With so many options, we know the payment processing industry can be confusing for merchants. You’re searching for the right products and services for your business, but the terminology and the amount of information out there can easily make it an overwhelming task.
At Q Solutions, we’re committed to educating our clients about the payment processing industry. This list of industry terms is just one way we provide you with the knowledge you need to make the best decisions for the future of your business.
An acquirer is a Visa/MasterCard affiliated bank or Bank/Processor alliance that is in the business of processing credit card transactions for businesses. An acquirer is always gaining new merchants.
Address Verification Service (AVS)
This is the process of validating a cardholder's given address against the issuer's records to determine accuracy and to deter fraud. This service is provided as part of a credit card authorization for mail order and telephone order transactions. A code is returned with the authorization result that indicates the level of accuracy of the address match and helps secure the most favorable interchange rates.
An adjustment is initiated by the acquirer to correct a processing error. The error could be a duplication of a transaction or the result of a cardholder dispute. The acquirer debits or credits the merchant DDA account for the dollar amount of the adjustment.
This is a terminal feature that allows an end-of-day batch closing to occur automatically at a specified time, without requiring the merchant to initiate it.
Automated Clearing House (ACH) File
This is a file with instructions for the exchange and settlement of electronic payments passed between financial institutions. It represents debits and credits to be deducted from an account automatically as they occur.
This is the accumulation of captured credit card transactions in the merchant's terminal or POS awaiting settlement.
This is the submission of an electronic credit card transaction for financial settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales. Also see Settlement.
Card Not Present
This is a transaction where the card is not present at the time of the transaction, such as mail order or telephone order. Credit card data is manually entered into the terminal, as opposed to swiping a card's magnetic stripe through the terminal.
This is a credit card transaction that is billed back to the merchant after the sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or dissatisfaction. Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.
This is the process of sending the batch for settlement.
Code 10 Authorization
If you suspect that a card is fraudulent at the time of the transaction, you can call your voice authorization phone number and ask for a code 10. The voice operator will instruct you on how to proceed.
This stands for Demand Deposit Account. It’s simply another name for the merchant's bank account.
This is the percentage of sales amounts that the bank card acquirer or T & E card issuer charges the merchant for the settlement of the transactions.
Electronic Date Capture (EDC)
This is the process of electronically authorizing, capturing and settling a credit card transaction.
This is the standardized electronic exchange of financial and non-financial data associated with sale and credit data between merchant acquirers and card issuers on various types of MasterCard and Visa transactions.
This is a fee paid by an acquirer to an issuer for transactions entered into interchange. The interchange fee is a percentage applied, according to Visa/MasterCard regulations, to the dollar value of each transaction. There are multiple categories of interchange, and Visa and MasterCard each have their own criteria for their own categories.
Internet Service Provider (ISP)
Internet Service Providers (ISPs) are the Web Site Hosting companies that provide a home for merchant's websites. They typically resell and support the services of a Secure Gateway Provider and ISO or Agent or Bank.
This is a batch close that the merchant must initiate on a daily basis, as opposed to an auto close at a pre-set time.
Merchant Identification Number (MID)
A processor or acquirer creates this number for each individual merchant location. They use this number to identify the merchant during processing of daily transactions, rejects, adjustments, charge backs, end-of-month processing fees, and more.
This is the company and system used to authorize and capture credit card transactions.
Non-Qualified Transaction Fees (NON-Qual)
These are fees that happen when bank card sales transactions do not meet set Visa/MasterCard criteria for that particular merchant and are processed at a higher interchange rate.
A processor is the company that actually routes an Authorization Request from a Point of Sale device to Visa or MasterCard. The processor then then arranges for Fund Settlement to the merchant.
Processing Network (Vendor)
This is the medium of data transport between the merchant application and the processor. This company authorizes and captures credit card transactions.
These are charge cards used by businesses to cover purchasing expenses, such as raw materials or office supplies.
ACH processors limit risk by requiring merchants to maintain a reserve account at the processor’s sponsoring bank. This allows the processor to issue a hold on funds in this account when fraud has been detected or when the processor receives an excessively large number of returns. Merchants with good credit can usually meet the expectations of ACH processors for covering returns and so are not always required to keep a reserve account.
Sales Draft (Ticket)
This is a form that shows the cardholder's obligation to pay the sales amount to the card issuer. The cardholder signs this piece of paper when making the purchase. Sales draft data can be captured electronically and sent to be processed over the phone lines. Also see Electronic Data Capture.
Secure Payment Gateway
These companies help other processors conduct secure business online using Secure Socket Layer (SSL) technology.
This is the process of sending a merchant's batch to the network for processing and payment. For non-bankcards, the issuer pays the merchant directly (less applicable fees) and then bills the cardholder. For bank cards, the acquirer pays the merchant (less applicable fees) with funds from Visa/MasterCard. The bank card issuer then bills the cardholder for the amount of the sale. Also see Capture.
T & E Cards
Businesses use these credit or charge cards for travel and entertainment expenses. Some examples include American Express, Diners Club, Carte Blanche and JCB. Also see Corporate Cards.
This is the equipment used to capture, transmit and store credit card transactions.
Terminal Identification Number (TID)
This is a unique number assigned to each POS terminal.