The acquiring bank is a bank or financial institution authorized as a member of a card association (such as Visa or MasterCard) creating and maintaining the bank account of the merchant
A cash discount is a discount offered by a merchant to any customer who pays by cash or check instead of by credit card. The merchant will post a sign stating that a service fee is added to all posted prices, but that this fee will be waived for those who pay for cash or check.
Early Termination Fee is the fee or penalty incurred upon a merchant by the payment processor in case the merchant cancels the merchant account during the initial contract period. The initial contract period spans to 36 months.
EMV compliance is the process of adhering to the global technology standard for embedded chip cards owned by a business consortium including Europay, MasterCard and Visa (EMV).
Interchange fees are transaction fees that the merchant’s bank account must pay when a client makes a purchase from their shop using a credit / debit card. The fees are paid to the card issuing bank to cover processing, fraud and bad debt expenditures and the risk of payment approval.
Interchange-plus is a pricing model used by credit card processors to determine per-transaction cost paid by merchants. The model comprises of two parts — the card networks’ interchange fee PLUS the processing fee set up by the card processor.
Interchange-plus pricing is one of the fairest and most balanced pricing systems used in the payment processing sector is interchange-plus pricing, mainly owing to its high level of transparency.
The issuing bank is a financial institution that on behalf of the card networks (Visa, MasterCard) issues credit cards to customers. By contracting with the cardholders for the terms of repayment of transactions, the issuer acts as a middleman for the consumer and card network.
A payment gateway is an application for e-commerce that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar business. It is the virtual equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways encrypt sensitive data, such as credit card numbers, to guarantee secure passage of data between the client and the merchant.
Payment Service Provider (PSP) is a company that offers online shops services to accept electronic payments through a variety of payment methods including credit card payments, bank-based payments such as direct debit, bank transfer and online banking-based real-time bank transfer.
PCI compliance refers to adhering to the rules in the Payment Card Industry Data Security Standard (PCI DSS). Which is a set of requirements for ensuring that all businesses processing, storing, or transmitting credit card information maintain a secure environment.
The payment card industry (PCI) relates to automated teller machines (ATMs), point of sale (POS) terminals, credit, debit, prepaid and electronic money cards, and other associated industries.
Tiered Pricing is a pricing method for merchant accounts that group all interchange rates into only a few separate pricing tiers. Following are the tiers:
A qualified rate is the percentage rate that a merchant will be charged when accepting a regular consumer credit card and processing it using an authorized credit card processing solution identified as “standard” by their merchant account provider. Usually, this is the lowest price incurred by a merchant when accepting a credit card. The qualified rate is also the rate that is frequently cited when a merchant asks about pricing.
The mid-qualified rate also known as the partially qualified rate is the percentage rate charged by a merchant when accepting a card not qualifying for the lowest rate (qualified rate).
The non-qualified rate is usually the highest percentage rate a merchant will be charged when accepting a credit card. All transactions that are not qualified or mid-qualified fall to this rate. A non-qualified rate is significantly higher than a qualified rate and can cost the provider much more in interchange costs, so the merchant account providers do make a markup on these rates. A transaction may fall to non-qualified for reasons such as:
Debit rate is the percentage rate a merchant will be charged when accepting a debit card for processing the payment.
A merchant account is a kind of bank account that enables companies and individual merchants to accept debit or credit card payments. A merchant account is therefore an agreement between a retailer, a merchant bank and payment processor for credit card settlement and/or debit card transactions.
Payment processing is a term used to define the process and service that automates the shopper and merchant’s payment transactions. Usually, it is a third-party service that is actually a computer processing system that processes, verifies, and accepts or declines credit card transactions on behalf of the merchant through secure Internet connections.