50 Need-to-Know Business Terms for a Better Understanding of Adult Merchant Accounts

Business can sometimes get complicated, especially if you're new to the game. Here are 50 business and banking terms that adult merchants need to know for a better grasp of the industry.

1. ACH (Automated Clearing House)
   A clearing and settlement operation overseeing the electronic exchange of transactions.
2. Account Number
   A unique series of numbers to identify a cardholder / account holder.
3. Acquirer
   An organization licensed as a member of Visa / MasterCard as an affiliated bank or bank/processor alliance that is in the business of processing credit card transactions for businesses (acceptors) and is always acquiring new merchants.
4. Acquiring Bank – see acquirer
5. Address Verification Software (AVS)
   A product designed to combat fraud by checking if the billing address provided by the cardholder matches the credit card address information.
6. Adjustment -A change in the transaction, initiated by the acquirer to correct an error in the transaction.
7. Approval – A transaction that is approved by the cardholder's bank after an authorization is sent by the merchant. (See also: Decline)
8. Authentication – Validation of data
9. Authorization -Verification of available funds/credit to a bank card
10. Bank card (also Bankcard) – A credit card issued by a Visa or MasterCard affiliate institution
11. Bank Identification Number (BIN)
    BIN is the acronym for bank identification number. A BIN check can be used as an effective form of fraud protection.
12. Batch – A collection of transactions
13. Batch Processing
    The process of handling transactions by set. While this may vary for different processor, it is usually a day's worth of sales, credits, voids and other transactions.
14. Capture – The submission of electronic date for financial settlement (See also: Settlement)
15. Cardholder
    The person / business to whom a card has been issued by a bank.
16. Card Not Present  Transaction -A transaction where the credit card is not physically present during the time of the sale.
17. Credit Card Verification Code – Used as a security net against fraud for card-not-present transactions, it is a 3 to 4 digit code printed on the card that verifies that the person using the card has physical possession of it.
18. Credit Card Association – A group that administers credit and credit cards such as Visa, MasterCard, American Express and Discover
19. Chargeback
    A transaction reversal. A chargeback is the process by which a consumer disputes a charge on his credit card statement, which usually results in the bank reversing or “charging back” the disputed amount to the merchant and then crediting the consumer. May be caused by a number of reasons such as double-charging, credit card expiration, bank error or customer dispute.
20. Chargeback Period -A set number of days for the issuer to initiate a chargeback
21. Clearing – The movement of checks and funds between the depository institution and the bank where the check is written which results in debits and credits between the involved accounts.
22. Close Batch -The process of settling the batch
23. Credit Card - A bank-issued card that entitles the holder to a line of credit for purchase of goods or services. The cardholder then pays the issuing bank in full or on installment basis upon billing.
24. Credit Limit -The maximum amount the card issuer sets for the credit card account
25. Decline – A transaction that has not been allowed by the card issuing bank after an authorization is sent by the merchant (See also: Approval)
26. EDC  - Electronic Draft Capture. The process of electronic transfer of data (involves authorizing, capturing and settling) to the card association system.
27. EFT (Electronic Funds Transfer) - Electronic transfer of funds from a terminal, a computer or via the phone.
28. Encryption - The scrambling of a file to make it unreadable except by the intended recipient who possesses the means of unscrambling it.
29. Fraud Scrubbing  - Methods by which a processor evaluates transactions to determine its legitimacy
30. High-Risk Account
    VISA considers any website selling downloadable, digital merchandise and/or services or those falling within Merchant Category Code 5967, to fall within the “high risk” category. Gambing, gaming, pharmaceuticals and adult sites fall under the high risk category, along with several other industries.
31. Internet Payment Service Provider (IPSP)
    An Internet Payment Service Provider (IPSP) is an online entity that enters into a contract with an Acquirer (Merchant Bank) to shoulder financial responsibility and liability for “high risk” merchant accounts, by which registered sponsored
32. merchants (website owners) are allowed to process and settle Internet transactions.Interchange – The flow of data between the issuing bank and the acquiring bank necessary for transaction settlement (may include transactions, retrieval requests and chargebacks)
33. Interchange fee – Amount charged by card associations (Visa and MasterCard) for transactions. (See also: Interchange)
34. Issuing Bank - The bank that has issued a credit card to an individual or a business.
35. Issuing Financial Institution – see issuing bank
36. Merchant - An entity (retailer, person or website) which is involved in commerce (the sale of goods or services) and is able to accept payments.
37. Merchant Account -An account that is established by a merchant to receive payments via credit cards.
38. Merchant Account Number -A unique set of numbers assigned by the merchant account provider to the merchant's bank account.
39. Merchant Account Provider – A bank that issues a merchant account to facilitate authorization and settling of credit card payments for a merchant
40. Online Processing – Transactions done over the Internet which are settled via a payment gateway.
41. Order - Goods or services purchased by a buyer/client from the merchant.
42. Payment Gateway
    A payment gateway allows credit card information to be collected and passed over the Internet. A payment gateway can be thought of as a digital equivalent to a credit card processing terminal.
43. Real-Time Processing – When a website is equipped with a secure payment gateway it is able to complete the transaction process at the exact time of the item purchase. Authorizations, verifications and other requests are done the moment the credit card information is collected and processed.
44. Recurring Payments – Payments that occur repeatedly at set intervals
45. Rolling Reserve Fund – A percentage of a merchant's gross volume transaction held by the payment processing service to provide security for the acquirer and the payment processor again potential credit risk
46. Secure Socket Layer (SSL) - A method of encryption and data protection used by online merchant websites.
47. Settlement – The process of closing a batch and sending it over the network for processing of payments and debits to the accounts involved.
48. Transaction – The movement of funds between the cardholders account and the merchant account as payment for goods or services purchased (Sale). Transactions can also pertain to actions involving non-sales (such as voids and credits)
49. Terminated Merchant File
    A negative database kept by credit card associations. Once placed in this list, businesses and its principals will never be able to escape and will be permanently barred from ever accepting credit card transactions again.
50. Void – Removing a sale transaction from a batch before its is sent over for settlement. A void occurs if it is done before a batch is closed. If done otherwise (after a settlement), it becomes a chargeback (please see definition)

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