Glossary of Terms

Rates & Fees Terminology

Access Fees
Fees with using a secure server to approve and process transactions. A credit card merchant account can also be charged gateway processing fees separately or as part of a monthly processing fee.

Annual Fee
An annual (yearly) fee associated with having a credit card, charged by the acquirer. This is a separate fee from interest rate on purchases.

Batch Close Fee
A daily charge for batch submission. A batch is a group of authorized transactions, typically used by the merchant in the settlement process at the close of business each day.

Basis Point
One hundredth of one percent. A merchant’s discount rate will usually be quoted in this format, as a percentage or a fraction. Also see Discount Rate.

Billing Statement
A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer (also simply called a statement or monthly statement).

Chargeback
When a customer does not receive his goods or services or says he didn’t place an order or make a purchase, he can ask his issuing bank to charge back the purchase to the merchant within 30-60 day timeframe. The issuing bank will notify the merchant when this happens, after which the merchant will need to validate and defend the purchase by providing such information as the amount, an invoice or folio, customer signature, or shipping documents.

Credit Transaction Fee
A flat fee charged per transaction.

Discount Rate / Processing Rate
The fee paid to a merchant bank to handle the deposit of credit card funds into a merchant account. It is usually quoted as a percentage to hundredths (or the basis point) on the monthly bill. The fee paid by merchants to credit card processors as a fee associated with accepting general use credit cards (like Visa, Mastercard, American Express and Discover Card).

Effective Merchant Discount Rate (EMDR)
The true amount charged by the merchant bank when processing each transaction. It is often more than the quoted discount rate because it is the calculated, bundled rate including the discount rate, assessments, and other per-item transaction fees. This is the fee that a merchant pays to its acquirer or processor for transacting on a Credit Card brand. EMDR is expressed as a percentage of the total transaction amount.

Interchange Fee
The fee charged by Visa and Mastercard to complete a transaction and deposit money into a merchant’s account. American Express and Discover do not participate. The “plus” in Interchange Plus (IC+) pricing is the markup that a credit card processor is charging on top of the interchange fee (a percentage fee and a transaction cost).

Interac Direct Payment (IDP)
Interac in Canada charges a fee to the processor, this fee is passed to the merchant to be able to offer their customers to pay with a debit card. The Interac Transaction Fee is a flat fee charged for every transaction.

PCI Monthly Fee
A separate fee charged by acquirers (for example: Elavon in Canada, and TSYS in the U.S.)

Recurring Payments
Pre-Authorized Debit (PAD) in Canada, Automated Clearing House (ACH) in the U.S.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

Glossary of Terms

Rates & Fees Terminology

Access Fees
Fees with using a secure server to approve and process transactions. A credit card merchant account can also be charged gateway processing fees separately or as part of a monthly processing fee.

Annual Fee
An annual (yearly) fee associated with having a credit card, charged by the acquirer. This is a separate fee from interest rate on purchases.

Batch Close Fee
A daily charge for batch submission. A batch is a group of authorized transactions, typically used by the merchant in the settlement process at the close of business each day.

Basis Point
One hundredth of one percent. A merchant’s discount rate will usually be quoted in this format, as a percentage or a fraction. Also see Discount Rate.

Billing Statement
A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer (also simply called a statement or monthly statement).

Chargeback
When a customer does not receive his goods or services or says he didn’t place an order or make a purchase, he can ask his issuing bank to charge back the purchase to the merchant within 30-60 day timeframe. The issuing bank will notify the merchant when this happens, after which the merchant will need to validate and defend the purchase by providing such information as the amount, an invoice or folio, customer signature, or shipping documents.

Credit Transaction Fee
A flat fee charged per transaction.

Discount Rate / Processing Rate
The fee paid to a merchant bank to handle the deposit of credit card funds into a merchant account. It is usually quoted as a percentage to hundredths (or the basis point) on the monthly bill. The fee paid by merchants to credit card processors as a fee associated with accepting general use credit cards (like Visa, Mastercard, American Express and Discover Card).

