Acquirer generally refers to the financial institution that has signed a contract with merchants for authorization, clearing, and settlement of credit card transactions.

Address Verification System (AVS)

Address Verification System is a procedure used to verify the accuracy of the billing address on the credit card. The process involves verifying whether or not the actual residence address matches with what is provided by the customer during registration.


An adjustment is a refund of a credit card purchase. There are various reasons for making an adjustment, such as returns, defective merchandise, overpayments, and other situations that cancel a transaction in its entirety or just a portion of it.


Authorization is the process where an acquirer verifies that your business is approved to accept credit cards (and by which issuer), and ensures funds are available.

Average Sale

The average sale is the amount of each credit card sale (or almost each one, there may be returns). It’s calculated by adding together all the sales and dividing by the number of transactions.

Base Discount Rate

The base discount rate, or simply base rate, is most commonly known as interchange-plus pricing (IPP) which has gained traction in the industry. Base rate is a type of blended pricing in which you pay both your processor’s markup and the card-accepting bank’s interchange fee for each transaction.

Back End Processor

A back-end processor is a merchant account provider that allows you to process credit cards in order for their customers to accept credit card payments. All transactions are, however, completed through the individual or business that owns the site and they keep the funds from each sale.

Blended Rate/Rates

This is a combination of flat-rate fees and percentage rates that are offered in different combinations by credit card processors. Often, flat rate fees are charged for keyed transactions while swiped transactions may have a percentage fee. This means there are at least two rates to consider when looking at pricing models.

Bank Card

This is the Visa or MasterCard branded credit card issued by a financial institution. Discover, JCB, and other major companies issue their cards directly rather than through banks.

Bank Card Association (B.C.A.)

The B.C.A is the governing body that sets the rules for transactions made with credit cards, debit cards, electronic benefits transfers (EBT), and other types of electronic funds transfer. They set standards for how information must be passed between merchants, banks, and networks to ensure network integrity and consumer trust

Bank Card Not Present (BCNP)

When a bank card transaction is not made when the cardholder and the credit card are not physically present, it’s known as a bank card non-present transaction. Only if payment information is collected in person at the time of purchase does a transaction qualify as “card present.”


Batches are made up of transactions that take place during a specific time interval. Batches can be created daily, weekly, or monthly, etc. depending on the credit card processing method used by an individual business. Most businesses choose to create one batch each day that contains every transaction that took place within that 24-hour period (also called posting). If you wait too long between batching, your transactions may be downgraded resulting in higher processing fees.

Card Holder

The cardholder is the person, or legal entity that owns/issued a particular credit or debit card.

Card Issuer

The card issuer is the bank that issues a particular credit or debit card. They are typically in charge of authorizing transactions and determining whether a purchase falls within its risk parameters.

Cash Discounting

Cash discounting is when a business offers customers a cash discount for paying in cash. For example, if you own a store that sells clothes and normally charges $100 for an item, but give customers who pay with cash $5 off, that would be a cash discounting payment option. Cash discounting is a great way to pass the cost of processing onto the consumer because customers who pay with a card are charged a “noncash adjustment fee”. If you want to learn more about how cash discounting works, and if it’s a good option for your business, you can schedule a free call with your lead consultant, Tom Holt on the “cash discounting” section of our website.


A chargeback occurs when a consumer requests to have a credit card purchase refunded because he or she didn’t receive the product, received an incorrect item, wants to cancel the transaction before it has shipped, or is dissatisfied with the purchase. When you process a credit card sale, your processor immediately converts the sale into “a debit” against your settlement

Data Security Standard (DSS)

The Payment Card Industry (PCI) Data Security Standard (DSS) includes 12 requirements that must be met to maintain the protection of customer account data. Failure to comply with the DSS may result in fines and/or forfeiting stored cardholder data.

Doing Business As (DBA)

An abbreviation for “doing business as”. It’s a legal term that refers to the registration of a fictitious name under which one or more people conduct business. The person or persons conducting business in this manner must file and obtain approval from government officials before using their name, or any variation thereof, as an assumed/fictitious name.

Dynamic Currency Conversion DCC

Dynamic Currency Conversion is a process by which the currency of a credit card transaction can be changed to a different currency after the original purchase was authorized. The destination country, discount rate, and type of conversion all affect the total cost of a DCC transaction.

