Browse 26 essential credit card processing terms and definitions used by professionals in Arlington.
Term Index
Open any term below for a dedicated definition page.
Acquirer is a financial institution or bank that processes credit or debit card payments on behalf of a merchant. Acquirers enable businesses to accept card payments by establishing merchant accounts, transmitting transaction data to card networks, And depositing approved funds into the merchant’s bank account. They also handle settlement, chargebacks, And compliance with payment network rules.
Address Verification Service is a fraud-prevention tool used by payment processors and merchants to confirm that the billing address provided by a cardholder matches the address on file with the card issuer. This service compares numeric portions of the address, such as the street number and ZIP code, to reduce unauthorized transactions, particularly in card-not-present environments like online or phone orders.
Batch Processing is a method where credit card transactions are grouped and submitted together for settlement at the end of a business day or shift, rather than individually in real time. This process reduces network traffic, lowers processing costs.
Card Not Present refers to any credit or debit card transaction where the physical card is not presented to the merchant at the point of sale. These transactions occur primarily online, over the phone, via mail order, Or through recurring billing, requiring alternative methods for verifying the cardholder’s identity and authorizing the payment.
Card Present is a transaction type in which the payment card is physically presented and read by a terminal at the point of sale. Card Present transactions occur in face-to-face settings such as retail stores, restaurants, Or service locations where the cardholder swipes, inserts, Or taps their card using EMV chip, magnetic stripe, Or contactless technology.
Cardholder is an individual or entity authorized to use a payment card, such as a credit or debit card, issued by a financial institution. Cardholders enter into an agreement with the issuing bank, agreeing to terms like repayment of charges, fees, And interest. They're responsible for safeguarding card details and reporting loss or theft promptly to prevent fraudulent transactions.
Chargeback is a forced refund mechanism that returns funds to a cardholder after they dispute a transaction with their issuing bank. Chargebacks protect consumers from unauthorized charges, merchant errors, Or undelivered goods and services, shifting the burden of proof to the merchant to validate the transaction’s legitimacy.
Credit Card Skimming is a fraudulent practice where criminals use hidden devices to steal credit or debit card information during legitimate transactions. Skimming devices are often placed on payment terminals, ATMs, Or gas pumps to capture card data, including the magnetic stripe or chip details, without the cardholder’s knowledge. This stolen data is then used to create counterfeit cards or make unauthorized purchases.
CVV is a three- or four-digit security code printed on credit and debit cards to verify that the cardholder physically possesses the card during a transaction. CVV stands for Card Verification Value and is used primarily for card-not-present transactions to reduce fraud by ensuring the code is entered correctly.
Discount Rate is the percentage fee a merchant pays to a payment processor for each credit or debit card transaction, covering interchange fees, assessment fees, And the processor’s markup. It's typically expressed as a percentage of the transaction amount plus a fixed per-transaction fee, combining costs from card networks, issuing banks.
EMV Chip is a small microprocessor embedded in payment cards that generates a unique transaction code for each purchase, replacing the static magnetic stripe data. EMV stands for Europay, Mastercard, And Visa, the three companies that developed the global standard to enhance security and reduce fraud in card-present transactions.
Fraud Prevention is a set of strategies, technologies, And practices designed to detect, deter, And mitigate unauthorized or deceptive transactions in payment processing. It encompasses tools like encryption, tokenization, real-time monitoring, And authentication protocols to protect merchants, financial institutions, And consumers from financial losses, identity theft.
Interchange Fee is a non-negotiable charge set by credit card networks (Visa, Mastercard, Discover, American Express) that merchants pay to the card-issuing bank for each credit or debit card transaction. Interchange Fee covers the cost of processing, fraud protection, And network services, And varies based on card type, transaction method, And merchant category.
ISO is an independent sales organization that partners with acquiring banks to market and sell credit card processing services to merchants. ISOs act as intermediaries, facilitating merchant account setup, providing equipment, And offering customer support, But don't directly process transactions or assume financial risk.
Issuing Bank is a financial institution that provides credit or debit cards to consumers on behalf of card networks like Visa, Mastercard, Or American Express. Issuing Banks approve or decline transactions, set credit limits, issue statements, And handle customer disputes, serving as the cardholder’s primary point of contact for account management and fraud protection.
Merchant Category Code is a four-digit number assigned by credit card networks to classify businesses by the type of goods or services they provide. Merchant Category Codes determine interchange fees, risk levels, And eligibility for rewards programs, ensuring transactions are processed under the correct industry standards and regulations.
Near Field Communication is a short-range wireless communication technology that enables secure data exchange between devices over distances of approximately 4 centimeters or less. Near Field Communication operates on high-frequency radio waves, allowing contactless interactions such as mobile payments, access control.
Payment Card Industry Data Security Standard is a global information security framework created by major card brands (Visa, Mastercard, American Express, Discover, And JCB) to protect cardholder data from theft and fraud. It establishes 12 mandatory requirements covering network security, data encryption, access controls, And regular vulnerability assessments that merchants, processors.
Payment Processor is a financial technology company or service that handles credit card and debit card transactions on behalf of merchants. Payment Processors authorize, capture, And settle funds by transmitting transaction data between the merchant, card networks, issuing banks, And acquiring banks, ensuring secure and timely payment completion.
PCI Compliance is a set of security standards established by the Payment Card Industry Security Standards Council (PCI SSC) to protect cardholder data during credit and debit card transactions. PCI Compliance ensures merchants and service providers implement safeguards like encryption, access controls, And network monitoring to reduce fraud and data breaches, applying to any business that stores, processes.
PCI SAQ is a self-assessment questionnaire used by merchants and service providers to validate compliance with the Payment Card Industry Data Security Standard (PCI DSS). PCI SAQ allows businesses to evaluate their own security practices, identify vulnerabilities, And document adherence to required controls based on their specific transaction volume, processing methods, And environment.
Recurring Billing is a payment model that automatically charges a customer’s credit or debit card at scheduled intervals for ongoing services, subscriptions, Or memberships. This process eliminates manual payment collection, reduces administrative overhead.
Settlement is the process where funds from credit or debit card transactions are transferred from the cardholder’s issuing bank to the merchant’s acquiring bank, completing the payment cycle. Settlement finalizes the transaction, ensuring merchants receive payment for goods or services rendered while cardholders’ accounts are debited.
Swipe Fee is a charge paid by merchants to the card-issuing bank and card networks (such as Visa or Mastercard) each time a customer uses a credit or debit card for a purchase. This fee covers the cost of processing the transaction, fraud protection, And network services.
Transaction Fee is a charge assessed by a payment processor or merchant services provider each time a credit or debit card payment is processed. Transaction Fees cover the costs of authorization, clearing, settlement, fraud screening, And network access, And are typically composed of interchange fees, assessment fees, And processor markup. These fees are deducted from the transaction amount before funds are deposited into the merchant’s account.
Virtual Terminal is a web-based application that allows merchants to manually enter and process credit card transactions without requiring a physical card reader or point-of-sale system. Virtual Terminals enable Card Not Present transactions by accepting payment details via a secure online interface, typically accessed through a browser, And are commonly used for phone, mail.
