Glossary

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ABA Routing NumberA unique bank identifying number that directs electronic ACH deposits to the proper bank.

Account

A formal contractual relationship established to provide services; a record or narrative description of financial events which shall include a statement of transactions and balances.

Account Balance

The amount of money in an account, equal to the net of credits and debits at that point in time for that account; also called a balance.

Account Statement

A record of transactions and their effect on account balances over a specified period of time, for a given account.

ACH (Automatic Clearing House)

A Nationwide electronic funds transfer network which enables participating financial institutions to distribute electronic credit and debit entries to bank accounts and to settle such entries.

AFT (Automatic Funds Transfer)

Transactions which occur through computer networks and which do not require direct management.

API (Application Programming Interface)

A language and message format used by an application program to communicate with the operating system or some other control program such as a database management system (DBMS) or communications protocol.

Applet

An application that has limited features, requires limited memory and is usually portable between operating systems; a software component that runs under the control of another program, for example a web browser.

ASP (Application Software Provider)

Software-based services and solutions that are distributed from a central data base center to customers via the Internet.

Automatic Transfer Service Account (ATS Account)

An automatic transfer service account can transfer funds to ensure that an account maintains a minimum balance.

American Bankers Association (ABA)

A trade association which can lobby the government on behalf of its members, and which also seeks to educate the public about commercial banking.

ATM

Automated teller machine; a machine at a bank branch or other location which enables a customer to perform basic banking activities (checking one’s account balance, withdrawing or transferring funds.

Bank

An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn upon them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor’s checks; and issues drafts and cashier’s checks.

Bounced Check

A check which a bank returns because it is not payable due to insufficient funds (also called a rubber check).

Branded Card

A prepaid debit card that has been branded with a MasterCard, Visa or Discover. Branded cards are signature and PIN cards and can be used anywhere the card brand is accepted.

Browser

Software resident on a computer that provides an interface with the Internet.

B2B (Business-To-Business)

A transaction that occurs between two companies, as opposed to a transaction involving a customer.

B2C (Business-To-Consumer)

A transaction that occurs between a company and a consumer, as opposed to a transaction between companies.

Cancelled Check

A check cleared by a financial institution.

Certificate

A digitally signed message that contains information about a public key and the owner of the public key.

Certification

The process of ascertaining that a set of requirements or criteria has been fulfilled and attesting to the fact to others usually with some written instrument.

Certified Check

A check for which the bank guarantees payment.

Check

A negotiable instrument drawn against deposited funds, to pay a specific amount of money to a specific person upon demand.

CISP (Cardholder Information Security Program)

Authorized by Visa USA and mandated in 2001, CISP is a specification developed and used by credit card companies for the purpose of ensuring and enhancing the privacy and security of financial data.

Cleared Funds

Funds that are available for withdrawal

Clearing House Interbank Payments System (CHIPS)

A privately-held transferral system that allows banks to settle transactions with each other electronically.

Clearinghouse Funds

Funds represented by a personal or business check that pass between Federal Reserve System banks prior to approval of credit. Since these funds have to be processed by the central clearing mechanism, they might not be available as soon as the check is deposited in an account (there is often a delay of a few days).

Clearstream

An electronic clearinghouse that allows financial institutions to settle securities transactions. Along with Euroclear, it is the principal clearinghouse for Euromarket transactions.

Closed Loop Cards

A prepaid debit card that has limited functionality and limited acceptance. Intended to be used to make purchases from specific merchants or possibly small groups of affiliated merchants.

Credit Card

Any card that may be used repeatedly to borrow money or buy products and services on credit.

Cryptography

Mathematical process used for encryption or authentication of information.

Customer Service

Providing assistance, information, services, support or help to a customer that is requesting customer service.

C2C (Consumer-To-Consumer)

A transaction that occurs between two consumers.

DBMS (Database Management System)

Software that controls the organization, storage, retrieval, security and integrity of data in a database

Database

A structured collection of records or data that is stored in a computer system..

