Merchant Service Terminology
Merchant Service Terminology
December 31st, 2008 · No Comments
Credit Card Processing Terms
Before you begin talking with credit card servicescompanies, you should understand certain industry terms so you can make an informed decision and ask the right questions. Some of the commonly used credit card processing terms are below to help you while reading this guide and during your credit card processing provider search.
- Cardholder: The cardholder is your customer and the person who is using the credit card.
- Chargebacks: Term used to describe when a customer asks for his money back from a service or product provider.
- Chargeback fees: Fees charged by the credit card processor to cover the costs associated with processing a chargeback.
- Contingent liability: When customer satisfaction dictates the business’ ability to perform a certain set of actions.
- Credit card processing specialist or processing company: The company you have retained to handle your merchant services needs.
- Issuing bank: The bank that has issued the credit card to the customer.
- Magnetic and non-magnetic transactions: Occurs when a card is swiped through
a point-of-sale (POS) machine. Non-magnetic are transactions that occur over the Internet or on the phone; cards are not present. Rates are higher for non-magnetic transactions because the risk of fraud is much greater. - Merchant account holder: The person or business who signed up for the merchant account and the one directly responsible for it. This would be you.
- Net settlement: What is transferred in to your bank account once a sale has been completely. The money you receive is minus whatever fees you pay per transaction to the merchant account company.
- Pass-through fee: Fee you are charged when a transaction you process failed to meet a certain set of requirements, such as neglecting to verify certain information. Choose a company that charges minimally for these types of fees.
- Reserves: What is required for accounts that are high-risk in nature. A certain percentage of the funds for each transaction are withheld for a pre-determined amount of time. Usually businesses with poor credit history are charged a reserve.
Leave a Comment
You must be logged in to post a comment.
