ACH: Automated clearinghouse, an electronic payment network that can be used for payroll direct deposit, recurring payments, and credit and debit card processing.
Acquirer: The company (typically a federally insured financial institution) responsible for connecting merchants to the card brands for card authorization and settlement systems.
Assessments: Fees paid to card brands for marketing and administrative costs. This is a percentage of the sales processed.
Average ticket: An estimate of a merchant’s average ticket size for credit and debit card sales.
AVS: Address verification system, an optional service that helps protect against fraud by verifying the billing address of the credit card provided by the user with the address on file at the credit card company.
Authorization: An electronic exchange between a card-issuing bank and the merchant acquiring bank, through a credit card terminal, verifying that a cardholder has sufficient credit (or funds in a bank account if it is a PIN-based debit transaction) to cover a pending transaction.
Basis point: One one-hundredth of a percent. One basis point is 0.01 percent or 0.0001; ten basis points are 0.10 percent or 0.0010; twenty-five basis points are 0.25 percent or 0.0025; one hundred basis points are 1.0 percent or 0.0100.
Batch: How the merchant electronically sends their captured transactions to their acquiring bank for settlement. Batches may be opened and/or closed automatically or manually, and most terminals can be programmed to batch out automatically at a certain time each day.
Bundled rate: A discount rate is offered to the merchant that includes both the qualified discount rate and the transaction fee. A separate transaction fee is not billed to the merchant, and the mid- and non-qual rates are added to the bundled qualified rate as normal.
Card not present: Card transactions (for example, Internet or MOTO purchases) for which the customer’s card is not presented to the merchant at the POS. The interchange is set higher on these transactions because they carry an increased risk.
Card type: Refers to the brand of card and type of card—consumer credit, business, check card, rewards, etc.
Chargeback: Occurs when a cardholder’s bank (the card issuer) reverses all or part of a card transaction, leaving the merchant financially liable for the payment and subject to penalties unless it can be proven the merchant was not at fault. Chargebacks can be initiated by disgruntled customers or by cardholders’ banks.
Check card: A card tied to a cardholder’s bank account and bearing the logo of any of the card brands. The transaction requires a cardholder signature, similar to a credit card transaction.
Check imager: A countertop device used to scan images of checks, according to legal specifications, for electronic clearing and settlement.
CVV: Card verification value, a value encoded on the magnetic stripe of the card. CVVs are used as a security feature for transactions in person (swiped retail transactions).
CVV2: Card verification value 2, a three- or four-digit number physically imprinted on the back of the card. CVV2s are used as a security feature and often are mandatory for card-not-present (MOTO/Internet) transactions.
Daily discount: The qualified discount rate deducted from a merchant’s batch sales total before their batch deposit is made. At the end of the month, the transaction fees and monthly fees are deducted from the merchant’s DDA.
DBA: Doing business as, the name under which a business is operating. The DBA name may or may not be the same as the corporate name.
Deal: When you write a contract for processing (differentiated from a sale, when you sell something like a piece of equipment). Sales are great, but deals are what help you make it in this business!
DDA: Demand deposit account, also known as a checking account.
Downgrade: When a transaction does not meet the qualifications for a particular level
and is assessed with an additional fee. For example, if a transaction that would normally
be swiped is keyed, that transaction will be downgraded from qualified to mid-qualified
or even nonqualified.
EBT: Electronic benefits transfer, commonly referred to as food-stamp benefits.
Gateway: In payment processing, any network that connects merchant POS terminals with transaction processing and settlement networks, such as the MasterCard and Visa settlement networks. Gateways can also provide related services, including transaction management and reporting.
High-ticket: An estimate of a potential high-ticket for the given merchant; can be used as a limit. If a merchant is only approved for a $1,000 ticket and they process a $3,000 transaction, the money could be held.
Interchange: The fee paid to the card-issuing bank by the card-acquiring (merchant) bank. The basic fee upon which all other acquiring and processing fees are added to come up with the total merchant cost.
Interchange plus pricing: A pricing structure in which the interchange and
dues/assessments are passed directly through to the merchant. Basis points are added for profit, and a charge per transaction for authorization is added to cover the cost. This structure is sometimes also referred to as cost-plus pricing. This type of pricing is usually used for larger-volume merchants.
Internet gateway: An online system designed to help merchants process payments either through a website, by phone for hand-keyed transactions, or even for a retail store.
Merchant account: The account created when a merchant has applied to and been accepted by an ISO and sponsor bank for credit and/or debit card processing.
Merchant bank: A bank that sponsors an acquirer into the card brand systems.
MLS: A merchant-level sales reps or front-line sales rep who spends most of his or her time talking to merchants on the street.
MOTO: Mail order/telephone order, a merchant who keys in or does not swipe a majority of the cards he accepts.
Monthly discount: Allows a merchant to receive 100 percent of the sales total to be deposited into their bank account. All discount, transaction, and monthly fees will be deducted at the end of the month.
Monthly minimum: A way to ensure the merchants pay a minimum amount in fees each month to cover costs from the provider to maintain the account and to create minimal profits.
PCI DSS: Payment card industry data security standard, often shortened to PCI. Established for securing payment card information. Failure to adhere to the standard (by any party that handles card information, including merchants and ISOs) can result in substantial fines.
PIN: Personal identification number, used to process PIN-based debit transactions.
POS: Point of sale, the place where retail sales occur and payment transactions are initiated. It is also commonly used to describe POS systems (such as cash register systems) and/or computer software programs used for electronic payment processing.
Processor: The company that moves transactions on behalf of acquirers between merchants, banks, and the card networks.
QSR: Quick-serve restaurant; no signature required for transactions under $25 for certain types of businesses.
Retrieval request: When a chargeback is initiated, the merchant’s processing bank sends to the issuing bank additional information about the transaction; the fee is generally set at $15 per retrieval request. The retrieval request fee is billed to the merchant regardless of the outcome of the chargeback.
Settlement: The process by which members exchange financial data and value resulting from sales transactions, cash disbursements, or merchandise credits, which are ultimately billed to the cardholder’s account.
Small ticket: Pricing available on the interchange for certain businesses when the average ticket is less than $15.
Statement fee: The fee to cover the cost of capturing and transmitting by mail or online the monthly processing history of a merchant.
Touch-tone capture: Allows the manual keyed entry and subsequent authorization of a credit card over a cellular or landline telephone. With this method, a merchant typically imprints his customer’s card with an imprinter to create a customer receipt and merchant copy, and then processes the transaction over the phone.
Transaction: A payment card sale or refund between the cardholder and merchant.
Transaction fee: A fee charged to cover the transaction; it can be only the cost, a combination of the cost of interchange, and/or the markup.
Vertical: Different types of business or industry that you can concentrate on for specialization. Specializations can be auto repair, dentistry, restaurants, grocery stores, and more.