Debit Card

A card which allows customers to access their funds immediately, electronically. Unlike a credit card, a debit card does not have any float

Demand Deposit

An account balance which can be drawn upon on demand (without prior notice).

Deposit

Money transferred into a customer’s account at a financial institution.

Deposit Insurance Fund (DIF)

An insurance fund that guarantees deposits at banks or other savings institutions up to a certain amount.

Depositor

A person or company that places money in a bank account.

Depository

A bank or company which holds funds or securities deposited by others, and where exchanges of these securities take place.

Digital Money

A form of electronic money that can be used to pay for goods and services, most often on the Internet or another electronic medium. Upon receiving the buyer’s authorization of the payment, the vendor contacts the issuing bank and receives a transfer of funds.

Direct Deposit

The deposit of funds directly into a bank account as a form of payment. Common use for direct deposits includes paychecks.

Dollar

A unit of currency used by many countries, including the United States (U.S. dollar). A dollar is often the smallest unit of paper money in a country. In most countries a dollar is equivalent to 100 cents.

Draft

An instrument signed by a drawer to a drawee requesting payment at a future tie to a third party (often the drawer).

EFT (Electronic Funds Transfer)

Any transfer of funds that are initiated by electronic means (such as an electronic terminal, telephone, computer, ATM or magnetic tape).

Electronic Commerce (eCommerce)

The buying and selling of products and services by businesses and consumers over the Internet.

Electronic Payments

A method of making monetary payments over the Internet. Also called online payments.

Electronic Wallet (eWallet)

An encrypted storage medium that is accessed through an ASP on the Internet. An eWallet manages and reports data for online transactions.

Encryption

Process of converting information so as to render it unintelligible to anyone except holders of a specific cryptographic key. Use of encryption protects information between the encryption process and the decryption process against unauthorized disclosure.

Euro

The name for the composite monetary unit that has replaced national currencies in several European countries.

Eurodollar Certificate Of Deposit

A certificate of deposit that is issued by a bank outside the U.S., but denominated in U.S. dollars.

FDIC (Federal Deposit Insurance Corporation)

A federal agency that insures deposits in member banks and thrifts up to $100,000.

Federal Reserve System

The central banking system of the U.S. comprised of the Federal Reserve Board and the national and state member banks. Its primary purpose is to regulate the flow of money and credit in the country.

Federal Reserve Wire Network (Fedwire)

A Federal Reserve-operated real-time gross settlement system (RTGS) that allows member banks to transfer funds to each other in a timely and safe manner.

Federal Savings And Loan Association

A federally chartered institution whose purpose is to collect savings deposits and provide residential mortgage loans.

Fee

A charge for services rendered.

Financial Institution

Institution which collects funds from the public and places them in financial assets, such as deposits, loans, and bonds.

FinCEN

The Financial Crimes Enforcement Network.

Flow Chart

The pictorial summary that shows with symbols and words the relationship of the various operations involved in the performance of a function or a process

Foreign Exchange Reserve

Deposits of a foreign currency held by a central bank.

Frozen Account

An account whose funds may not be withdrawn until a lien is satisfied or an ownership dispute is resolved.

Funds

Money; or sometimes, money plus assets which could be converted to money.

FX (Foreign Exchange)

FX is the exchange of currency (from one currency to another currency) at a specified exchange rate during a specific period of time.

General Spending Card

A prepaid debit card (or stored value card).

IBAN (International Bank Account Number)

Developed by the European Committee for Banking Standards, the IBAN is a new format for an existing bank account number that will be recognized internationally. An IBAN contains information relating to the country, bank and branch of the beneficiary, as well as the account number itself.

Identity Theft

Obtaining a person’s personal and financial information through criminal means. A thief uses this information for illegal purposes, such as to make purchases using the victim’s name.

Inactive Account

An account in which there have not been any transactions for an extended period of time. Some accounts are often charged a fee is there is not enough activity.

Initial Deposit

The amount of money required to open an account.

