A service that card networks offer to automatically update the customer card details a merchant has stored for repeat or recurring payments.
A bank or other financial institution that is a registered member of a card network and processes payments on behalf of a merchant. The acquirer will arrange the card transaction’s settlement and will typically credit the merchant’s nominated bank account with the funds in 3 or 4 days but can be as quick as 12 hours. The timeframe will be stipulated in the service agreement with the merchant.
The funds the acquirer receives — other than interchange and scheme fees — to provide card-acquiring services, plus a margin (or markup).
The margin on top of processing fees an acquirer charges to make a profit on transactions. Markups vary by acquirer and can be based on transaction volume, industry and other factors. It is this part of the Merchant Service Fee (MSC) that is negotiable and where we can secure your business savings.
Also known as a trace ID, an ARN is a unique number that is assigned to a card transaction when it is transferred from a merchant’s bank to a cardholder’s bank. The ARN is used to trace where the funds are in the transaction process and track the transaction’s progress.
A service that is part of the transaction authorisation process, enabling merchants to verify the cardholder’s billing address by checking it against the address details held by the issuing bank.
A software interface that specifies how payment systems transfer data and interact with other applications, such as online forms and checkout functions.
Also known as pass-through fees, paid to credit card networks to cover operating costs. The fees are based on factors such as card type, transaction amount and location.
The process of verifying that a cardholder’s account has sufficient funds to pay for a transaction. Once verified, an authorisation code is created and the funds are allocated to the transaction.
A group of card transaction data that is manually or automatically sent to the merchant’s account for the acquiring bank to process.
A pricing model for merchant acquirer services based on headline rates and additional fees, rather than IC+ pricing, IC++ pricing or fixed pricing.
An individual or business to whom a bank has issued a credit or debit account with a card that they are authorised to use for payments.
A method used to verify whether a customer is a legitimate cardholder for the credit or debit card used for a transaction. CVM aims to prevent fraudulent activity.
Services provided to process card transactions on behalf of a merchant resulting in a transfer of funds to the merchant. These include onboarding merchants; underwriting merchants’ credit risk; providing transaction authentication; authorisation and settlement; facilitating chargebacks and refunds; and monitoring merchants’ compliance with card network rules.
The financial institution that issues a credit or debit card to an individual or business. The card issuer retains authority over the card and liability for its use.
A company that operates a card payment system, including American Express, Mastercard and Visa.
See Primary Account Number (PAN).
A transaction in which a physical card is not presented to the merchant, for example when a transaction is conducted online, over the phone, or by post.
A payment system that enables a cardholder to use a debit or credit card to pay for goods and services.
A transaction in which a cardholder presents their physical credit or debit card to the merchant in person. The merchant uses a point of sale (POS) device to obtain the card details.
A transaction using a debit or credit card that transfers funds between the cardholder and merchant, including purchases, refunds and chargebacks.
A three- or four-digit numerical code that is calculated from the data encoded on a debit or credit card’s magnetic stripe and used to verify the cardholder’s identity in a card-not-present transaction.
The code is called a Card Verification Value (CVV) by Visa, Card Validation Code (CVC) by Mastercard and Card Identification Code (CID) by American Express.
A transaction in which a card issuer transfers the funds from a transaction back from the merchant to the cardholder in response to a dispute over the purchase raised by the cardholder. The merchant has a set length of time to dispute the chargeback and provide evidence to support its illegitimacy (known as chargeback representment).
A fee charged to the merchant by their acquiring bank for each chargeback transaction to cover the cost of processing the payment back to the cardholder. If a merchant incurs frequent chargebacks, card networks can charge additional penalties.
The period of time in which a card issuer can charge a transaction back to the merchant acquirer. This varies from 45 to 180 days depending on the transaction type.
The process for managing chargeback transactions based on a card scheme’s rules.
The transmission of card transaction data between the issuer and acquirer for approval or rejection and the settlement of funds.
‘Contactless’ payments use Near Field Communication (NFC) to complete a transaction. See Near Field Communication (NFC) for more detail.
A merchant account provider, also known as a third-party processor, that manages the details of credit card transactions between merchants, card networks and issuing banks.
A charge to deduct funds from an account.
A refusal to complete a transaction, typically by the card issuer, because of insufficient funds in the cardholder’s account or in the case of suspected fraud.
The distribution of fees and funds when a transaction is approved.
The interest rate that a card processor charges a merchant for processing credit card transactions.
A claim a cardholder makes to their card issuing bank challenging the validity of a card transaction, which could result in a chargeback.
