K
Keyed
Keyed is a term that refers to the process of manually entering credit card information into a terminal or other device. Keyed transactions may be used when a card is not present, such as when a cardholder makes a purchase over the phone or online, or when a card reader is not functioning properly. Keyed transactions may be subject to higher fees or fraud risks than cardpresent transactions.
Know Your Customer (KYC)
Know Your Customer (KYC) is a process that is used by financial institutions and other companies to verify the identity and background of customers or clients. KYC may be used to prevent fraud, money laundering, or other financial crimes and may involve the collection and verification of personal information, such as name, address, and government-issued identification. In the credit card processing industry, KYC may be used to ensure that merchants are legitimate and to protect against losses or liabilities.
L
Late Payment Fee
A fee charged to a customer when they fail to pay their bill by the due date. This fee is typically a percentage of the unpaid balance and is meant to encourage timely payment.
Layering
The process of disguising the source of funds or the identity of the owner of those funds through a series of transactions designed to obscure the true origin of the money. This can be done for a variety of reasons, including money laundering, tax evasion, and fraud.
Legal Risk
The potential for a merchant to face legal action as a result of their business practices or actions. This risk can come from a variety of sources, such as consumer complaints, regulatory violations, or contract disputes. Legal risk is mitigated through enhanced due diligence and underwriting when applying for a merchant account.
Level 1 Processing
The most basic level of credit card processing, which involves only the basic information needed to process a transaction. This includes the cardholder’s name, card number, expiration date, and security code.
Level 2 Processing
A more detailed level of credit card processing that includes additional information beyond the basics, such as the cardholder’s billing address and the merchant’s tax ID number. This level of processing is typically required for business-to-business transactions and government payments.
Level 3 Processing
The most detailed level of credit card processing, which includes all of the information required for Level 1 and Level 2 processing, as well as additional line item details such as product codes, descriptions, and quantities. This level of processing is typically required for large corporate transactions and is used to provide more accurate tax reporting and invoicing.
Limits of Liability
The maximum amount that a merchant or payment processor is liable for in the event of a loss or dispute. These limits are typically set by the merchant’s payment processor or the card issuer and may vary depending on the type of transaction and the specific circumstances of the loss or dispute.
Liquidated Damages
A predetermined amount of money that a party agrees to pay in the event of a breach of contract. This amount is typically agreed upon in advance and is meant to compensate the nonbreaching party for any damages or losses incurred as a result of the breach.
Loyalty Program
A rewards program offered by a merchant to encourage customers to return and make repeat purchases. Loyalty programs may offer discounts, points, or other incentives to customers based on their level of spending or frequency of visits.