Credit Card Processing And Merchant Account Definitions
Address Verification Service (AVS): This is an electronic service that verifies the billing address of the credit card holder. The goal of the address verification service is to decrease fraud by ensuring that the person who is using the credit card is the actual credit card owner.
Application Fee: Many credit card processing companies charge merchants a fee just for applying for a merchant account. The application fee ranges from $99 to $399. We have no application fee.
Authorization: The process by which a credit card transaction is authorized.
Authorization Code: The code that authorizes the credit card transaction. The code is alphanumeric and is given to the merchant electronically or via the operator.
Bank Card: A credit card or debit card issued by a member of either MasterCard, VISA, American Express or Discover and bearing their respective trade names, trademarks, and/or trade symbols.
Batching: When using traditional credit card processing services, merchants have to perform batching. This is a procedure that requires the merchant to electronically add up the day's or month's transactions and submit them to their bank. If the merchant doesn't batch, he could lose the money he charged on that batch's credit cards. The hassle and constant worry of needing to batch transactions is a key reasons many small businesses choose not to accept credit cards. With the Charge America Service, batching is automatically performed every day.
Cancellation Fee: Traditional credit card processing services charge a fee for the 'privilege' to quit. Cancellation fees of $295 or higher are very common. We charge no cancellation fees. Merchants can quit anytime.
Cardholder: Any individual whose been approved by a bank and has received a credit card. The name of the authorized cardholder is embossed on the front of the credit card.
Card Truncation: The process by which a credit card processing machine hides all the credit card data and prints only the cardholder's name and the last four digits of the credit card on the credit card slip.
Code 10: A code that enables the Merchant to alert the credit card processing company that a customer may be using a stolen credit card. For instance, if the Merchant suspects fraudulent activity, he tells the customer to wait, dials a toll-free number, and says 'Code 10.' From that point on the operator will instruct the Merchant as to how he should proceed.
Commercial Card: A company credit card that was issued to an employee for commercial use.
Customer Bank: Also known as the Card Issuing Bank. This is the bank that issued the customer the credit card. Examples: Citibank, Wells Fargo, American Bank, etc.
CVV / CVC: Code Verification Value (Visa) and Card Validation Code (MasterCard). This is a three-digit code that appears on the signature strip (magnetic stripe) on the back of a credit card. It is used to verify the authenticity of the card when the cardholder is not physically present, thus decreasing fraud.
Debit Card: A bank-issued card that enables a consumer to pay for goods and services or obtain cash. All charges are debited from the consumer's checking / savings account.
Discount Rate: A fee charged by the bank for processing credit card transactions. The discount rate is the percentage that is taken out of every credit card transaction processed through our service.
Equipment Lease: With traditional credit card services, merchants need a swipe terminal before they can accept credit cards. Merchants have two options:
Option #1: They buy the terminal outright. The machine can cost from $400 to $1000 depending on how new it is and how many features it offers. This is a significant investment for small business owners.
Option #2: They lease the terminal. This option appears to be easy on cash flow but in reality it is a very costly choice simply because the huge leasing fees the merchant ends up paying are multiples of the cost of a terminal. Typically, the merchant is required to sign a four-year lease without an 'escape clause.' In other words, there is no way he can break the lease and save himself from the exorbitant costs. The only way out is to get another merchant to assume his credit obligations.
With the Charge America Service no equipment is necessary so the merchants pay no monthly leasing fees. Our service is accessible from any cell or touchtone phone.
Interchange System: The collective of the processing systems that facilitate the acceptance and payment of credit card transactions.
ISO An independent sales organization registered with Visa and MasterCard to market credit card merchant accounts. Typically, ISOs represent banks or third party processors.
ISR: Independent sales representative.
ISR Code: The independent sales representative number Charge America gives you in order to track your compensation.
Keyed-In Entry: See 'manual entry' below.
Magnetic Stripe: The signature strip on the back of a credit card that magnetically encodes the credit card holder's information. When a credit card is swiped through a terminal, the magnetic stripe is used to extract the cardholder's information.
Manual Entry: Also known as 'Card Absent.' The process whereby the cardholder's information is manually keyed-in through a phone pad or a computer keyboard, as opposed to being swiped though a terminal. All entries using the Charge America Service are entered manually.
Merchants: Any eligible person or business we market the Charge America Service to.
Merchant Agreement: An agreement entered into between the Merchant and a credit card processing company.
Merchant Bank: Also known as the Acquiring Bank. This is the bank where a merchant's credit card transactions are deposited. With Charge America the Merchant may have a business or personal account as their Merchant Bank.
Merchant Identification Card: A plastic card on which the merchant's identification number, name and location are embossed.
Merchant Identification Number: A number given to the merchant.
Monthly Minimum: With traditional merchant accounts, merchants have to pay minimum monthly fees whether they used the service or not. The monthly minimum ranges from $20 to $30.The following examples should help make the monthly minimum requirement clear:
Merchant A accepted no credit cards in June. Merchant A has to pay $25 to the bank regardless.
Merchant B accepted a total of $500 in credit card transactions in June. If we apply a 3% discount rate to the $500, we see that Merchant B should pay only $15 (3% x $500 = $15). Yet, because of the $25 minimum requirement, Merchant B still has to pay an extra $10 for a total of $25.
Merchant C accepted a total of $3000 in credit card transactions in July. If we apply a 3% discount rate to the $3000, we see that Merchant C needs to pay $90 (3% x $3000 = $90). In this case, the merchant does not get penalized because he exceeded the monthly minimum.
With the Charge America Service there is no monthly minimum.
MOTO: This acronym refers to credit card transactions that were accepted without the cardholder being present. MOTO: Mail Order / Telephone Order.
MSR A merchant service representative that contracts to an independent sales organization.
PIN: Personal Identification Number.
Program The Charge America Service.
Recurring Payment Authorization: A procedure whereby a credit card holder authorized the merchant to bill his credit card every month, every quarter, etc.
Rules: Also known as Operating Regulations. All bylaws, rules, operational regulations, procedures and guidelines promulgated by the Bank Card System, as they may from time to time be amended.
Sales Draft: The record of a sale, whereby a Merchant accepted a credit card payment. The sales draft can be a paper slip or have electronic form. With the Charge America Service, the merchant does not need to deposit sales drafts to his bank nor perform batching. The process is automatic. Within 24 – 72 hours, the money charged is transferred from the Customer's Bank to the Merchant's Bank.
Set Up Fee: A fee merchants pay to get a merchant account. The set up fee varies widely.
Statement Fee: Traditional credit card processing services charge a mandatory fee that 'entitles' the merchant to a monthly statement of their credit card activities. The statement fee is usually $10. Merchants typically receive their statement around the 10th of the next month. For example, they would get May's statement around the 10th of June. With our service, merchants have daily access to their activities via a secure Internet connection.
Store-Inspection Fee: Traditional credit card processing companies charge a fee for making sure the merchant is a legitimate business. With the Charge America Service no store inspection is needed nor is any related fee charged.
Swiped Card Entry: Also known as 'Card Present.' The process whereby the cardholder's information is captured electronically by swiping the card through the terminal.
Third-Party Processor: A company that handles credit card transactions and dispense funds. Instead of performing the credit-card related operations in house, most banks choose to outsource them to third-party processors.
Transaction: Each sale of merchandise or services by a Merchant for which a customer makes payment through use of a Bank Card.
Transaction Fee: A standard fee the bank charges for every credit card transaction that takes place. The transaction fee ranges from 20 cents to 50 cents.
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