Instant Issue

A prepaid debit card that can be issued immediately without a credit check. Instant issue prepaid debit cards do not show the cardholders name; only the account number.

Institution

An organization which is in the business of holding assets. Examples include banks, insurance companies and investment companies.

Instrument

Any financial security such as a bond, stock, check, etc.

Insured Account

Account at a bank, savings and loan, credit union, or brokerage; the balance of which is insured by a federal or private insurance organization.

Intellectual Property Rights (IPR)

The copyright and other intellectual property rights, including logos, patents, trademarks, service marks, trade names, domain names, database rights, registered designs and any applications for the protection or registration of these rights and all renewals and extension thereof throughout the world.

Internet

The largest collection of networks in the world that are interconnected in such a way as to allow them to function as a single virtual network.

Joint Account

Any account owned by two or more people.

Kiting

Illegally benefiting from a float; for example by depositing and drawing checks between accounts at two or more banks or accounts.

Late Charge

A charge levied on an account for a payment that is either made late, or is not made at all.

Late Fee

A fee charged when a payment is not received on time.

Letter Of Credit (L/C)

A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller.

Merchant Processing

Merchant processing is the settlement of electronic payment transactions for merchants. Merchant processing activities involve gathering sales information from the merchant, obtaining authorization for the transaction, collecting funds from the card-issuing bank, and reimbursing the merchant.

Minimum Balance

The minimum amount of money required to be maintained in an account.

Money Center Bank

A large bank in a major financial center which borrows from and lends to governments, corporations, and other banks, rather than consumers.

Money Order

Financial instrument, issued by a bank or other institution, allowing the individual named on the order to receive a specified amount of cash on demand.

Named Fiduciary

The individual officially designated as being responsible for a financial account or activity.

NACHA (National Automated Clearing House Association)

An electronic payment association that oversees the ACH network.

NDA (Non-Disclosure Agreement)

An agreement between two or more parties not to pass any shared confidential information on to a third party without the other parties permission..

Negotiable Instrument

A transferable, signed document that promises to pay the bearer a sum of money at a future date or on demand. Examples include checks, bills of exchange, and promissory notes.

NxPay®

An ASP payment platform owned by NxSystems™.

NxPOS™

A web-based point-of-sale system that is used to fund, remove funds, track transactions and manage reward points associated with prepaid debit cards.

OFAC

The Office of Foreign Assets Control.

Online

Computer or device connected to a network (such as the Internet) and ready to use (or to be used) by other computers or devices

Online Banking

A system allowing individuals or companies to perform activities from their home or offices, via the Internet. Some online banks are traditional banks which also offer online banking, while others are online only and have no physical presence.

Online Payments

A method of making monetary payments over the Internet. Also called electronic payments.

Open Loop Cards

A prepaid debit card that offers a broad acceptance and flexibility. Open loop cards may be branded with a bank association (such as Visa, MasterCard, or Discover) and function in the same way as a traditional debit card. Mostly used for payroll purposes. Open loop cards are reloadable.

Outstanding Check

A valid check which, although possibly already cashed, has not yet been returned for processing to the financial institution from where it originated.

Overdraft

The amount by which withdrawals exceed deposits.

PAD (Pre-authorized Debit Agreement)

The pre-authorized debit agreement between parties that gives permission from one party to debit funds from another parties bank account through and ACH.

Patriot Act

The USA Patriot ACT established in 2001 that deters terrorist acts and detects international money laundering and financing of terrorism.

Pay Any Card™ (PAC®)

The process of sending monetary payment to consumers wherebythe payment is deposited directly onto consumers MasterCard® or Visa® sponsored credit card, debit card or stored value card account.

Payment Platform

A secure web-based payment information system also known as an electronic wallet (eWallet).

Payroll Card

A prepaid debit card that is offered by employers as an alternative to payroll checks. Payroll funds can be direct deposited onto payroll cards.

