Merchant Account Glossary
Account Number
A unique sequence of numbers assigned to a cardholder account that
identifies the issuer and type of financial transaction card.
Acquirer
Electronic Merchant Systems or another financial institution, which
receives electronic financial data from a Merchant relating to a
transaction and initiates that data into an interchange system.
Authorization
This is a process that assesses transaction risk, confirms that
a given transaction does not raise the account holder's debt above
the account's credit limit and reserves the specified amount of
credit.
Average Ticket
A predetermined dollar amount that the merchant can process on
a per-sale basis.
AVS (Address Verification Service)
A service provided by Visa that checks to match the street number
and zip code of the cardholder's address. It provides a level of
fraud protection that helps to prevent fraud and charge-backs.
Batch
A collection of transactions that are processed as a group. You
can batch orders for authorization or for capture. Your processing
requests may in turn be batched for settlement by banks.
Capture
A transaction sent after the merchant has shipped the goods. This
transaction will trigger the movement of funds from the Issuer to
the Acquirer and then to the merchant's account.
Cardholder
Customer associated with the primary account number requesting
the transaction from the card acceptor.
Credit
A claim for funds by the cardholder for the credit of his account.
At the same time it provides details of funds acknowledged as payable
by the acquirer (and/or the card acceptor) to the card issuer.
Chargeback
A chargeback is when a customer calls their credit card company
disputing a charge because the products/services were not received.
If the merchant cannot prove otherwise, then the charge is refunded
to the customer at the merchant's expense.
Discount Rate
The fee a merchant pays its acquiring bank/merchant bank for the
privilege to deposit the value of each day's credit purchases. The
fee is usually a small percentage of the purchase value.
Factoring
This term refers to the practice of allowing more than one merchant
to process transactions through a single merchant account. Factoring
is not permitted under Visa, MasterCard and American Express regulations.
Interchange
The exchange of information, transaction data and money among banks.
Interchange systems are managed by Visa and MasterCard associations
and are very standardized so banks and merchants worldwide can use
them.
Interchange Fee
A fee paid by the acquiring bank/merchant bank to the issuing bank.
The fee compensates the issuer for the time after settlement with
the acquiring bank/merchant bank and before it recoups the settlement
value from the cardholder.
Internet Payment Gateway
A payment gateway is a service that gives merchants the ability
to perform real-time credit card authorizations from a web site
over the Internet.
Issuer
A financial institution that issues the identification payment
card (e.g. VisaŽ Card) to the cardholder identified by the primary
account number.
Merchant
An Electronic Merchant Systems approved seller of goods, services,
and or other information who accepts payment for these items electronically.
The merchant may also provide electronic selling services and/or
electronic delivery of items for sale.
Monthly Minimum
Charge levied by the merchant bank instead of the monthly credit
card volume multiplied by the discount rate if the merchant's monthly
credit card volume multiplied by the discount rate is less than
the monthly minimum.
Monthly Volume
A predetermined dollar amount that the merchant can process.
Retrieval Request
A request from a cardholder's bank for information about a charge,
which is being disputed. Retrieval requests usually precede a chargeback.
Reversal
A transaction from the acquirer to the card issuer informing the
card issuer that the previously initiated transaction cannot be
processed as instructed, i.e., is undeliverable, unprocessed or
cancelled by the receiver.
Real-time
The term "real-time" means to incur immediately. For
credit card processing, this means that the validity of a customer's
credit card, as well as their available credit limit can be checked
immediately before processing is accepted. This is extremely important
for card-present and Internet transactions, in which it is difficult
and costly to get back in touch with the customer
Secured Sockets Layer (SSL)
SSL is used to encrypt and protect data usually on an order from
an online merchants web site. Since the intended client machine
can be identified, only that machine is able to decrypt the transmission.
Settlement
As the sales transaction value moves from the merchant to the acquiring
bank, to the issuer, each party buys and sells the sales ticket.
Settlement is what occurs when the acquiring bank and the issuer
exchange data or funds during that function.
Shopping Cart
On an e-commerce enabled web site, a method of collecting the items
chosen by a consumer for purchase from an on-line catalog.
Statement Fee
Charge levied by the merchant bank for monthly reports detailing
activity on a merchant account.
Ticket
Another name for the sales slip or its monetary value that results
when a credit card purchase is made.
Transaction
There are several types of transactions but the most common transaction
is the process that takes place when a cardholder makes a purchase
with a credit card.
Transaction Fee
A per transaction fee that is charged by the bank for processing
transactions.
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