R & D
Research and Development.

Radio Frequency Card (RFID)
A proximity card in which the coupling between the card and the interface device is by way of radio.

RAID
Acronym for Redundant Array of Inexpensive Disk, a new technique for storing records on PCs and Mainframes. This greatly reduces the cost of disk storage.

RAM
The computer`s temporary memory. This is erased when the user turns off the computer.

Random Access
Modern computer disks can access database records in random fashion. The opposite of Random Access is Sequential Access. Random Access makes database marketing possible.

Random Digit
A number, between 00-99, randomly assigned to an account. The purpose of this is to enable the division of accounts in a portfolio in an unbiased manner, allowing for statistically valid Champion-Challenger testing.

Random Digit Group
A collection of random digits, e.g. 00-04, would be 5% of the portfolios accounts.

Rank Order
To put any group of similar items in either ascending or descending order.

Ratio
Comparison of two figures used to evaluate business performance, such as debt/equity ratio and return on investment.

Re-alignment
The process of re-aligning the scorecard, using fitted odds to ensure that the observed odds match the predicted odds. It is recommended that scorecards are re-aligned on an annual basis.

Re-engineering
A term referring to radically redesigning processes to improve efficiency and service

Re-financing
An arrangement where the goods obtained through a financing agreement are sold back to the financing house by the customer and a new financing arrangement is concluded.

Re-issue
The process of renewing a customer’s facility, typically a card, but also applicable to current accounts.

Re-pricing
The process of changing the terms and conditions of the customers account.

Reactivation
A program which encourages customers with lapsed accounts to recommence purchasing.

Reading Device
A device that can read and manipulate information stored on a smart card.

Ready Credit
An unsecured, revolving line of credit.

Real Estate
Real estate mortgage loan transactions, in which terms can be revolving or instalment.

Real Property
Real estate account types, including mortgages (conventional, VA, FHA), home improvement, mobile homes, and second mortgages, used to indicate ownership of real property.

Real-Time Processing
Credit card processing completed online while the customer is visiting your website.

Reason Code
A code used to provide additional information to the receiving clearing member regarding the nature of a chargeback, subsequent presentment, fee collection, funds disbursement, or request for a source document.

Rebate Card
This is a credit card that allows the customer to accumulate cash, merchandise or services based on card usage.

Receipt
A hard copy description of the transaction that took place at the point-of-sale, containing at minimum: date, merchant name/location, primary account number, type of account accessed, amount, reference number, and an action code.

Recency
Used within an RFM model, this is when was the last time the customer purchased?

Recency Delinquency
A measurement of delinquency, whereby an accounts delinquency status is governed by the last time it made a qualifying payment. For example, if an account was contractually delinquent 5 cycles, but just made a qualifying payment, then it would be considered as Recency Delinquent 0.

Recency, Frequency, Monetary value (RFM)
This approach is used by direct marketers to develop a formula combination to generate a score. A three dimensional matrix, using Recency, Frequency and Monetary value, is developed and response rates within each cell are measured. See Cell Code.

Recession
A period in which all economic activity shrinks.

Recidivist
Someone who lapses into previous undesirable patterns of behaviour. E.g. a historical 2 cycle delinquent customer who cures their delinquency, but who is once again missing payments.

Record
Refers to the information contained in the database that comprises an entry for each field in the database. For example, an employee database contains a record for each employee. Also known as Case, Observation, and Row.

Recoveries
The amount of funds that are collected from accounts that have been previously charged-off.

Recurring Transaction
An agreed transaction charged to the cardholder on a periodic basis for recurring goods and services, i.e., health club memberships, book-of-the-month clubs, etc.

Red Lining
The practice of declining an applicant solely on the basis of their address.

Redundant Array of Inexpensive Disk (RAID)
This is a new technique for storing records on PCs and Mainframes, which greatly reduces the cost of disk storage.

Reference Number
A twenty-three position number assigned by the acquiring member and used to identify a transaction.

Referral
The message received from an issuing bank when an attempt for authorisation requires a call to the Voice Authorisation Centre or Voice Response Unit.

Referral Rate
The percentage of new customers that begin buying this year as a result of encouragement from last year's customers. This is expressed as a percentage of last year's customers. If we had 4,000 customers last year that recommended new customers to us, of whom 240 became customers, the referral rate would be 6%.

Referral Response
An authorisation response where the merchant or acquirer is instructed to contact the issuer for further instructions before completing the transaction.

Refinance
A process whereby one or more existing mortgage loans are repaid by way of a new mortgage loan agreement.

Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the same property.

Reformatting
Changing the format of data or text to match a desired arrangement.

Regional Network
A network which processes debit transactions for financial institutions and retailers in a given geographic area. Regional networks are not part of the national interchange system.

Regression – Backwards
All attributes are entered into the regression model and then tested, one by one, for removal based on selection criteria.

Regression – Forwards
All attributes are entered into the regression model one by one, based on specified selection criteria.

Regression – Stepwise
Attributes are tested and may be entered into the regression model one at a time, all existing attributes are tested to determine if they should be dropped, based on certain selection criteria.

