Merchant Processing Terms and Definitions

Vision Payments is dedicated to making merchant processing as simple and hassle-free as possible for all of our clients. If you’re new to the payment processing game, you might wonder what exactly you’re getting into. To make things easier, we’ve created an A-Z beginner’s guide of merchant processing terms to keep you in the know:

Authorization: The approval given from a participating customer’s bank in order to approve a transaction. Upon authorization, a code is generated for that specific transaction for tracking purposes.

Chargeback: A chargeback occurs once a credit card holder disputes a credit card transaction with their credit card issuer. Once a dispute has been filed, the disputed amount is withdrawn from the merchant’s bank account, giving them ten days to fight the chargeback with proof of the transaction (signed receipt, proof of delivery, proof of purchase, etc.) Merchants might also be subject to a chargeback fee should the original dispute prove valid.

Credit Card (or Third Party) Processors: Credit card processors handle the details of processing credit card transactions. The transaction must pass from a merchant, to an issuing bank, to the merchant account provider in order for an individual transaction to be completed.

Issuer: An issuer is the institution that has issued a credit card to a business or an individual. They are one of the key players in completing a transaction as they help to approve the credit card payment to the merchant.

Merchant: This one is pretty self-explanatory. A merchant is the business selling goods or services bought by a consumer.

Payment Gateway: A gateway acts as a middleman between a merchant’s payment software or website and the payment processor itself. In some cases, the gateway acts as the payment processor.

PCI Compliance: PCI standards were created by major issuing banks in order to protect consumers from identity theft and ensure greater security during transactions. Processors now charge what is commonly known as a PCI compliance fee to insure against data breaches and hackings. Never sign up with a Merchant Processor that is not PCI compliant.

Point of Interaction (POI): The actual instance in which a credit card’s information is read by a merchant’s payment processing software. Most POIs fall under the category of integrated circuit (chip) and/or magnetic strip-based payment transactions.

The more you know before signing up for a merchant processing account, the better prepared you’ll be to choose the payment processor that works for you. If you have any questions about signing up for a merchant account or wish to sign up for one, feel free to contact VPS today at (877) 674-2286.