Treasury Terms


ABA (American Bankers Association)
National trade and professional association serving the entire banking community, from small community banks to large bank holding companies.
ACH (Automated Clearing House)
An Automated Clearing House transaction that involves the transfer of funds to or from a receiver’s account to or from a receiver’s account

Any bank, financial institution, and public or private company that maintains a Seller's credit card processing relationship and receives all transactions from the Seller to be distributed to the credit card issuing banks.

BAI (Bank Administration Institute)
Professional institute devoted to improving the competitive position of financial services companies through education and research.
CHAPS (Clearing House Automated Payment System)
A U.K.-based payment system for high-value, same-day settlement of transactions
Check Conversion
The conversion of a check to an electronic debit or image of the check. This check image serves as the official record.
When a credit card transaction is disputed (either at the request of the Cardholder or by a card Issuer), the dispute is handled through a chargeback. A chargeback will cause the amount of the original sale and a chargeback fee to be deducted from the checking or savings account you provided.
An independent message switching system that permits international financial transactions to be settled among New York banks. CHIPS is operated by the New York Clearing House Association.
Commercial Paper (CP)
Short-term, unsecured promissory notes issued to finance short-term capital needs with a maturity of 270 days or less.
Discount Rate

A discount rate is a fee associated with collecting, assessing, approving, processing, and settling credit card transactions. This fees is often a percentage of the transaction value.

Credit Rating
A current opinion delivered from a rating agency of the creditworthiness of an obligor with respect to a specific financial obligation.
EFT (Electronic Funds Transfer)
The movement of funds by non-paper means (i.e. electronically), usually through a payment system such as the ACH network or Fedwire.
The same-day value electronic funds transfer system operated in the U.S. by the Fed.
Fixed Rate
An interest rate on a security that does not change for the remaining life of the security.
Floating Rate
An interest rate, sometimes referred to as a “variable rate,” on a security that changes at intervals according to market conditions or a predetermined index or formula.
FX (Foreign Exchange Rate)
The equivalent number of units of one currency per unit of a different currency.
Interchange Fees

Fees generally collected from Acquirers on the value of their card sales and paid to Issuers.

Interest Rate SWAP Contract

A contract entered into by an issuer with a swap provider to exchange periodic interest payments. For example, one party agrees to make payments to the other based upon a fixed rate of interest in exchange for payments based upon a floating rate. Interest rate swap contracts are used as hedges against interest rate risk or to provide fixed debt service payments to an issuer or dependent on a specified revenue stream for payment of such debt. Certain regulatory requirements mandate these contracts to be marked-to-market.


Any Discover®, MasterCard® American Express or VISA® member, or a commercial organization that establishes and maintains customer credit lines that are accessed through the use of a card. (Public and private companies and financial institutions that offer card-accessed lines of credit to consumers and businesses.)

The benchmark used by banks, securities houses and investors to gauge the cost of unsecured borrowing in the money markets.  It is calculated each day by asking a panel of major banks what it would cost them to borrow funds for various periods of time and in various currencies, and then creating an average of the individual bank’s figures.
LOC (Letter of Credit)
A document issued by a bank guaranteeing the payment of a customer’s draft up to a stated amount for a specific period, provided that specified terms and conditions are met.
A collection system in which a bank or a third party receives, processes and deposits a company’s mail receipts. Also known as a lockbox processor.
A high-grade municipal bond index. The index serves as a benchmark for fixed rate tax-exempt bonds.
A process whereby the carrying value of a security is adjusted to reflect its current market value. Certain regulatory requirements mandate that issuers of these securities carry positions at prices that reflect current market values.
NSF (Not Sufficient Funds)
A bank check having insufficient funds to back it.
Official Statement
A document prepared by or on behalf of the issuer of municipal securities in connection with a primary bond offering that discloses material information on the offering of such securities.
Payment Gateway

An Internet-based service that transports credit card information from a computer terminal or website to a credit card processor, where it can be verified.

Positive Pay
Positive pay is the leading method of check fraud deterrence. The process entails a daily reconcilement of a company’s issued checks to checks presented for payment to your bank to identify potentially fraudulent checks.

The process of transferring funds for sales and credits between Acquirers and Issuers, including the final debiting of a Cardholder's account and crediting a Seller's account.

A 7-day high-grade market index comprised of tax-exempt floating rate securities. The index serves as a benchmark to gauge the cost of borrowing in tax-exempt money markets.
The Society for Worldwide Interbank Financial Telecommunication ('SWIFT') runs a worldwide network by which messages concerning financial transactions are exchanged among banks and other financial institutions. As of December 2001 it linked over 7,000 financial institutions in 194 countries and estimates that it carries payment messages averaging more than six trillion US dollars per day.
A fixed amount of time usually given to repay a loan
Variable Rate Demand Note (VRDN)
A long-term taxable or tax-exempt bond that bears a floating interest rate and that provides investors the option to tender or put securities at any time with specified notice. The put price is par plus accrued interest.
ZBA (Zero Balance Account)
A disbursement bank account on which checks are written even though the balances in the accounts are maintained at zero. Debits are covered by a transfer of funds from a master account at the same bank.