MERCHANT ACCOUNT TERMS
Following are a few terms
that are frequently used in Merchant
Accounts:
Discount Rate – This rate
is a tiny percentage that gets removed
from the order’s total cost. The
Discount Rate is one among the two costs
for processing which are involved while
accepting credit cards. This rate varies
with respect to swiping or non-swiping
of customers’ credit cards during sale.
Transaction Fee – This is
the 2nd type among the 2
processing fees involved that is
encountered with merchant accounts.
Apart from discount rate, this fee is a
small amount that will be charged. As it
is with the discount rate, transaction
fess top varies with respect to the
swiping or non-swiping of a customer’s
credit card.
Gateway – The passing of
information of a credit card from the
website of a merchant to a processing
bank is referred to as Gateway. This
procedure is a secure one. VeriSign,
ECHO, Authorize.Net, are a few payment
gateways. Only Internet merchants
require a gateway. Most of the providers
of merchant accounts charge a monthly
fee for a gateway.
Charge Back – This is the
charge when customers dispute their
credit-card charges and the credit care
companies to remove this charge. Some of
the charge back occurs when a customer
fails to recognise the name of the firm
on the statement of their credit cards.
Reserve – A small
percentage of the sale that will be
with-held for a particular time period
in order to cover issues related to
charge back. The amount that will be
with-held depends on the provider of
merchant accounts.
Monthly Minimum – This is
the fees that must be met each month. If
the sales if a particular month do not
meet monthly minimum, then the merchant
should make up for this difference.
Card Verification Value
(CVC2 / CVV2) – This is the 3-digit
security number printed on the reverse
of credit cards. Asking for this number
during checking-out orders will reduces
instances of charge back as well as
frauds made by credit cards.
Factoring – This term is
applicable in e-commerce to companies
which offer processing of transactions
made by credit cards through the
trader’s own account. This practice is
considered illegal and could result in
huge fines.
Real-time Processing –
The immediate processing of a
transaction made by credit card after a
customer makes a purchase.
Batch – A Batch is a
collection of transactions made by a
credit card which are saved in order to
submit at each business day’s end.
Authorization – This is a
process where permissions are granted by
the issuer of the credit card, usually a
financial institution, which allows the
transaction of payments to proceed
further. This process ensures that the
credit available on a card will not
exceed.
Address Verification
System (AVS) – The AVS service is used
to check if the customer’s billing
address is a match with the one on their
credit card. If the AVS service is not
opted for, then an additional charge
will be added on the sales. However,
most of the merchant accounts have the
AVS service with no extra fees.