Regression –Enter
All attributes are entered into the regression model, regardless of strength.

Regression Analysis
A statistical method using formulae to combine the information from known variables to predict an unknown variable, i.e. using characteristics to predict risk. See F-Distribution.

Regression Equation
A regression equation allows us to express the relationship between two (or more) variables algebraically. It indicates the nature of the relationship between two (or more) variables. In particular, it indicates the extent to which you can predict some variables by knowing others, or the extent to which some are associated with others.

Regression Line
A regression line is a line drawn through the points on a scatter-plot to summarise the relationship between the variables being studied. When it slopes down (from top left to bottom right), this indicates a negative or inverse relationship between the variables; when it slopes up (from bottom right to top left), a positive or direct relationship is indicated.

Regulatory Capital
The aggregate capital, calculated according to a standard methodology published by regulators, required as a cushion for the company's overall risk of unexpected loss.

Reject Inference
Any process that augments the known Good and Bad accounts in a sample by the Inferred Good and Bad accounts from the applications that were rejected. Also known as Augmentation.

Rejects
Applications for credit that fail to pass the credit review process.

Relational
A relational database is required for database marketing. Such databases are kept on disk and consist of related files (name and address, orders), which are related to each other by ID numbers and accessed by indexes.

Relationship Marketing
The process of building a relationship with customers which results in the customers becoming more loyal, buying more, and staying as customers.

Relationship Marketing
A form of marketing that puts particular emphasis on building a longer-term, more intimate bond between an organisation and its individual customers.

Remaining Balance
The unpaid principal amount on a loan.

Remaining Term
The time it takes to pay off the rest of an instalment loan as scheduled.

Remanence
Information that is still readable after a storage medium, such as a computer disk, has been supposedly erased.

Remittance Information
Information required by the biller to post customer bill payments effectively.

Remittance Processing Service
An electronic routing and settlement service that accepts previously captured and authorised payment transactions from members for delivery to other financial institutions.

Renegotiable Rate
A type of variable rate involving a renewable short- term "balloon" note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortised, periodic refinancing may be necessary.

Rental Agreement
A detailed contract with the cardholder indicating all the charges for which the cardholder is responsible.

Repayment Plan
Modifying the repayment terms of an existing loan after a borrower has been delinquent.

Repayment Terms
The length of a loan repayment period will directly affect the required monthly instalments. The longer the repayment period, the lower the monthly instalments will be, however the total interest cost over the life of the loan will increase.

Replacement Plastic
A credit card that has been issued to cover the loss or theft of an existing card.

Representment
A transaction presented to the issuer by the acquirer, when the merchant requests a reversal of a chargeback.

Reputation
Reputation is the overall impression of an organisation and is the sum total of experiences. Based on the organisation`s image with particular stakeholders, reputation is the prevailing impression that people have of an organisation. An organisation`s reputation is like a fragile vase, once broken it is not easily restored.

Reputational Risk Management
Reputational Risk management is a proactive and systematic approach to identifying issues that currently affect your company. A company’s policies and actions are shaped and developed in anticipation and reaction towards political, economic, social and technological forces.

Request for Proposal (RFP)
This is the document issued by a company to an external vendor to solicit a bid and proposal for goods and services.

Rescind (also Right to Cancel)
The right to cancel or to take back. Should a borrower rescind a mortgage loan, it is as if the mortgage loan never existed. Some borrowers have by law a right to "rescind" certain mortgage loans. See Notice of Right to Cancel

Rescission
A court order setting aside a default judgment.

Reseller
In information technology, a reseller, is a company that typically buys products such as computers in bulk from a manufacturer and then "adds value" to the original equipment by including specific software applications or other components. The reseller then markets and sells the customised product under its own name.

Residual
Residual refers to an unexplained variation after fitting a regression model. It represents the difference between the observed value of the variable and the value suggested by the regression model.

Residual Error
This is the extent to which a regression model is out. The residual error is often used for building multi-stage models as the results can simply be combined together.

Responders
People who respond to unsolicited mail shots or other forms of advertising.

Response Device
A code attached to outgoing direct mail that usually contains the prospect number and identifies the offer, package, list or marketing segment used. The device is especially helpful in mail tracking. See Source Code.

Response Rates
The percentage of a mail shot that actively responds.

Response Score
A scoring model used to predict the likelihood of a person responding to a particular offer.

Restrictions
A requirement placed on the score point calculation program that requires certain conditions to occur. For example, a characteristic may be forced to have steadily increasing values, even though the statistics may suggest otherwise.

Restrictive Covenant
An obligation imposed on the owner of property deeds. An example might be a restrictive covenant preventing a property from being used for business or trading purposes.

Retained Score
This occurs when an account retains a behaviour score that was previously generated. For example, for accounts that are inactive for 6 months or more, it is typical to retain the last behaviour score that was generated.

Retention
The tendency to keep customers buying. Success is measured by retention of customers. See Loyalty.

Retention Budget
A budget for a programme to keep customers from leaving.

Retention Period
The minimum time the member must retain microfilm or other reproduction of interchange paper and chargeback documentation. See Attrition Rate and Loyalty.

