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Credit Card Processing Terms Cheat Sheet by

Glossary of major terms used in Credit Card Processing
card     credit     terms     glossary     processing

Introd­uction

Indepe­ndent sales organi­zations (ISO) are respon­sible for acquiring new merchant relati­ons­hips. They also process credit card transa­ctions for small businesses on occasion - a service that usually occurs in exchange for a fee or percentage of sales. ISOs must equip themselves with the right knowledge and termin­ology when approa­ching a merchant, especially if they want to play the role of industry expert or consul­tant.

Address Verifi­cation System (AVS):

An AVS is a security feature that requires merchants to supply address inform­ation for the cardholder in transa­ctions where the card isn't present, or online transa­ctions. The merchant's system confirms the entered address matches the same creden­tials listed with the partnering bank and determines whether that inform­ation is valid.

Compli­ance:

What it takes to become compliant with the Payment Card Industry Security Standards Council. The PCI SSC website offers tips and explan­ations on what it takes to become compliant. These industry guidelines were created to better protect merchants and cardho­lders from payment theft.

EMV liability shift

The Europay, MasterCard and Visa liability shift is coming in October 2015. ISOs must commun­icate this to merchants, both prospe­ctive partners and current clients. Small-­bus­iness owners may not be aware of the upcoming EMV liability shift. Under the new liability shift, any party that has become EMV-co­mpliant is protected from financial liability for card-p­resent counte­rfeit fraud losses.



Inte­rchange Fee

"ISOs sign up a merchant and explain the terms and rates of a cardholder partne­rsh­ip."­
­
I­nte­rchange Fee: This fee is charged by MasterCard and Visa to complete a payment and deposit the money into a merchant's account. It's based on credit card regula­tions and capturing the approp­riate data, some of which includes the address, electronic signature and the swipe itself.
 

Loyalty solutions

Loyalty solutions, commonly known as customer loyalty, is a growing focal point in many indust­ries, as its benefits have been found to dramat­ically improve bottom­-line revenue. ISOs must educate merchants on various types of payment processors and back-end loyalty programs, both of which could improve customer retention and therefore profit­abi­lity.

Point-­to-­point encryption (P2PE)

Point-­to-­point encryption is provided by a third party solution provider. It is a combin­ation of secure devices, applic­ations and processes that encrypt data from the point of sale until the inform­ation reaches the solution provider's end. In essence, P2PE safeguards against data breaches for merchants and service providers.

Various processing method

Consumers now have different ways to complete a transa­ction. The tradit­ional means of swiping a credit or debit card at the point of sale are still viable, but recent industry develo­pments, such as mobile wallets and NFC payments like Apple Pay, are enabling digital, seamless transa­ctions. Merchants must prepare for the former and latter types of payment proces­sing, or card-p­resent and card-n­ot-­present transa­ctions. Card-p­resent payments are transa­ctions where the merchants can read a customer's data electr­oni­cally when the customer swipes or inserts their card into a terminal. Card-n­ot-­present payments are transa­ctions where the cardho­lder's inform­ation is entered manually or provided through a separate gateway or portal.

Pay-Pe­r-Use Model

Payment structure where merchants have access to a wide variety of resources but only pay for what they use. Volume of business may have an impact on which partners merchants end up choosing since the merchant will likely want to choose a partner that best fits their needs. Instead of spending signif­icantly on a fully compre­hensive IT network,

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