MERCHANT ACCOUNT GLOSSARY OF TERMS

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Mail Order/Telephone Order (MO/TO) - These type of transactions are done through the mail or over the phone they are not processed using the internet. Typically businesses like pyschic lines or 1-900 numbers use the telephone credit card processing method.

Merchant Account Provider - A Merchant Account Provider is a third party company that has one or a few relationships with a number of banks that operate merchant accounts. The providers either have their own processing system or they are resellers of third parties processing systems.

Merchant - Any business, person, or entity that accepts credit cards.

Merchant Bank - This is the bank that supplies the merchant the merchant account and provides the service for merchants to accept credit card payments.

Mobile Commerce (mCommerce) - This is wireless credit card processing and has been around for a few years now and is popular with businesses such as pizza delivery as the pizza driver can just bring the wireless terminal to the door to process credit card transactions. They are generally more expensive and start at $700 and up but do provide the flexibility that wired terminals cannot. This is one of the newest ways to process credit cards and is becoming increasingly popular.

Monthly Minimum - The monthly minimum is the minumum charge a merchant must pay in discount rate fees even if they process a small number of credit cards per month. If the merchant only processes $13.00 per month in transactions and the monthly minimum is $20.00 the merchant is charged the $7.00 difference. If the monthly minimum is reached then no fee will be charged.

Offline Debit Card -An Offline Debit Card looks alot like a credit card and appears like a credit card transaction. What happens when the merchant's terminal reads the card is immediately identified as a debit card and not a credit card. Instead of debiting the funds right away it processes the transaction in 2 - 3 days.

Online Debit Card - The Online Debit Card is an enhanced ATM card and function the exact same as they would in an ATM transaction.

Payment Processor - This is the company that processes the actual payment of the transaction. This is not to be confused with the merchant account bank which recieves the payment. They only recieve not process the payments.

Personal identification number (PIN) - This is a secret code usually 4 - 6 digits that provides additional security to the card holder. This authenticates the transaction by positively identifying the cardholder.

Point of Sale Terminal (POS) - This is also commonly known as the swipe machine. When you are standing at the checkout and produce your credit or debit card you are asked to swipe your card. This is the machine that is known as the Point Of Sale terminal commonly known as the POS terminal.

Real-Time Processing - This is when the credit card transaction is completed online and the AVS system is verified by matching the billing address with the reciepients address. This is a very quick type of transaction processing.

Secure Electronic Transactions (SET) - This is a secure protocol designed to process payments over the internet and was developed by MASTERCARD and VISA. It denies merchants access to the actual credit card information and securing the information between the shopper and the bank.

Secure Socket Layer (SSL) - This is an extra secure protocol that makes credit card transactions over the internet extremly secure during the ordering process.

Settlement - This is a transaction in which funds are transferred from VISA and Mastercard via the cardholders account and the merchant account bank. The funds are withdrawn from the cardholder's account and are sent to the merchant account.

In the event the transaction is a refund the opposite actions listed above take place. The banks reverse the transfer back to the business bank account. Please keep in mind that you must do a batch settlement to close your batch everyday or you will end up paying a higher discount fee on those funds.

Terminated Merchant File (TMF) - Like having a credit history you also keep a merchant account history when you have a merchant account. If you default on the account it will impact your future abilities of applying elsewhere. It is recommended you resolve all issues with your current processor before going to a different credit card processor. Having a negative file could impact you for several years.

Travel and Entertainment - The American Express Diner Cards are paid off every month and don't revolve a balance. There are a few Discover cards that are also set up in this fashion but aren't technically a Travel and Entertainment type.

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Where to go next? Check out our scenario page to see what type of scenario your business falls in and find out how you can save money with one of our select merchant account providers.