DDA Account

A DDA account is a demand deposit account. This is the type of account that an acquiring bank uses when routing electronic transactions.

Debit Card

A debit card is a plastic card, similar to a credit card, that accesses the account of the person who owns it. Many banks allow their customers free checking accounts, but if you want extra services like overdraft protection or direct deposit of paychecks, they may charge fees. These are known as fee-based checking accounts. Debit cards result in smaller transaction fees for merchants than debit cards.

Deposit Correction Notice

A deposit correction notice is sent by the bank to the merchant advising that funds deposited into an account are either not authorized or do not represent the full settlement of a transaction.

Discount Rate

The merchant discount fee is a percentage of each transaction amount charged to a merchant by the acquirer.


E-commerce, or electronic commerce, is the buying and selling of products and services using computer networks such as the Internet.


EMV chip technology, also known as “chip-and-PIN” or “chip-and-signature”, is a standard for smart payment cards (also known as chip cards) used in offline, point of sales terminals. EMV was invented to increase security and decrease credit card fraud.

Front End Processor

A front-end processor is a company that works with merchants to accept credit card payments from customers or other businesses.

Interchange Rate

The interchange rate is the fee paid by a merchant’s acquirer (the bank that issues the credit card) to another bank for processing payments.


An ISO (Independent Sales Organization), also known as a Merchant Services Consultant, is an organization that works with merchants to accept credit card payments.

Issuing Bank

An issuing bank (or issuer) is the financial institution that issues a credit card to customers.

Merchant Account

A merchant account is a bank account that allows businesses to accept credit card payments from customers or other merchants.

Merchant Cash Advance (MCA)

A merchant cash advance is a short-term loan that provides small business owners with immediate access to working capital for day-to-day operations without the use of their credit cards.

Merchant Identification Number (MID)

A Merchant Identification Number (or MID), is a unique number that identifies the merchant to credit card processing networks.


A MO/TO (Mail Order/Telephone Order) refers to a transaction made by phone or mail.

Multi-Currency Processing

With multi-currency processing, merchants can accept transactions in multiple currencies.

Payment Card Industry (PCI)

The Payment Card Industry (PCI) is a security standard designed to ensure that all companies that process, store or transmit credit card information maintain a secure environment.

PCI Compliance

Achieving PCI Compliance means that a company has demonstrated to an external assessor that it is meeting specific security standards.

Point of Sale (POS)

A Point of Sale is a device, usually attached to a cash register or payment system, where customers make payments. Point of sale systems offers merchants more options than traditional terminals such as inventory tracking, running sales, and more detailed reporting.


A Processor is a company that has an agreement with another company to handle their credit card processing. The processor receives all the transaction information from the merchant’s terminal or online store and then sends that information through to the credit card companies.

Real-Time Processing

Real-Time Processing refers to the immediate availability of funds during a transaction. With real-time processing, merchants know their money is available immediately after completing a transaction.


A reserve is the minimum amount of money that a merchant must pay to their credit card processor. Each month, the reserves go towards any transactions that were declined, in which case the merchant must pay the processor for these transactions. Reserves are usually required for high-risk companies so that payment processing companies have a smaller chance of losing money on the client.  

Retrieval Request

A retrieval request is when a credit card processing company submits your sales data for the previous month to the major credit reporting agencies (CRAs). These requests happen at least once per month.

Secure Payment Gateway

The Secure Payment Gateway is an e-commerce service provided by major credit card processing companies. It requires customers to enter their billing information along with a valid Credit Card number.


Settlement happens once per month, and it is the process of transferring collected revenue from a credit card processing company to your merchant account.

Shopping Cart

A shopping cart is a website feature that allows customers to place items into a virtual basket.

SSL (Secure Socket Layer)

SSL is a standard security measure that allows for encrypted communication between two devices.


Surcharging is when a business charges customers extra fees to make up for the processing cost. Surcharging has a number of rules that must be followed to be compliant. Surcharging is illegal in some states.

Transaction Fee

A transaction fee is a small fee that is paid to the credit card processing company each time they process a payment.

Value Added Reseller (VAR)

These vendors add value to the services provided by the processor or acquirer by improving or modifying existing hardware or software.

Virtual Terminal

A virtual terminal is a software program that allows business owners to process credit card transactions through the internet.