Credit Card Glossary

Letter M

Magnetic Strip

The magnetic stripe located on the back of a physical credit card that contains the account number, the cardholder's name, the expiration date, and the country code associated with the card. When swiped through a terminal, the information stored on the strip is able to be read by the reader and can facilitate a sale for that particular credit card account. Also called a magnetic swipe or stripe.

Mail - Phone Order Merchant

A merchant who solely or transacts a credit card purchases a majority of the time over the phone or via direct mail. Because the potential for fraud is more prevalent or possible for these types of transactions, the merchant fees associated with this type of processing method are a bit higher than when the physical plastic is present.

Mail - Phone Order Transaction

The transactions for purchases made with credit cards by mail or phone merchants (see above) where no physical card is present.

Man in the Middle Fraud

A hacking practice that attempts to steal account information from mobile payment transactions. Expected to be a larger concern as mobile payments become even more prevalent, hackers build worms or trojans to intercept wireless transmissions of credit card data from unsuspecting users.

Mandatory Binding Arbitration

A clause in the terms and conditions or elsewhere in a credit card contract that protects the financial issuer from legal suits brought against them by cardholders. In the event where a lawsuit would normally arise, the cardholder is forced to settle their differences between an arbitrator outside of court.

Margin

When calculating a variable interest rate, the number of points added to the prime rate to calculate the interest rate charged on balances. For a credit card with a variable rate of 11.99%, when the prime rate is 4%, the margin would be 7.99%. Please see the below example for the formula: margin = variable - prime

MasterCard

The global payment processor and network with several other international products under their umbrella. MasterCard does not issue cards, determine APR's, or function like a bank when it comes to credit cards. Instead, they partner with issuers (banks) who set the terms and conditions in credit card contracts and issue cards with the MasterCard brand.

MasterCard Acquirer

An acquirer who signs a merchant contract with MasterCard or disburses cash to a MasterCard credit card account holder in the form of cash disbursement.

MasterCard Card

A credit card bearing the MasterCard logo which may be used wherever MasterCards are accepted on a national or international level.

MasterCard Issuer

A financial institution or bank that issues MasterCard credit cards, debit cards, or check cards that bear the MasterCard logo.

Means Test

Limiting the ability for high net worth or wage earners from disposing their debts through Chapter 7 bankruptcy. Means tests vary from state to state and came about via the Bankruptcy Abuse Prevention and Consumer Protection Act back in 2005.

Medical Identity Theft

Fraud where personally identifiable information is stolen to obtain medical services, pills, or other goods.

Merchant

A company or other entity that enters into contracts with ISOs or merchant banks to facilitate transactions.

Merchant Agreement

The contract between a merchant (see above) and a bank that outlines and defines their rights and roles as they relate to matters related to bank card activity and acceptance of bank cards.

Merchant Bank

A company that has a merchant agreement with a retailer or merchant to acquire deposits generate by credit card sales.

Merchant Category Codes

For every transaction processed by the networks, a merchant category code is assigned which is a four digit code that describes the type of retailer or business selling their services. They are commonly referred to as MCC's and are primarily used by issuers to analyze and track the types of purchases made with the cards they issue.

Military Bank

An institution that issues credit cards or provides banking services to member of the US Military.

Mini Miranda Rights

When a debt collector contacts an individual or business who has outstanding debt for the purpose of collection, they have to disclose the amount owed, the creditor the debt is owed to, transparency that if the consumer or business does not dispute the validity of the debt in the days it is considered valid, and that the consumer or small business may request proof that the debt is verifiable. The mini miranda rights can be noted either verbally or in written form.

Minimum Finance Charge

The minimum finance charge is applicable when a balance is carried over from one billing cycle to the next sequential one. If the calculated amount of your finance charge is less than the minimum finance charge outlined in your credit card contract, you will need to pay the minimum finance charge rather than the calculated finance charge.

Minimum Payment

The least amount of money you need to pay on your credit card bill to keep it current and out of default. The formula to calculate minimum payments vary from issuer to issuer and should be clearly outlined in your credit card statement or in the terms and conditions of your contract.

Monthly Periodic Rate

Used to compute a consumer's credit card bill, it is part of the formula that is multiplied by the outstanding debt to come up with the interest rate charge during a given billing cycle.

Monthly Statement

A credit card statement sent electronically or via direct mail to a cardholder. It outlines all purchases made, fees, finance charges, and payments and is sent out on a monthly basis.

Mutual Savings Bank

State chartered financial institutions that accept deposits and in some cases provide credit card offers to consumers. They are regulated by their state's banking commission or agency.