ETA CPP CORE MAIN ANSWERS AND QUESTIONS
SET A+
✔✔wireless terminal - ✔✔a device that processes transactions with a debit or a credit
card via a cellular (wireless) data network, typi- cally powered by battery pack.
✔✔mobile payment solution - ✔✔consists of a device and software application (typically
a smart phone application and card reader) that process transactions with a debit or a
credit card via a cellular (wireless) data network. Examples include Payment Jack and
Square.
✔✔virtual terminal - ✔✔a payment gateway service provider allowing merchants to
accept credit card and electronic check pay- ments through their website over an IP
(Internet Protocol) connection.
✔✔PIN Pads / PIN Entry Devices (PEDs) - ✔✔electronic devices used in debit or smart
card-based transactions to input and encrypt the cardholder's Personal Identification
Number (PIN)
✔✔Authorization - ✔✔The cardholder presents the card as payment to the merchant;
merchant submits the transaction to the acquirer (acquiring bank) through the payment
processor. The acquirer verifies the credit card number, the transaction type and the
amount with the issuer (card-issuing bank) and reserves that amount of the cardholder's
credit limit for the merchant by use of an authoriza- tion code. An authorization will
generate an approval code, which follows the life of the transaction through the
processing systems.
✔✔Batching - ✔✔Authorized transactions are stored in batches, either in the terminal or
on the processor's host, which are sent to the acquiring clearing processor on a
predetermined schedule, also know as "auto batch". If a transaction is not submitted in
the batch, the authorization will stay valid for a period of time, determined by the issuer,
after which the held amount will be returned to the cardholder's available credit (see
authorization hold). Some transactions may be submitted in the batch without prior
authorizations; these are typically seen where the authorization was unsuccessful but
the merchant still attempts to force the transaction through. (Such may be the case
,when the cardholder is not present but owes the merchant additional money, such as a
hotel stay extension or car rental.)
✔✔Clearing and Settlement - ✔✔The acquirer sends the batch transactions through the
card brand, which debits/credits (if charge- backs and returns exceed sales for the day)
the issuer for payment and credits/debits the acquirer. Essentially, the issuer pays the
acquirer for the transaction.
✔✔Funding - ✔✔Once the acquirer has been paid, the acquirer pays the merchant. The
merchant receives the amount totaling the funds in the batch in total or less the discount
fees charged.
✔✔Chargeback - ✔✔A chargeback is an event in which money in a merchant account is
held due to a dispute relating to the transaction. Chargebacks are initiated by the
cardholder or the issuing bank. In the event of a chargeback, the issuer returns the
transaction to the acquirer for resolution. The acquirer then forwards the chargeback to
the merchant, who must either accept the chargeback or contest it.
✔✔Maximum ticket - ✔✔risk systems must monitor the average ticket and a maximum
ticket. Transactions above the maximum ticket may be an indicator of misinformation
during the application process, a change in the merchant product, cardholder fraud, a
bust-out scheme, or perhaps collusion and should be reviewed and possible
investigated.
✔✔Average ticket of the merchant - ✔✔if the application shows a $30 average ticket
and you see an average ticket of $400, you should investigate to ensure they are selling
what the application stated. Alternately, it could be a fraudulent cardholder transaction.
✔✔Monthly volume - ✔✔applications typically request the average monthly volume and
a peak season volume. Sales beyond these volumes may indicate risk problems or may
warrant adjustments in account set up to off set merchant growth. Larger than expected
volumes in the first month may be an indicator that the merchant has past sales they
are trying to process, a bust-out scheme, or that the application was erroneous or false.
The volume should also be balanced against similar merchants. Larger volumes than
similar merchants may be an indicator of risk and should be investigated.
✔✔Large dollar or excessive credits - ✔✔monitoring credits is a good way to gauge the
satisfaction of your merchant's customer with the products and/or services sold.
Excessive credits may indicate money problems at your merchant. Large dollar credits
may be an indicator of a merchant utilizing the card schemes to layer money amongst
their various accounts. It is required that all credits have an offsetting sale. Credits
without an offsetting sale may be an indicator of employee theft, merchant system hack,
or a fraudulent merchant. Frequent credits for large amounts may be an indicator of
money laundering.
