Ten Payment Terms to Know

mobile payments imageAs an industry, we payment types are guilty of tossing around a lot of jargon. Here’s a short list of 10 credit card payment terms it can’t hurt to know:

An acquirer (or “acquiring bank”) solicits, underwrites, and owns the accounts merchants need to accept credit cards. They may provide the technology permitting businesses to process transactions, take on chargeback risk, and deposit funds into a merchant’s bank account.

Authorization is the process by which a transaction is approved or declined by the issuer. Merchants use it to ensure customers have sufficient funds available on their credit limits at the time the request is being made.

Card Verification Value (CVV)
This is the unique 3- or 4-digit number found on the back (sometimes the front) of a credit or debit card. A CVV is an extra layer of security to minimize unauthorized transactions.

A chargeback is a return of funds to a consumer from a disputed transaction. Reasons for a chargeback can include fraud, faulty goods or services, or technical errors (double charge).

Interchange is the fee an acquiring bank pays to the issuing bank. Each credit card has a different interchange rate set by the card brands.

The issuer (or “issuing bank”) provides the cardholder with their credit and a physical card. The issuer is responsible for approving and declining transactions, customer billing, and collections.

Merchant Account
This is a type of bank account allowing businesses to accept credit, debit, and mobile payments. It’s established through an agreement between a business owner and an acquirer for the settlement of payment card transactions.

Merchant Identification Number (MID)
The MID is a unique number issued by the acquiring bank to identify a specific merchant.

Payment Processor
Payment processors are organizations that partner with acquirers to open merchant accounts, handle support, manage payment processing, and build technology on behalf of acquirers.

PCI Compliance
PCI or, more precisely, the Payment Card Industry Data Security Standard (PCI DSS), is an information security standard for organizations that handle branded credit cards from the major card organizations. PCI standards are mandated by the card brands and administered by the Payment Card Industry Security Standards Council (PCI SSC). The standard was created to increase controls around cardholder data to reduce credit card fraud.

Originally published at https://www.globalpaymentsintegrated.com.

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