Card program success story...
four-party payment system
Card payment system involving the end-user and issuer on one side, and the merchant and acquirer on the other—all of whom are linked by the network; includes the Visa and MasterCard models. Learn more...
Unauthorized use of a card; can be external or internal. Includes purchases made with a lost, stolen or counterfeit card (or stolen account information), or when an employee of the end-user organization uses the card for personal gain. To prevent and/or detect fraud, effective controls are critical.
Ghost Card/Ghost Account
A type of card account issued/provided to a supplier by an end-user organization for the payment of its purchases. May function like a P-Card, having a monthly/cycle limit, whereby the supplier charges the card upon the fulfillment of each employee order, or as a Dynamic Ghost Account, having specific limits that the end-user turns on and off in conjunction with the payment of approved invoices. Learn more...
GSA (General Services Administration)
An agency/division of the U.S. federal government for which one function is providing centralized procurement of goods and services that federal agencies need to serve the public; acts as the acquisition arm of the government.
ISO (independent sales organization)
A third-party entity—organization or individual—who signs up (acquires) and manages various merchant accounts related to card acceptance; in order to do so,partners with a qualifying business (e.g., processor) that maintains a relationship with the card networks. Also known as a merchant service provider or member service provider (MSP).
In a four-party payment system, a fee paid by an acquirer to the issuing bank (card issuer); comprises the largest part of the merchant discount fee that merchants pay. Interchange rates are set and managed by MasterCard and Visa; in some cases, subject to government regulation. Learn more...
Electronically integrating data from one source (e.g., P-Card) into a separate system (e.g., ERP system, finance system).
Documentation that specifies the details of what an end-user organization purchased, the total amount due and due date.
The entity (e.g., financial institution) that: issues Payment Cards to consumers and end-user organizations, incurs the related risk, and provides customer service. Also called a card issuer or issuing bank.
issuer identification number (IIN)
See bank identification number (BIN).
large-ticket interchange (LTI)
Reduced/lower interchange rate for transactions that meet specific criteria (e.g., a certain dollar amount and level of data), as defined by the respective card networks.
levels of data
Transaction data that originates with a supplier and accompanies a card transaction, providing information to the cardholder and end-user organization about the purchase. Learn more...
Data about what was purchased, such as product code/item number, quantity, description and commodity code; is part of Level III transaction data.
A business that sells goods and/or services to consumers and/or organizations. In B2B payments, an entity that accepts cards for payment from end-user organizations. Also called a supplier or vendor.
An account related to card acceptance, set up by an acquirer, ISO, etc.—the account through which a merchant receives funds for card payments made to the merchant.
merchant category code (MCC)
Four-digit code, used in the card industry, to signify a merchant’s primary type of business; is selected/assigned by a merchant or its acquirer when the merchant is set up to accept card payments. Commercial Cards can be set up to restrict a cardholder from making a purchase with a merchant whose MCC is blocked, according to the restrictions established by the end-user organization.
The collective fee a merchant pays in conjunction with card payments; typically amounts to 2–4% of the transaction total. Also called a discount fee.
merchant level salesperson (MLS)
A middleman in the chain that serves merchants in conjunction with the acceptance of card payments; typically, an independent contractor who works for an ISO.
Entity that supports the card infrastructure through which card activity flows; for example, American Express, Discover, MasterCard, Visa. Also referred to as the card brand or association.
Type of Commercial Card that a cardholder uses for more than one category of expenses (e.g., goods/services and business travel expenses), eliminating the need to carry both a Purchasing Card and a Corporate Card. Also called a Multi-Card.
A generic term for any type of card used for payment; could be a Commercial Card or consumer card, debit or credit card.
Payment Card Industry Data Security Standard (PCI DSS)
A framework of standards, for which card accepting merchants must comply, designed to protect the security of card payments and, specifically, sensitive card data; often called “PCI” for short. Learn more by visiting the official website of the PCI Security Standards Council.
point of sale (POS)
The point at which a purchase is made. A POS system or device is the equipment or technology used by a merchant to complete the purchase/transaction.
A pre-funded card for which transaction amounts are deducted from the account balance; can be reloadable or non-reloadable. Also called a Stored Value Card. Examples include gift cards and payroll cards.
Entity that serves as an intermediary link between merchants and issuers, providing the necessary technology involved with card transaction authorization and settlement; can also fulfill an acquirer role, and may or may not be a division of a bank.
procure-to-pay (P2P) process
The steps the employees of an end-user organization follow to make a purchase and the associated payment. An organization typically has different P2P processes for different types of purchases/payments; a P-Card P2P process is usually the most streamlined. Also referred to as purchase-to-pay or source-to-settle process.
program administrator (PA), program manager (PM)
Common job roles/titles for the employee who manages one or more Commercial Card programs for an end-user organization. Learn more...
Generic term for an entity that provides goods and/or services related to card payments, such as a card issuer, third-party technology vendor, etc.
purchase order (PO)
A written document detailing what an end-user organization wants to purchase from a supplier, along with the related terms and conditions.
See procure-to-pay process.
Purchasing Card (P-Card)
Type of Commercial Card used by organizations to pay for business-related goods and services; end-user organization must pay its issuer in full each month for the total of all P-Card transactions. Also called a Procurement Card (ProCard) and Purchase Card.
Money paid by an issuer to its customer (an end-user organization) in conjunction with the end-user’s Commercial Card usage; the rebate amount is based on various criteria, as defined within the contract terms between issuer and end-user. Also sometimes called revenue share. Learn more...
Process of reviewing and comparing card transactions to internal records of orders/payments and receipts, including resolving discrepancies and validating or allocating transactions to appropriate accounting codes.
request for proposal (RFP)
Document (hard copy or electronic) that an organization sends to various suppliers when it seeks to select a supplier for particular goods and/or services; outlines the organization’s requirements and related details.
A funded account that an acquirer may require of a merchant to cover unexpected costs; helps protect the acquirer against risk, as estimated by the acquirer’s underwriting team, who evaluates the financial risk of the merchant.
Process of reviewing and documenting the risks and mitigating controls associated with a particular business operation, such as a P-Card program. Learn more...
See procure-to-pay process.
The result of dividing a purchase amount into at least two smaller card transactions in order to circumvent dollar limits, such as a cardholder’s single purchase limit; typically prohibited by end-user organizations.
straight-through payment (STP)
A specific version of electronic payables; an end-user organization receives and approves a supplier invoice, then initiates payment to the supplier through its issuer. The supplier does not need to process a card transaction, as payment is made directly through its merchant account.
An extra fee that a merchant adds to an end-user’s purchase total when the end-user wants to pay via a card; serves to compensate the merchant for the discount fee related to card acceptance. Also called a checkout fee.
Not subject or liable to taxation—commonly government entities.
three-party payment system
Card payment system involving the end-user on one side and the merchant on the other—linked by the network, which also fulfills the role of issuer and acquirer; includes the American Express and Discover models. Learn more...
An added layer of security for card transactions; following authorization by the issuer, tokenization software assigns the card data random, unique identifiers called tokens, which replace corresponding customer data within merchants’ systems.
See levels of data.
See Corporate Card.
In B2B payments, the department within an acquirer/processor organization that evaluates the financial stability and risk of a potential merchant customer.
See electronic payables above or visit the related ePayables webpage.