,✔✔Chargeback monitoring - ✔✔if your merchant is receiving a lot of chargebacks, you
should quickly evaluate the reason codes behind the chargebacks and question the
merchant's practices. Increased chargebacks may mean your merchant's business is in
financial distress, is experiencing supplier issues, or has gone rogue and is committing
fraud, potentially against the consumer. This is especially the case if the chargebacks
are for unauthorized charges, services not received, or duplicate transactions.
✔✔Percentage keyed vs. swiped - ✔✔monitoring the percentage of swiped transactions
vs. keyed transactions is a simple way to tell whether your merchant has shifted from
retail to MOTO (mail or telephone order) or internet. If you see more keyed transactions
than indicated and subsequently approved on the application, you should talk with your
merchant to understand why transactions are being keyed. Increased key-entered
transactions may also be an indicator of factoring or money laundering where the cards
are not present.
✔✔Repeat or excessive authorizations - ✔✔evaluate authorization logs to help
determine whether your merchant has software problems that cause repeated
authorizations or whether your merchant is being targeted by a fraudster seeking to find
good card numbers. Monitoring excessive authorizations is also a way to help your
merchant avoid brand fees associated with non-settled transactions.
✔✔Merchant information changes - ✔✔another area to monitor is when merchants
change checking accounts, contact information, or websites. It is important to
understand why the changes are being made, how often, who is authorizing the
changes, and what impact the changes might have on the business.
✔✔Financial strength of the business - ✔✔Periodically checking the financial health of
your merchant and watching trends in processing volume can help protect against
unexpected financial loss. If the merchant is struggling to cover their costs of goods it is
possible owed fees may be returned as NSF (non-sufficient funds).
✔✔Future delivery - ✔✔The risk with transactions dependent on the future delivery of
goods and services is that the chargeback period may be quite lengthy. Examples
include household furniture and/or appliances, membership dues, home renovation/
remodeling, or service contracts. If the merchant goes out of business prior to delivery
or completion of services and is not capable of covering the returns/chargebacks, the
acquirer will absorb loss.
✔✔PIN debit transactions - ✔✔The regulations for PIN debit and the PIN debit network
rules allow for cardholder disputes in certain instances. You should be aware of these
regulations and understand the potential impact on your business.
✔✔Data security - ✔✔With the increase in merchants using point of sale systems (not
just a terminal) comes an increase in the likeli- hood that you will experience a data
breach at a retail merchant. Diligence should be used in ensuring software and
, hardware in use is PCI compliant and that your merchant follows proper procedures and
guidelines for protecting cardholder data.
✔✔EMV Chip Card - ✔✔If a consumer presents a chip card and the merchant is not
able to accept the card AND the consumer claims fraud, the liability is now held by the
merchant. This is a new risk not previously faced by card present merchants. The
details of this shift are below.
✔✔Address Verification Service (AVS) - ✔✔The Address Verification System (AVS) is a
system used to verify the address of a person claiming to own a credit card.
✔✔A2A (Account-to-Account) - ✔✔The automatic transfer of funds from one account to
another. An example is the Fedwire or wire transfer transaction.
✔✔AAV - ✔✔See Accountholder Authentication Value.
✔✔ABA - ✔✔See American Bankers Association.
✔✔ABA Transit Routing Number - ✔✔The unique number devised by the American
Bankers Association (ABA) in 1910 that identifies the bank issuer of depository
accounts. It is a 10‐digit number (nine digits and a verification digit) issued by the
Federal Reserve Bank to identify each bank by a bank identification number. This
number (also called the ABA number and the routing transit number) has changed over
the years to accommodate such things as the Federal Reserve System, the advent of
MICR, and the implementation of the Expedited Funds Availability Act (EFAA). It is used
both in check processing and in the ACH (Automated Clearing House) routing of
electronic checking account debits. The number is usually the first sequence of
numbers preceding an account number at the bottom of a check.
✔✔Access Card - ✔✔A plastic card used in an automated teller machine (ATM) to
complete deposits, cash withdrawals, account transfers, and other related account
functions.
✔✔Access Control System Format - ✔✔In the smart card industry, a term referring to
the bit pattern that the reader transmits to the control panel. The format specifies how
many bits make up the data stream and what these bits represent. For example, the first
few bits might transmit the facility code, the next few the unique ID number, the next few
parity, and so on. (Source: Smart Card Alliance).
✔✔Access Device - ✔✔A card, code, or other means of access to a consumer's
account that may be used to initiate an electronic funds transfer. This term does not
include the terminal, telephone, or personal computer.
