Glossary

 

Batch - A collection of transactions that have been made in a single day. Most terminals and real-time processors will collect all of the transactions and then do a batch at the end of day, instead of batching them throughout the day. With real-time processing, processors such as Echo do the batching automatically for you.


Capture - The submission of credit card transaction to be processed by the merchant provider or merchant account holder. This is used to check the funds availability on the credit card submitted.


Charge Back - This is a charge declined from a customer or credit card holder. Their credit card issuer will handle the matter and you must show some proof that the services and/or products was delivered in the manner you both agreed upon. If the cardholder wins, then the money is taken out of your account. It is usually best to let the customer win, and not waste your time and money fighting it out, but it all depends.


Credit Card Fee (Discount Rate) - This is the fee that is charged by Visa, MasterCard, Discover or American Express. This rate can range from about 1.99% to 2.49%. The national average is around 2.35%. American Express is the only one with their separate rate which is usually around 3%. The credit card fee is always taken off the top along with the transaction fees before any money is deposited into your account.


Ecommerce - This pertains to doing business online and making transactions, sales, refunds and selling online. This pertains to any online sales, and the way businesses communicate and grow.


Holdback - A portion of the merchant account holders revenue or funds held by the merchant account provider for future unplanned bills like charge backs, late charges and other expenses. The majority of providers do not do this.


Issuing Bank - This is the bank that issues the customer the credit card and funds your account when you make a charge to one of their accounts. They will then bill their customers for the debit on their card.


Mail/Telephone/Internet Discount Rate - This is the discount percent fee for Internet/mail/telephone related business. This fee is the highest fee on the market due to the increased risk of fraudulent order submissions. It is much easier for a scamster to send a credit card number over the Internet than it is in person at a retail store. This is the same thing as Credit Card Fee (Discount Rate).


Merchant Provider (Processor) - This is a company that will offer you a merchant account. They will usually have a relationship with their sponsored bank to give you a merchant account. If they do not own their own processing system, they usually resell another company's system which will do the processing, while the bank does the charging and depositing.


Merchant Account - A merchant account is a relationship and a trust you have with a bank that has agreed to allow you to charge people's credit card, while they honor it and deposit the funds into your account. The bank is responsible for debiting the funds from the customer and depositing it into your account. There is usually a processor that is involved that processes the credit cards for the bank and lets them known the funds are available. When you are given a merchant account from a bank, they are relying on you to uphold your promises to your customers by delivering the products and/or services to them in a timely manner.


Merchant Bank - A bank that works with businesses to give them the ability to offer merchant accounts. They take care of charging the customer and funding the merchant account holder.


Monthly Minimum - The majority of Merchant Providers have a monthly minimum. This is a fee that is imposed if your credit card charges (Discount Rate) doesn't add up to their monthly minimum. For example, your monthly minimum is $25 a month. If you only sold $100 worth or products for that particular month, then it would cost you say 2.35% for charging the card, 30 cent transaction which equals to $2.65. Now, that is $25 - $2.65 = $22.35, so you would be charged $22.35 for that particular month.


Payment Processor - Most of the smaller merchant providers resell some other Gateway Processor, which is the company that does all the charging on your customer's accounts. The larger providers such as Echo, have their own gateway processing system.


Point of Sale Terminal (POS) - Is a little device that allows you to slide the credit card through to make a charge. This is what most retail stores have. It is fast, easy and accurate to make a charge on a customer's credit card within seconds. It is also known as a terminal machine.


Real-Time Processing - This is having the customer's credit card information validated and processed for you automatically. The credit card will be charged and the money will be deposited into your bank account all automatically. This is perfect for a business offering memberships, selling software, Services, products, etc.


Secure Socket Layer (SSL) - SSL is a secure web protocol that uses 128 bit or higher encryption technology to keep your customer's information completely safe through the entire ordering process.


Swipe Discount Rate - This is the discount rate for retail stores that use a POS terminal. This is for merchants that swipe the credit card, and run the credit card through the machine. This fee usually is about 1.65% and is lower than the Internet rates due to the decreased risk in fraudulent orders being placed. The likelihood of a scamster using a credit card in a retail store than online is much less because of the difficulty.


Transaction Fee - This is the fee that your processor, or your merchant provider charges for the transaction. This fee ranges from 20 cents to about 50 cents. This fee covers the costs of the computers and network required to accomplish the task.

 

 
 
 

 





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