Credit Glossary of Terms

Gross Monthly Deposit
Funds paid to the merchant’s account based on the entire batch amount.  The discount rates and fees will be assed separately at the end of the month.

Net Daily Discount
Funds paid to the merchant’s account based on the batch amount less the discount rate and fees.

ACH (Automated Clearing House)
Facility operating under the rules and regulations of the Federal Reserve Bank that clears financial transactions between financial institutions

AVS (Address Verification Service)
Feature allowing entry of the street number and zip code of the cardholder’s billing address. AVS is a requirement for MOTO merchants and is requested when a card is manually entered in the POS device

BIN (Bank Identification Number)
First six-digits of a payment card that identifies the issuing bank

DDA (Demand Deposit Account)
Bank account used for clearing payment transactions

On File Fees
Monthly fee incurred to maintain merchant accounts on the authorization and settlement networks.

Batch Fee
Amount charged for each batch submitted for settlement.

Discount
The percentage of each retail sale a merchant must pay the acquirer for the ability to accept a credit or debit card at the point of sale. Its components include the cost to process and handle bank card sales transactions, interchange fees and the costs of providing deposit credit to the merchant.          
 
Basis Point
Equal to one, one-hundredth of a percent.  Discount rates are expressed in basis points

Transaction Fee
Per item fee charged each time a transaction settles

Authorization Fee
Per item fee charged each time a card is authorized through the POS equipment

Interchange   
Exchange of financial and non-financial information between acquiring and issuing institutions

Interchange Rate
Fee assessed to specific card types based on the characteristics of the transaction (i.e. swiped or keyed, settled within 24 hours, required data entered per industry, etc.)

Dues and Assessments
The amount collected per transaction by the associations, Visa, MasterCard and Discover         
 
Sale

1. Card Present

            A merchant, market or sale environment where a transaction can be completed only if both a valid card and cardholder are present at the time of the sale

1. Card-Not-Present

An environment where transactions occur without the cardholder present; generally used when referring to mail order/telephone order (MOTO) merchants as well as the Internet

Return
A credit to the cardholder for returned merchandise

Void
The process of reversing a transaction, either immediately following a sale, or during the merchant end-of-day balancing and reconciliation; the transaction is still logged but is not cleared or settled

Swiped
Payment is made by swiping the credit card through the point-of-sale (POS) or electronic data capture (EDC) terminal, which reads the account number, expiration date and other identifying information encoded on the magnetic stripe on the back of the card

Keyed
A transaction manually keyed into the POS terminal and authorized in the same manner as a swiped transaction

Forced
A transaction has been swiped or keyed requiring verbal authorization at which time the authorization is manually keyed into the POS terminal

Electronic Benefit Transfer Card (EBT)
The delivery of annuity and public assistance benefits by the application of plastic card technology versus paper coupons and checks

Fleet Card
Designed especially for shipping companies, the Fleet Card is a payment system for fuel and maintenance expenses      
 
Stored Value Card
A prepaid card is loaded with an amount usable for later purchases, usually at the sponsoring retailer or group such as a mall

Rewards Cards
A credit card affiliated with an organization, retail store, charity program, airline mileage program or cash back program. Visa Traditional Rewards, Visa Signature Rewards, and MasterCard World Card, MasterCard Elite programs were all created to compete with Discover and American Express who began the rewards programs

Commercial Cards
Payment cards issued to businesses to cover expenses such as travel, entertainment and purchase of business related items.  There are three types of commercial cards: business, corporate, and purchasing cards

Travel and Entertainment Cards (T&E)
Plastic cards (credit or debit) used with airlines, hotels, restaurants, car rentals or particular retail outlets.  Popular programs include: American Express, Discover, and JCB.

Debit Card
A bank card that enables the user to purchase goods and services and obtain cash disbursements against his or her asset account (generally a checking account).   Also called an online debit card or deposit access card.  Online debit cards or PIN-based debit cards ride over the ATM network; they require a PIN and the ability to connect to the live balance of the account holder.

Check Card
A plastic card linked to a checking or savings account. Offline or signature based debit cards work in the merchant environment the same as a credit card transaction and are not required to be “online” to the account balance.

Bank Card
A financial transaction card issued by a financial institution

Credit Card
Plastic cards allow payments to be offset against a special-purpose account associated with a revolving line of credit requiring some form of installment-based payments

Open Looped
Value Added Gift or Prepaid card which allows consumers to choose from multiple retail locations.

Closed Looped
Value Added Gift or Prepaid card typically designed to be used at one location or specific business chain.

Does and Don’ts

Do ask for a list of all charges a merchant service provider can asses.  Review the list above to make sure they have included all charges. 

Do require all boxes where a cost/fee can go on an application be filled in with and fee amount or “0” so they cannot be filled in after they leave.

Do require the application be completed before signing the agreement

Do take into consideration how you will be processing credit cards. For example, keyed in transactions will never process at a “Qualified Rate.” 

Do Not sign an agreement which is not fully completed

Do Not sign a lease for equipment, in most cases a good merchant service provider will provide you with equipment to process with, assessing a small deposit or rental fee may be need.  As always, do your homework, if it sounds too good to be true, it probably is.

Do Not take a sales agents word, get it in writing.