SET A+
✔✔wireless terminal - ✔✔a device that processes transactions with a debit or a credit
card via a cellular (wireless) data network, typi- cally powered by battery pack.
✔✔mobile payment solution - ✔✔consists of a device and software application (typically
a smart phone application and card reader) that process transactions with a debit or a
credit card via a cellular (wireless) data network. Examples include Payment Jack and
Square.
✔✔virtual terminal - ✔✔a payment gateway service provider allowing merchants to
accept credit card and electronic check pay- ments through their website over an IP
(Internet Protocol) connection.
✔✔PIN Pads / PIN Entry Devices (PEDs) - ✔✔electronic devices used in debit or smart
card-based transactions to input and encrypt the cardholder's Personal Identification
Number (PIN)
✔✔Authorization - ✔✔The cardholder presents the card as payment to the merchant;
merchant submits the transaction to the acquirer (acquiring bank) through the payment
processor. The acquirer verifies the credit card number, the transaction type and the
amount with the issuer (card-issuing bank) and reserves that amount of the cardholder's
credit limit for the merchant by use of an authoriza- tion code. An authorization will
generate an approval code, which follows the life of the transaction through the
processing systems.
✔✔Batching - ✔✔Authorized transactions are stored in batches, either in the terminal or
on the processor's host, which are sent to the acquiring clearing processor on a
predetermined schedule, also know as "auto batch". If a transaction is not submitted in
the batch, the authorization will stay valid for a period of time, determined by the issuer,
after which the held amount will be returned to the cardholder's available credit (see
authorization hold). Some transactions may be submitted in the batch without prior
authorizations; these are typically seen where the authorization was unsuccessful but
the merchant still attempts to force the transaction through. (Such may be the case
,when the cardholder is not present but owes the merchant additional money, such as a
hotel stay extension or car rental.)
✔✔Clearing and Settlement - ✔✔The acquirer sends the batch transactions through the
card brand, which debits/credits (if charge- backs and returns exceed sales for the day)
the issuer for payment and credits/debits the acquirer. Essentially, the issuer pays the
acquirer for the transaction.
✔✔Funding - ✔✔Once the acquirer has been paid, the acquirer pays the merchant. The
merchant receives the amount totaling the funds in the batch in total or less the discount
fees charged.
✔✔Chargeback - ✔✔A chargeback is an event in which money in a merchant account is
held due to a dispute relating to the transaction. Chargebacks are initiated by the
cardholder or the issuing bank. In the event of a chargeback, the issuer returns the
transaction to the acquirer for resolution. The acquirer then forwards the chargeback to
the merchant, who must either accept the chargeback or contest it.
✔✔Maximum ticket - ✔✔risk systems must monitor the average ticket and a maximum
ticket. Transactions above the maximum ticket may be an indicator of misinformation
during the application process, a change in the merchant product, cardholder fraud, a
bust-out scheme, or perhaps collusion and should be reviewed and possible
investigated.
✔✔Average ticket of the merchant - ✔✔if the application shows a $30 average ticket
and you see an average ticket of $400, you should investigate to ensure they are selling
what the application stated. Alternately, it could be a fraudulent cardholder transaction.
✔✔Monthly volume - ✔✔applications typically request the average monthly volume and
a peak season volume. Sales beyond these volumes may indicate risk problems or may
warrant adjustments in account set up to off set merchant growth. Larger than expected
volumes in the first month may be an indicator that the merchant has past sales they
are trying to process, a bust-out scheme, or that the application was erroneous or false.
The volume should also be balanced against similar merchants. Larger volumes than
similar merchants may be an indicator of risk and should be investigated.
✔✔Large dollar or excessive credits - ✔✔monitoring credits is a good way to gauge the
satisfaction of your merchant's customer with the products and/or services sold.
Excessive credits may indicate money problems at your merchant. Large dollar credits
may be an indicator of a merchant utilizing the card schemes to layer money amongst
their various accounts. It is required that all credits have an offsetting sale. Credits
without an offsetting sale may be an indicator of employee theft, merchant system hack,
or a fraudulent merchant. Frequent credits for large amounts may be an indicator of
money laundering.
