Credit Card Processing Small Business Glossary

Acquirer or Acquiring Bank: Provides the merchant with the ability to do credit card transactions. It communicates with the customer’s credit card providing bank to authorize payment and transfer money (see Merchant Bank).

Address Verification Service (AVS): Fraud prevention service that verifies the customers billing address during keyed in transactions.

Authorization: Occurs when the merchant account communicates with the credit card customer’s bank to ensure that the customer has enough credit to make the purchase.

Batch: Is the process in which a batch of authorized credit card transactions are processed in one group, usually at the end of the business day.

Card network: Is the intermediary between the merchant account and the customer’s credit card issuing bank.

Cardholder: Is the person that has been issued credit by a credit card issuing bank, which allows them to use this credit for purchases.

CVV2 (Cardholder Verification Value) or CVV2 (Card Verification Value): Are 3 or 4 digit numbers printed on the credit card for added security.

Chargeback: Is a credit transaction that is billed back to the merchant on the premise that the customer did not receive his good or service, or if the customer believes that he did not place the order.

Discount Rate: A fee paid to the merchant account provider by the merchant during a credit card transaction for handling the transaction.

Gateway: Connects the shopping card to the credit card processor during an online credit card transaction (see Payment gateway).

Imprinter: Is a manual device used in physical transactions to create a physical imprint of the credit card on a transaction slip.

Interchange Fee: The fee the merchant account provider pays the credit card issuer during a transaction.

Issuing Bank: Issues credit card to the cardholder, usually a bank or financial institution.

Keyed: Occurs when the credit card information needs to be typed or “keyed” in rather than “swiped”, normally used when card is not physically present.

Merchant account: is an account provided by the acquiring bank to the merchant so that the merchant can accept payment via credit card.

Merchant Bank: (See Acquiring Bank).

Point Of Sale (POS) terminal: A physical device used to read credit card information in retail businesses.

Payment gateway: Permits merchants to accept credit card online.

Shopping Cart: Used during online shopping to allow the customer to put a number of purchases together in one group so that that group can be paid for with one credit card payment.

Swipe: The act of sliding a card through a Point of Service machine for processing. Used instead of “keying in” the credit card information.

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