Retention Rate
The percentage of customers who continue to make purchases from you in a second period, such as a year. If you had 4,000 customers who bought from you last year and this year 3,000 of those same people also make purchases, your retention rate would be 75%.

Retrial Tables
Sometimes used to calculate the trunks and other system resources that are required. They assume that some callers will make additional attempts to reach the call centre if they receive engaged signals.

Retrieval Request
A request by the issuer to the acquirer for a copy of the actual ticket of a transaction. The initial step that the issuer takes in the event that either the issuer or the cardholder disputes a transaction.

Retrospective Data Analysis
Data analysis that provides insights into trends, behaviours, or events that have already occurred.

Return on Capital
This is calculated with the following formula: Divide income from continuing operations (before changes in accounting principles), less tax-adjusted interest expense by average total capital.

Return on Equity
Annual net income, divided by average stockholder equity for that year.

Return on Investment
This is a key measure of the success of any direct marketing activity. It is the total net profit from a direct marketing initiative, divided by the total cost of the entire operation. ROI from an initial offer is often negative. But when customer lifetime value is taken into account, it often becomes positive.

Revenue Score
A scoring model used to predict the likelihood of a person generating a pre-determined level of revenue for the organisation.

Revenue Stamp
A stamp that must be placed on all documents initiating a court process in order that the papers issued are not null and void

Review
The process by which both criminal and civil proceedings are brought before a higher court in respect of grave irregularities or illegalities occurring during the course of such proceedings.

Revolver
A term credit card issuers use for card holders who roll over part of the bill to the next month, instead of paying off the balance in full each month.

Revolving Credit
Accounts where the outstanding balance can fluctuate depending on usage. Most revolving account payments are tied to the account balance as a percentage of the balance. Most have credit limits that may not be exceeded. When a balance is not paid in full each month a service charge is added to the balance.

Revolving Line of Credit
An agreement to lend a specific amount to a borrower and to allow that amount to be borrowed again once it has been repaid.

RFM
Abbreviation for Recency, Frequency, Monetary value.

RFP
Request for Proposals. This is the document issued by a company to an external vendor to solicit a bid and proposal for goods and services.

Ride-Along
An offer that rides along with another offer. Also see Piggyback.

Ridge Regression
A regression technique in which the regression coefficients are biased toward zero in order to reduce sample tuning.

Risk
The statistical likelihood of an account becoming a bad risk in the future. Risk is measured in odds or percentages.

Risk Capital
The funds used to invest in a company where there is a certain degree of financial risk in the initial stages. See Venture Capital.

Risk Management
A strategic function responsible for optimising credit losses versus business development. Also known as Credit Strategy.

Risk Premium
Return or extra reward for assuming risks. See Excess Return.

Risk-Based Pricing
A strategy in which the interest rate or other terms and conditions are driven by the perceived risk of the account or customer.

Risk-Return Ratio
Measure of the relation between the risk inherent in a position compared to its potential gain.

Risk-Reward Trade-off
This is the trade-off or calculation that an organisation makes when setting the cut-off score for accepting applicants. Higher risk applicants will tend to generate higher rewards and lower risk applicants will tend to generate lower rewards

ROI
Abbreviation for Return on Investment, which is a key measure of the success of any direct marketing activity. It is the total net profit from a direct marketing initiative, divided by the total cost of the entire operation. ROI from an initial offer is often negative. But when customer lifetime value is taken into account, it often becomes positive.

Roll Back/Roll Forward Software
A utility that enables you to switch to earlier or later versions of software while retaining the original data.

Roll Printer
A dot matrix printer connected to a POS terminal and used to print receipts and reports on carbonless roll paper.

Roll Rate
The percentage of accounts or balances rolling forward from one level of delinquency to the next level of delinquency.

Roll Rate Analysis
Analysis showing the percentage of accounts that move from one level of delinquency into worse levels. Conversely, there are also accounts that reduce their levels of delinquency.

Rollout
After a direct mail test of a few thousand letters, a rollout is the mailing to the rest of the names on the successful lists. It may be preceded by a second test or ‘continuation’.

Root
The top-level directory in a file system. Also the administrative user in a UNIX system.

Root Node
The node at the very top of a hierarchical tree display. This node also represents the overall distribution of values of the dependent variable.

ROP
Abbreviation for Run of press, or Run of Paper. This is advertising space purchased from a newspaper, which may insert the advertisement wherever they see fit.

Router
A communication device that handles the connection between two or more networks.

Row
1) Refers to the information contained in the database that comprises an entry for each field in the database. For example, an employee database contains a record for each employee. Also known as Case, Observation, and Record. 2) In a database, a row represents a single record.

Rule Induction
The extraction of useful if/then rules from data that is based on statistical significance, for explanatory or predictive purposes.

Rule Set
A binary formula that determines processing. A rule set can be a step in an execution path.

Run of Paper
This is advertising space purchased from a newspaper, which may insert the advertisement wherever they see fit. See ROP and Run of Press.

Run of Press
This is advertising space purchased from a newspaper, which may insert the advertisement wherever they see fit. See ROP and Run of Paper.