Glossary of Credit Card Processing Terms

We have selected the most common words related to credit card processing. We hope this guide will provide the informatuion you are looking for. If you have any questions feel free to email us.

Authorization
This is where a request of funds is sent in by the Merchant Account provider to see if the card is valid. If approved, a confirmation number is sent.


Batch
This is the collection of transactions in a defined period, usually in one day (24 hours). This is so all of the transactions don't need to be submitted individually.

Cardholder
This is the person whose name is on the credit card and is the only person authorized to use the card.

Charge Back
When a customer disputes a transaction this becoms a chargeback, if they are successful then the merchant is charged chargeback fees and the disputed amount is debited from the merchant's account. The funds are withdrawn from the account until a resolution has been made.

Credit Card
Typically this is a Mastercard, VISA, or American Express, the card is solely the property of the person bearing the name at the bottom of the card. It is defined with an expiry date. Credit cards also are assigned a credit limit.

Currency Conversion
This is where money is converted into funds that allow the transaction to be processed.


Debit Card
This card is used when the customer wishes to send money through their personal bank account.

Discount Rate
A percentage of the final sale is charged by the credit card issuer.

Electronic funds transfer (EFT)
A transfer processed via phone, internet, or wireless.

Mail Order/Telephone Order
Transactions processed by the customer using the mail or telephone, rather than through retail terminals or the Internet.

Merchant
Any type of retailer or corporation that has the ability to process credit card transactions.

Merchant Account
A special business bank account that is used to receive the funds of credit card transactions.


Merchant Provider
A third party company providing merchants with merchant bank accounts. Usually the providers have either a processing system to process and validate transactions, or act as a reseller for third party processing systems.

Monthly Minimum
This only applies if the Merchant fails to meet the minimum in discount rate fees. If the Merchant falls short of the fees then the difference is applied. If the minimum is $20 for example and you only paid $17.90 in discount rate fees then the $2.10 is applied to meet the monthly minimum.

Personal identification number (PIN)
A secret digit code that help prevent fraud by having to enter a secret code to gain access to the account.

Point of Sale Terminal (POS)
The hardware associated with retail terminal processing.

Real-Time Processing
Live up to date processing. Once a transaction is posted it is posted in real time and you don't have to wait to see the posted transaction.

Reserve
An amount of the sale that is held back by the credit card company to protect against fraud or chargebacks.


Secure Socket Layer (SSL)
A secure digitally encrypted protocol that scrambles the information to prevent criminals from gaining access to highly sensitive information.

Transaction Fee
This is a fee that is charged per transaction. If you make 100 transactions per month and the fee is 25 cents you would owe $25.00.

If you would like a free merchant account FreeCreditCardProcessing.com is offering Merchants a free digital processing machine or free software valued at over $400.

» Set Up Fee: Usually a one time fee, between $200-$1000

» Transaction Fee: This fee applies to each transaction usually $.25

» Monthly Statement Fee: A fee charged monthly by the providers bank.

» Monthly Minimum Fee: A fee only applied if the qouta isn't met.

» Application Fee: One time fee that applies to the potential client.

» Chargeback Fee: Fee charged to the Merchant for a disputed credit card claim or purchase.

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» Reserve or Holdback Fee: A fee witheld by the credit card processing company in case of fraud. It is usually a % of the sale.

» Address Verification Fee: A fee applied to the Merchant to verify the customers address. This fee is sometimes free.

» Voice Authorization Fee: A fee that is applied if you need to use your phone in case your company loses power or other emergency.

» Gateway Fee: A fee that is applied to online merchants because of the service they use is through the internet.

» Retail Terminal Equipment: The hardware used for retail purchases and the swiping of a credit card.

» Software: The software that is used in online merchant services.

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