,✔✔Chargeback monitoring - ✔✔if your merchant is receiving a lot of chargebacks, you
should quickly evaluate the reason codes behind the chargebacks and question the
merchant's practices. Increased chargebacks may mean your merchant's business is in
financial distress, is experiencing supplier issues, or has gone rogue and is committing
fraud, potentially against the consumer. This is especially the case if the chargebacks
are for unauthorized charges, services not received, or duplicate transactions.
✔✔Percentage keyed vs. swiped - ✔✔monitoring the percentage of swiped transactions
vs. keyed transactions is a simple way to tell whether your merchant has shifted from
retail to MOTO (mail or telephone order) or internet. If you see more keyed transactions
than indicated and subsequently approved on the application, you should talk with your
merchant to understand why transactions are being keyed. Increased key-entered
transactions may also be an indicator of factoring or money laundering where the cards
are not present.
✔✔Repeat or excessive authorizations - ✔✔evaluate authorization logs to help
determine whether your merchant has software problems that cause repeated
authorizations or whether your merchant is being targeted by a fraudster seeking to find
good card numbers. Monitoring excessive authorizations is also a way to help your
merchant avoid brand fees associated with non-settled transactions.
✔✔Merchant information changes - ✔✔another area to monitor is when merchants
change checking accounts, contact information, or websites. It is important to
understand why the changes are being made, how often, who is authorizing the
changes, and what impact the changes might have on the business.
✔✔Financial strength of the business - ✔✔Periodically checking the financial health of
your merchant and watching trends in processing volume can help protect against
unexpected financial loss. If the merchant is struggling to cover their costs of goods it is
possible owed fees may be returned as NSF (non-sufficient funds).
✔✔Future delivery - ✔✔The risk with transactions dependent on the future delivery of
goods and services is that the chargeback period may be quite lengthy. Examples
include household furniture and/or appliances, membership dues, home renovation/
remodeling, or service contracts. If the merchant goes out of business prior to delivery
or completion of services and is not capable of covering the returns/chargebacks, the
acquirer will absorb loss.
✔✔PIN debit transactions - ✔✔The regulations for PIN debit and the PIN debit network
rules allow for cardholder disputes in certain instances. You should be aware of these
regulations and understand the potential impact on your business.
✔✔Data security - ✔✔With the increase in merchants using point of sale systems (not
just a terminal) comes an increase in the likeli- hood that you will experience a data
breach at a retail merchant. Diligence should be used in ensuring software and
, hardware in use is PCI compliant and that your merchant follows proper procedures and
guidelines for protecting cardholder data.
✔✔EMV Chip Card - ✔✔If a consumer presents a chip card and the merchant is not
able to accept the card AND the consumer claims fraud, the liability is now held by the
merchant. This is a new risk not previously faced by card present merchants. The
details of this shift are below.
✔✔Address Verification Service (AVS) - ✔✔The Address Verification System (AVS) is a
system used to verify the address of a person claiming to own a credit card.
✔✔A2A (Account-to-Account) - ✔✔The automatic transfer of funds from one account to
another. An example is the Fedwire or wire transfer transaction.
✔✔AAV - ✔✔See Accountholder Authentication Value.
✔✔ABA - ✔✔See American Bankers Association.
✔✔ABA Transit Routing Number - ✔✔The unique number devised by the American
Bankers Association (ABA) in 1910 that identifies the bank issuer of depository
accounts. It is a 10‐digit number (nine digits and a verification digit) issued by the
Federal Reserve Bank to identify each bank by a bank identification number. This
number (also called the ABA number and the routing transit number) has changed over
the years to accommodate such things as the Federal Reserve System, the advent of
MICR, and the implementation of the Expedited Funds Availability Act (EFAA). It is used
both in check processing and in the ACH (Automated Clearing House) routing of
electronic checking account debits. The number is usually the first sequence of
numbers preceding an account number at the bottom of a check.
✔✔Access Card - ✔✔A plastic card used in an automated teller machine (ATM) to
complete deposits, cash withdrawals, account transfers, and other related account
functions.
✔✔Access Control System Format - ✔✔In the smart card industry, a term referring to
the bit pattern that the reader transmits to the control panel. The format specifies how
many bits make up the data stream and what these bits represent. For example, the first
few bits might transmit the facility code, the next few the unique ID number, the next few
parity, and so on. (Source: Smart Card Alliance).
✔✔Access Device - ✔✔A card, code, or other means of access to a consumer's
account that may be used to initiate an electronic funds transfer. This term does not
include the terminal, telephone, or personal computer.
