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* Glossary of Credit Card Processing Terms

* Lets look at various common credit card processing terms. As a merchant offering credit card payments, its imperative that you understand the lingo associated with the process.

Acquirer or Acquiring Bank - The institution or organization that processes credit cards payments for a merchant that accepts credit cards in return for goods and services.

Authentication - Identification of individuals and businesses through the use of digital certificates.

Authorization - The process, where it is checked if the amount of funds required for transaction, are available or not.

AVS - Address Verification System - The process where cardholders address is validated against the records of credit card issuer. The process helps in establishing the legitimacy of the cardholder and prevents fraud.

Account Number - A unique number assigned to the cardholder that serves as a unique identity.

Batch - A group of credit card transactions that have to be settled with the merchants acquiring financial institution.

Card Not Present - When the card is not present during the transaction like in case of mail order, it is termed as Card not present transaction.

Card Present Account - A transaction where the consumer and the card are required to be present at the same location.

Cardholder - The person who holds the credit card or a business enterprise who is eligible to make a payment by card.

Corporate Card - A Card held by a business unit and is used for covering work related expenses.

Chargeback - Charge back occurs when the credit card holder requests to debit the amount from Merchant account.This mainly occurs when the cardholder is not satisfied with the quality of product/service or on the occurrence of fraud.

Charge back Fees - Are the fees levied in the event of charge back.

Debit Card - Card, which withdraws payments directly from holders banking account to pay the merchant.

Discount Rate - Rates set by a Merchant Bank for offering services. This rate is arrived by taking into consideration the charges of number of factors.

Encryption - The process where data is scrambled and unscrambled when sent over the Internet.

Gateway - An application that accepts order transactions from merchants and sends them.

Interchange - A system managed by Master and Visa to bring global standard in exchanging data and money between banks.

Late Settlement - Fees paid by merchant for late processing of settlement

Third Party Processor - Companies that enter into third party agreements with Issuer and acquirer banks to process settlements.

Transaction - Refers to the purchase or transfer of money through credit card. Transactions are either offline or online in nature, Offline transactions are those that happen at physical establishments.

If you want explanation of any term or would like to submit us one, please email us