It’s easy to get lost when navigating the world of credit card processing. Credit card processing is a complex system with a panoply of terms that are important to understand. Why? Because payment processing represents a lot of profits and, equally, a big expense for small- and medium-sized business owners.
Here is a glossary featuring the most common payment processing terms you will come across as a business owner:
Glossary of Terms
Acquiring Bank/Acquirer: A bank or financial institution that processes credit card transactions for business owners (see merchant). It issues interchange fees and is a licensed member of Visa or MasterCard. Acquiring banks maintain merchant accounts.
Card Association/Card Network: Card-issuing organizations that license and manage payment cards. The most well-known ones are Visa and Mastercard, however, there are others. The logos are either on the front or back of your card.
Cardholder: The owner of a debit or credit card-- your customers! Cardholders may purchase goods or services online or in person.
Card-Not-Present Transaction (CNP): A transaction where the credit card isn’t present. You take CNP payments when your customers purchase something from you either online or over the phone.
Card-Present Transaction (CPT): A transaction where the card is present, such as when your customer makes a purchase in-store.Their card is read by a card reader that is connected to your POS system, tablet or smartphone, or contactless terminal.
Chargeback: This happens when your customer or issuing bank disputes a transaction and it is sent back through the interchange to your acquiring bank (or merchant account) to be resolved.
Credit Card: A payment card that is issued by a bank in order to purchase goods or services on credit.
Debit Card: A card your customer uses to access funds from their checking account. These funds are withdrawn immediately, either to purchase goods or services or can be transferred to another account.
EMV: This stands for Europay, MasterCard, Visa, but it now includes American Express, Discover, UnionPay, JCB. EMV cards have smart chips embedded in order to prevent fraud at point-of-sale (POS). These cards usually require PINs or signatures.
Interchange Fees: Fees charged for every debit or credit card transaction that you make. They are paid by your acquiring bank (also called acquirer or merchant bank) to your issuing bank (or card issuer). Interchange fees are determined by card associations and vary depending on the type of card used.
Issuing Bank/Card Issuer: A bank or financial institution that issues credit cards on behalf of your card association, such as Visa, Mastercard. They are licensed by respective card associations to do so and bear financial responsibility for all transactions made by the cardholder. In other words, they are the intermediary between your card association and the cardholder--your customer.
Merchant: This refers to you -- an individual or business owner that processes card payments through a merchant account (or an acquiring bank).
Merchant Account: This is opened by a business owner like you through a merchant bank (also called an acquiring bank or acquirer) in order to accept debit, credit card, or ACH transactions.
Point-of-Sale (POS): The location where customers pay for their goods and services, colloquially known as the cash or cash register. Point-of-sale can also refer to the hardware or software that you use to process transactions.
POS Terminal: An electronic handheld device used to process debit and credit card transactions for your business.
Payment Gateway: This is an essential technology for business owners to process debit and credit card transactions online. With a payment gateway, your customer’s payment information is securely sent, using encryption, to your acquiring bank for payment acceptance.
Payment Cards: Credit or debit cards used by your customers to make purchases.
Payment Card Industry (PCI) Compliance: Payment Card Industry (PCI) sets security standards that your business must adhere to in order to keep your consumers' personal information safe from fraud, hacking, or system vulnerabilities.
Payment Processor: A third-party company that processes debit or credit card transactions for your business. Payment processors usually offer a host of merchant solutions such as payment gateways, security features, customer support, and others.
The Payment Process
You don’t need to spend more time pouring over your statements, trying to decipher the myriad of fees, charges, and transactions incurred. Instead, Sekure’s payment processing experts can do a complete analysis of your statement and review it with you. Doing so will help you gain a better understanding of your setup, which will undoubtedly lead you to identify how to save on fees.
Contact Sekure to get additional assistance, such as upgraded equipment and top-of-the-line customer support to help your business succeed.