Credit Card Processing Terms You Need To Know

If you own a business and accept cards as a form of payment it is important for you to have a basic understanding of credit card processing. Here is a look at some of the more common terms you will need to know.
 
Merchant Account: What business owners need to set up in order to process credit card payments. There are numerous account options available and you will want to shop around to find one to fit your business needs.
 
Application Fee: The fee that some processing companies charge to businesses when they open a merchant account.
 
Annual Fee: A fee that is often charged by payment processing companies on an annual basis in order to keep your merchant account active.
 
Transaction Fee: Fee charged by the processing company each time you process a customer’s card for payment.
 
Interchange Fee: The fee that the credit card companies charge for converting a card payment to cash and transferring the cash to your account.
 
Address Verification: Term related to account security. It is a process that verifies a card holder’s address before accepting payment. Address verification is most often used to help prevent fraud on both on line transactions and phone orders.
 
Card Verification Code: The card verification code is used to help with fraud prevention. Just like address verification it is most often used with on line transactions. The card verification code is a 3 or 4 digit number found on either the front of back of a credit card. When paying on line the card holder would need to enter this number in order to be able to use their credit card for payment.
 
Automated Bill Payment: An automated bill payment is an agreement between a business and a customer that allows the business to automatically bill the customer’s credit card for ongoing products, services or subscriptions. The customer’s credit card is automatically charged on the contracted renew date which can be weekly, monthly, yearly or whatever other time frame the business and the customer have agreed to.
 
Charge Back: A charge back is when a transaction is billed back to the business after payment has already been processed. A charge back is in favor of the customer and often occurs when a card holder is not satisfied with the product or service they received.
 
Mobile Credit card Processing: Mobile credit card processing is a way for businesses to accept credit card payments from customers when they are on the go. Mobile credit card processing uses a wireless processing machine to process credit cards and can be used just about anywhere,
 
Online Payment Gateway: An application that businesses use on their website that allows for the secure processing of credit cards. It is the means of connecting a customer’s shopping cart to the credit card processor.
 
Third Party Processor: A third party processor is a company that will process credit cards for you. They then most often keep a per transaction fee and deposit the rest of the sale into your account. PayPal is a popular third party processor.