PCI (Payment Card Industry Data Security Standard)

Authorized by Visa USA and mandated in 2001, PCI was mandated under CISP in 2004 and co-developed by VISA USA and MasterCard. PCI defines an expanded set of requirements for the protection of credit-card information, including encryption, access control, physical security and operational audits. This standard requires that public networks and web sites be tested frequently and regularly for compliance by a certified auditor.

PIN (Personal Identification Number)

Code used by an individual so that they can access their account at an ATM machine, but others cannot.

PIN Card

A prepaid debit card that can only be used where PIN acceptance is offered (i.e., ATM’s).

Postdate

To put a future date on a document or check, postponing when it becomes effective or negotiable.

Prepaid Debit Card

A card that has a pre-determined limit of cash, which is drawn with every purchase. Cardholders can only access the funds that are deposited on the cards. These cards can be reloadable or disposable. Also known as stored value cards.

Private Key

A cryptographic key used with a public key cryptographic algorithm, uniquely associated with an entity, and not made public. Used to create digital signatures, or to decrypt messages or files.Public Data Network

General the world wide web, or Internet

Public Key

A cryptographic key used with a public key cryptographic algorithm, uniquely associated with an entity, which is available publicly. Used to verify signatures that were created with the matched private key. Public keys are also used to encrypt messages or files that can only be decrypted using the matched private key.

Real-Time Gross Settlement System (RTGS)

A system that streamlines that settlement of large-value transactions.

Real-Time Transaction Processing

Live connection to the transaction processing network, allowing immediate funds authorization.

Reconciliation

Adjusting one’s account balance to match a statement.

Regional Bank

A bank that operates in one region of a country, as opposed to a money center bank, which operates nationally or globally.

Retail Banking

Banking services for individual customers.

Reloadable Card

A prepaid debit card whereby funds can be deposited to the card at any time.

Rubber Check

A check which a bank returns because it is not payable due to insufficient funds (also called a bounced check).

Sight Draft

A draft which is payable on demand.

Sight Letter Of Credit

A letter of credit that is payable as soon as the required documents have been presented.

Signature Card

A prepaid debit card that requires a signature with each transaction. Usually a branded card that can be used anywhere the card brand is accepted.

Smart Cards

A card that has information stored on an embedded microprocessor computer chip (instead of on a magnetic stripe).

SSL (Secure Sockets Layer)

An electronic key that encrypts transmissions between two computers on a public network, providing privacy and security to the session.

State Bank

Bank organized under a state, rather than a federal, charter.

Stop Payment

An order to a bank not to honor the payment of a check after it has been delivered, but before it has been cashed.

Stored Value Card

A card that has a pre-determined limit of cash, which is drawn with every purchase. Cardholders can only access the funds that are deposited on the cards. These cards can be reloadable or disposable. Also known as prepaid debit cards.

Straight Paper

Unsecured notes, bills of exchange and/or bankers acceptances.

SWIFT (System Of Electronic Bank Transfers)

The SWIFT system is a secure messaging system that allows financial institutions to instruct each other on payments and accounts that they hold with each other.

SWIFT NUMBER

A SWIFT number the worldwide numeric address of a banking institution.

Transfer

A changing of ownership, such as a security or a financial account, from one party to another.

Universal Banking

A system of banking where banks are allowed to provide a variety of services to their customers. Universal Banking is less common in the United States than in Europe.

Virtual Prepaid Debit Card (Virtual Stored Value Card)

Prepaid debit cards that consist of a card number and expiration date that is issued (or usable) without a corresponding plastic prepaid debit card.

Web-Based Point-of-Sale

A secure web-based user application (ASP) for the issuance of prepaid debit cards, depositing funds in multiple government-issued currencies, removing funds, the review of the transactional history and the management of reward points.

Wire Transfer

An electronic transfer of funds, such as one that is made over the Federal Reserve Wire Network.

Withdraw

To take money out of an account

Withdrawal

The removal of funds from an account.

Zero Balance Account (ZBA)

An account which always maintains a balance of zero. Whenever there is a need to write a check, money is transferred into the account for the exact sum of the check that is written, so that once the check is cashed there once again be a zero balance.

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