Glossary of term used in the Credit Card Processing Industry

Click on any of the items below to view the definition.

ACH - Automated Clearing House
A credit and debit processing organization that clears and settles electronic debit and credit transaction with other organizations or associations.
A merchant bank or financial institution that initiates and maintains credit card processing agreements with merchants so they can accept and process Visa and MasterCard transactions.
Address Verification Service (AVS)
AVS helps reduce fraud on card not present transactions. Merchants use AVS to verify a cardholder’s billing address on keyed “card not present” transactions (internet, mail or phone).
Annual Fee
Yearly account fee charged by some merchant service providers. (Also referred to as membership fee, risk assessment fee)
Application Fee
Onetime fee to cover cost of merchant account approval and paperwork processing.
The financial institution that issued the cardholder’s Visa/MasterCard or “issuer” provides an authorization code verifying the credit card is valid and credit is available for the sale amount. A temp hold on funds or “soft charge” will automatically fall off the cardholder’s card after 4-5 business days if the merchant does not capture or settle the authorized transaction.
Authorization Code
Authorization code provided by card issuer verifying card is valid and credit is available. See Authorization.
Automatic Bill Payment
An agreement between a merchant and a cardholder that allows recurring automatic charges for a service, subscription, or membership.
Original term used for those selling services in the payment-processing field.
Basis Points
1/100th of a percentage point.
Batch Processing
A merchant’s credit card processing terminal or software will batch out usually once a day and send all of the transaction data to the processor for settlement. This usually happens after the close of business each day.
Keyed credit or debit transactions that are processed from mail, phone, or Internet based sales.

Card Present
Swiping a credit card through a terminal or using a manual imprinter to capture an imprint and signature.
Cardholder Information Security Program (CISP)
A standard of rules that companies must follow in order to be compliant that store or process cardholder information and credit card data.
A reversal of a credit or debit transaction due to cardholder dispute.
Three digit security codes printed on the back of most Visa, MasterCard and Discover cards. On American Express it’s 4 digits and located on the front right top corner. By asking a customer for this code it usually means they have it on their person.
Discount Rate
A fee charged by the processor that is based on a percentage of the total transaction amount. Normally accompanied by a transaction fee. The average discount rate for a qualified swiped transaction is 1.75%-1.99%; keyed qualified transactions can range from 2.20%-2.50%.
EMV (Europay, MasterCard and Visa) EMV is a technical standard adopted by the payment card industry utilizing more secure, chip-based ‘smart cards’ to conduct the transmission of payment data between the card and the processing service.
Term used to identify the means a program can communicate to the server, typically referring to online applications.
Gateway fees
Monthly charge for online payment gateway and secure server access. Average gateway fees range from $15-$40 per month with a $0.10-$0.25 per transaction fee for Address Verification Service (AVS).
Gift and Loyalty Programs
Any process implemented by a company to track and promote sales from customers, typically automated via an electronic format.

The impression of the front of a credit card on a paper receipt made by a credit card imprinter. Used by a merchant that processes face-to-face transactions but does not have a terminal that prints receipts.

A manual imprinter allows a merchant to capture an imprint of the credit card and customer signature on a credit card receipt. This should be kept on file as proof of authorization in case of a dispute or chargeback.
Internet Merchant Account
An Internet merchant account allows the merchant to accept credit card payments from customers over the Internet.
Issuing Bank

Approves and Issues the credit or debit card to the cardholder.

A “keyed” transaction is one that is manually entered on a terminal keypad or credit card processing software like an online payment gateway.
Member Alert To Control High Risk Merchants (MATCH)
Electronic bulletin board used to track merchants whose accounts have been reported as “terminated” by other processors.
Merchant Bank

Financial institution (acquirer) that provides Visa/MasterCard processing services and support.

Mobile Payments
Payment transactions conducted while using a device that captures the card data electronically in the field, such as magnetic readers equipped to a mobile phone, are considered to be mobile payments.
Monthly Minimum
The discount rates & transaction fees on Visa/MasterCard transactions must add up to this amount each month or the processor will charge the merchant the difference. Monthly minimums range from $15-$25 a month.
Monthly Bank Statement
Monthly statement mailed or e-mail by the processor to the merchant that reflects the previous months transaction activity to include all rates, fees, and adjustments.
Mail Order / Telephone Orders (Any transaction where the card data is not captured directly from the magnetic stripe or chip.
Online Payment Gateway
A browser based application that allows a website or its shipping cart to authorize credit card transactions in a real time, secure environment. The online payment gateway connects the shopping cart to the processor.
Point of Sale (POS).  The equipment used to conduct transactions, ranging from stand-alone credit card terminals to highly technical systems such as in restaurants, car rental agencies, etc.
Programming Fee
Charged by a merchant services provider for programming your credit card terminal.
An additional percentage in addition to the normal discount rate a processor will hold back due to a merchant’s prior processing history or if their business is deemed of higher risk than normal.
Retrieval Request
When a cardholder disputes a credit card transaction with a merchant the issuing bank will initiate a retrieval request for transaction information. The merchant will normally have to provide proof of authorization, shipping and other information requested.
SSL Certificate
Certificate installed on a secure server that is used to identify the user (merchant) and encrypt the credit card data and other sensitive information.
Secure Sockets Layer (SSL)
Encrypts the flow of data between web server and browser to ensure all sensitive information is only accessible by the parties involved.
Smart Card
A credit card that contains an electronic data chip in addition to the magnetic stripe commonly found on credit cards.  This chip is used to transmit payment data, and is a more secure means than the previous technology.
Standard Industry Code (SIC)
The SIC code is a four digit, numeric identifier used to identify a business or organizations product and/or service.
Tablet Based Technology
Software that can be downloaded on an Android, iOS or Windows based tablet to conduct transactions.
Transaction Fee
A fee charged on a per transaction basis for using the network to authorize or decline a transaction.
Payment processors require all processing contracts to undergo an underwriting process, where the merchant information is confirmed for authenticity.
Term used to identify the step in the payment process where the card data is transmitted to the processor and the sale is either approved or declined.
Verification Number
This is another term commonly used by customer service representatives and is the same as authorization number.