A fixed or variable fee charged by some merchant service providers if a merchant terminates their contract before its expiry date.
A software and services platform that enables merchants to build a website to sell goods and services online. An e-commerce platform is a type of independent software vendor (ISV).
The transfer of funds between bank accounts electronically without using paper money.
A hardware and software system that enables merchants to take card-present transactions, including POS devices and inventory management.
A standard for credit and debit cards with embedded chips used in chip-and-pin systems to provide security for card-present transactions.
Also known as flat rate pricing, referring to a pricing model for the charges a merchant pays for card-acquiring services (known as the Merchant Service Charge or MSC). The various card acquiring fees are combined into a flat rate, but can be higher than other pricing options to ensure the service provider covers their costs. Examples of companies offering fixed rate pricing are Square and Paypal.
See fixed rate pricing.
The maximum amount a merchant can charge for a card transaction without obtaining authorisation online by the issuing bank.
A login ID used in a merchant account along with a merchant identification number (MID) and terminal identification number (TID) to identify the network the merchant uses to process transactions.
One-off charges to merchants including account opening costs, AVS fees, chargeback fees and fines for non-compliance with payment industry regulations.
A pricing model whereby the acquirer shows the Merchant Service Charge (MSC) broken down into two components: the interchange fees for each transaction plus a markup to cover processing costs.
A pricing model whereby the acquirer shows the Merchant Service Charge (MSC) broken down into three components: interchange fees, processing charges, and card network scheme fees.
A sales and support organisation that sells merchant accounts to merchants on behalf of acquirers along with value-added services.
A business that provides software, and sometimes hardware, to merchants to facilitate sales. This includes e-commerce platforms and providers of EPOS systems.
A real-time notification that enables online merchants to track purchases and other server communications automatically.
A system built into software or POS devices that connects payment processing with other business management software to help merchants increase their organisation and efficiency.
The transfer of card transaction information, authorisation, settlement and the pass-through of fees on the domestic and international systems operated by card networks.
A percentage fee that acquiring banks pay to card issuing banks to process each card transaction. Each card scheme publishes its interchange fees, which vary by card type, card authorisation method and business type.
Acquirers pass on interchange fees and they are typically the largest card processing cost for merchants.
A card issuer, or issuing bank, is licensed by a card payment system operator to issue individuals and businesses with credit and debit cards. The issuer administers the customer’s account and transfers funds to the acquirer for payment to the merchant. The issuer bills the cardholder for transactions they make using the card.
A process for complying with government, card network and bank requirements to verify the identity of a customer to prevent fraud, money laundering and terrorist financing.
A business that accepts payments for goods and services.
A bank account a merchant holds at an acquiring bank that allows them to accept payments for goods and services.
A service provider that helps a business set up its merchant account to accept payments. The term merchant account provider is often used interchangeably with merchant service provider, but merchant service providers offer additional services.
A contract between a merchant and an acquiring bank that sets out the services the acquirer will provide as well as the terms of their relationship, including their rights and responsibilities.
A legal entity that is authorised to accept card payments from a customer for goods and services. An MoR acts as a reseller on behalf of a merchant, paying the merchant for the products they sell. An MoR can manage transactions, refunds and disputes, provide customer support, and monitor activity to prevent the sale of illegal or counterfeit products. The MoR also holds the liability to the financial institution for each transaction.
A unique identification code given to a merchant by a payment processing provider to identify the business when a customer makes a card payment. The MID enables merchants to accept payments to their merchant account and verifies the legitimacy of the business to the card issuer.
A charge that merchants pay to acquiring banks for card-acquiring services, including interchange fees, scheme fees and acquirer net revenue.
A service company that provides merchants with payment processing, compliance and security services as well as technology integrations for customer management, inventory systems and payment data analytics along with other business services.
A portable device used either alone or with a smartphone or tablet and combined with software to function as a POS terminal, allowing a merchant to process card-present transactions anywhere.
A method of customer identity verification that requires them to provide multiple pieces of information to log in to an online account.
Final settlement of a series of transactions from customers of two or more banks.
A service that allows merchants that submit a batch of card transactions before a set time to receive the funds the next business day.
Technology that connects two NFC-enabled devices in close proximity to transmit payment information using two-way encryption. If a customer’s mobile device is used, the transaction must be authorised using a passcode, fingerprint or face ID. Once validated, the transaction data is sent to the merchant’s NFC terminal with a code instead of the customer’s card details.
A fee charged by an acquiring bank if a transaction is reversed because there are insufficient funds in a merchant account.
