Payment Processing Definitions

A financial institution that processes credit card and debit card transactions. An acquirer is sometimes referred to as a "payment processor" even though they are different.

A system that provides bank to bank money transfers. It is typically used for direct deposits and monthly debits. Bank to bank transfers are called ACH (Automated Clearing House) in the United States and EFT (Electronic Funds Transfer) in Canada.

The approval given from the customer's bank that a transaction has been approved for a specific amount. The credit card is not charged in an authorization, it just verifies that amount is available on the credit card.

Visa and MasterCard started requiring merchants who manually key in credit card transactions to have a special fraud prevention system. This system checks to see that the billing address given by the cardholder matches the credit card.

A debit card or credit card that is issued by a bank or other financial institution.

A set of transaction information that is sent to and "Acquirer", typically sent at the end of a work day.

The actual charge of an "Authorization". See "Authorization" definition above.

A person that holds a credit card.

A customer who does not receive his goods or services or did not make the order can ask his bank to chargeback the merchant for the charge on the credit card. The Issuing Bank sends the chargeback request to the merchant bank, which forwards it to the merchant asking to validate the charge.

The process of exchanging financial transaction information between an acquirer and an issuer to facilitate the posting of a cardholder's account and reconciliation of a customer's settlement position.

A credit card issued jointly by a member bank and a merchant, bearing the "brand" of both.

A bank card issued to companies for use by company employees. The liability for abuse of the card typically rests with the company and not with the employee.

The process by which the transaction currency is converted into a different currency. Payment processors can do this currency in real-time (dynamic currency conversion - DCC) allowing a merchant to charge a cardholder in any currency but the resulting funds get deposited in the merchant's home currency.

A type of card that deducts funds directly from the cardholder's bank account. This is in comparison to a credit card which is more of a loan rather than a debit.

A system in which the transaction data is captured at the merchant location for processing.

A system that provides bank to bank money transfers. It is typically used for direct deposits and monthly debits. Bank to bank transfers are called ACH (Automated Clearing House) in the United States and EFT (Electronic Funds Transfer) in Canada.

A financial institution such as a bank or credit union that issues credit cards, debit cards, or pre-paid cards to cardholders.

The bank that maintains the consumer's credit card account and must pay out to the merchant's account in a credit card purchase.

A business that accepts credit card payments. It can be any legal structure such as a partnership, corporation, or sole proprietorship.

The minimum amount that a processor charges you, regardless of how much you process payments.

A set amount of credit card sales from a merchant's credit card transactions that are temporarily held by the payment processor to cover possible disputed charges, chargeback fees, and other expenses.

A retrieval request is getting access to a credit card transaction by a cardholder that cannot remember a credit card transaction or the bank wants to retrieve transaction information.

A system for encrypting data sent over the Internet, including e-commerce transactions and passwords. Websites use SSL to secure their eCommerce transactions.

Settlement is the process where credit card payments made to a merchant are sent to the merchant's bank account. Merchant and cardholder banks exchange transaction and financial information to facilitate this process.