A sales approach that offers customers different ways to make payments, such as online, in person, or through a mobile app.
A simplified payment process that stores a customer’s card payment details so that they do not have to enter all of their information with subsequent purchases but simply enter their card security code for authorisation.
Manager of a card payment system that licences issuing banks to provide cards and acquiring banks to provide services to merchants. Operators manage the card scheme rules and can provide processing services to transactions between acquirers and issuers.
A business or individual who receives payment.
See third-party payment processors and payment facilitators.
The sector of the financial industry involved with processing, transmitting and storing payment cardholder information.
Mandatory payment card industry standards set out by the card associations’ PCI Security Standards Council to ensure the security of card transactions. Merchants and payment processors that fail to meet the standards can face penalties or suspension from card networks.
A payment service provider that offers card-acquiring services to one or more merchants, acting as intermediaries between merchants and acquiring banks. They can also provide card acceptance and value-added services to merchants. Payment facilitators must be registered by an acquirer with a card payment system operator. Examples include Square, Sumup and Zettle by Paypal.
Software and servers that enable a merchant to accept card payments. Payment gateways securely collect and transmit transaction information to the merchant acquirer and send responses from card issuers, such as approving or declining transactions.
Type of payment, such as credit card, debit card, electronic bank transfer or mobile app.
A company that connects a merchant bank account with a customer’s account to process payments. Processors validate transactions and must comply with standards set out by credit card associations.
A service provider that works with acquirers to enable merchants to accept electronic payments. In addition to processing payments, PSPs can offer PCI DSS compliance, fraud protection, foreign currency processing and language translation.
PDQ stands for Process Data Quickly. A PDQ machine is another name or a POS terminal or card machine.
A verification procedure to confirm a cardholder’s identity by comparing the personal identification number (PIN) they enter in a card-present transaction to the card account data.
The location and device where a merchant collects a customer’s card information to process a transaction.
A standard established by the Payment Card Industry Security Standards Council to encrypt a customer’s card data as soon as it is used at a POS terminal and decrypted only when it is processed by the payment processor to increase card security and reduce fraud.
A POS device a merchant uses to collect a customer’s card details in a card-present transaction. Also known as card machines and PDQ machines.
The account number displayed on the front of a payment card.
A debit card that only allows the cardholder to spend the amount of funds deposited in the account in advance. A prepaid account is not linked to a bank current account or credit card balance.
The process of matching incoming and outgoing transactions and funds between internal systems and bank account records.
An automated payment a merchant charges a customer’s card at regular intervals, such as for a monthly or annual subscription.
A transaction to return funds from a merchant back to a customer when they cancel a purchase.
An individual payment that is scheduled to be taken from the customer’s payment method on a specific date. The payment details can be adjusted before the scheduled date.
Fees that acquirers charge merchants on a regular basis for their merchant account, typically monthly. Scheduled fees include charges such as the Fixed Acquirer Network Fee (FANF) and acquirers’ markup costs for maintaining the account.
Fees that acquiring banks pay to the operators of card payment schemes for each transaction to use their services. Acquirers pass on scheme fees to merchants.
The policies and regulations that govern the operation of a card payment system, including how transactions are processed and the terms on which merchants, cardholders, card issuers, merchant acquirers and other entities participate.
The completion of a card transaction with the transfer of funds to the merchant, or the process of settling claims and liabilities between issuing banks and acquiring banks.
See Blended Pricing.
A two-factor authentication process required for online payments and banking transactions in the European Economic Area (EEA) under the Revised Payment Services Directive (PSD2) to increase security.
A fee that merchants pay to merchant services providers to rent POS terminal hardware.
A unique ID code for each POS terminal a merchant rents from a service provider.
Also known as a payment aggregator, a third-party processor such as Square or PayPal allows merchants to accept card payments without a merchant account. They provide payment processing services to merchants using their own merchant account.
A fee charged for processing payment card transactions. Fees are higher for credit cards and cards issued in a foreign country.
Services that acquiring banks, ISOs and payment facilitators offer to merchants beyond card-acquiring services or card acceptance products.
Cancellation of a transaction and the transfer of funds from a customer to a merchant.
A payment offering from a PayFac that other companies, such as software platforms, can use and rebrand as part of their own products and services.
Fixed, non-negotiable fees that card issuers and associations charge to use their card network.
Copyright © ALL RIGHTS RESERVED 2023
Merchant Savvy is a division of VUBO Ltd (Company Number 09017066).
Address: Spaces, 9 Greyfriars Rd, Reading, RG1 1NU.