Effective Merchant Discount Rate (EMDR)
The true amount charged by the merchant bank when processing each transaction. It is often more than the quoted discount rate because it is the calculated, bundled rate including the discount rate, assessments, and other per-item transaction fees. This is the fee that a merchant pays to its acquirer or processor for transacting on a Credit Card brand. EMDR is expressed as a percentage of the total transaction amount.

Interchange Fee
The fee charged by Visa and Mastercard to complete a transaction and deposit money into a merchant’s account. American Express and Discover do not participate. The “plus” in Interchange Plus (IC+) pricing is the markup that a credit card processor is charging on top of the interchange fee (a percentage fee and a transaction cost).

Interac Direct Payment (IDP)
Interac in Canada charges a fee to the processor, this fee is passed to the merchant to be able to offer their customers to pay with a debit card. The Interac Transaction Fee is a flat fee charged for every transaction.

PCI Monthly Fee
A separate fee charged by acquirers (for example: Elavon in Canada, and TSYS in the U.S.)

Recurring Payments
Pre-Authorized Debit (PAD) in Canada, Automated Clearing House (ACH) in the U.S.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

Glossary of Terms

Rates & Fees Terminology

Access Fees
Fees with using a secure server to approve and process transactions. A credit card merchant account can also be charged gateway processing fees separately or as part of a monthly processing fee.

Annual Fee
An annual (yearly) fee associated with having a credit card, charged by the acquirer. This is a separate fee from interest rate on purchases.

Batch Close Fee
A daily charge for batch submission. A batch is a group of authorized transactions, typically used by the merchant in the settlement process at the close of business each day.

Basis Point
One hundredth of one percent. A merchant’s discount rate will usually be quoted in this format, as a percentage or a fraction. Also see Discount Rate.

Billing Statement
A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer (also simply called a statement or monthly statement).

Chargeback
When a customer does not receive his goods or services or says he didn’t place an order or make a purchase, he can ask his issuing bank to charge back the purchase to the merchant within 30-60 day timeframe. The issuing bank will notify the merchant when this happens, after which the merchant will need to validate and defend the purchase by providing such information as the amount, an invoice or folio, customer signature, or shipping documents.

Credit Transaction Fee
A flat fee charged per transaction.

Discount Rate / Processing Rate
The fee paid to a merchant bank to handle the deposit of credit card funds into a merchant account. It is usually quoted as a percentage to hundredths (or the basis point) on the monthly bill. The fee paid by merchants to credit card processors as a fee associated with accepting general use credit cards (like Visa, Mastercard, American Express and Discover Card).

Effective Merchant Discount Rate (EMDR)
The true amount charged by the merchant bank when processing each transaction. It is often more than the quoted discount rate because it is the calculated, bundled rate including the discount rate, assessments, and other per-item transaction fees. This is the fee that a merchant pays to its acquirer or processor for transacting on a Credit Card brand. EMDR is expressed as a percentage of the total transaction amount.

Interchange Fee
The fee charged by Visa and Mastercard to complete a transaction and deposit money into a merchant’s account. American Express and Discover do not participate. The “plus” in Interchange Plus (IC+) pricing is the markup that a credit card processor is charging on top of the interchange fee (a percentage fee and a transaction cost).

Interac Direct Payment (IDP)
Interac in Canada charges a fee to the processor, this fee is passed to the merchant to be able to offer their customers to pay with a debit card. The Interac Transaction Fee is a flat fee charged for every transaction.

PCI Monthly Fee
A separate fee charged by acquirers (for example: Elavon in Canada, and TSYS in the U.S.)

Recurring Payments
Pre-Authorized Debit (PAD) in Canada, Automated Clearing House (ACH) in the U.S.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

Payments Industry Terminology

Acquirer
The financial institution that initiates and maintains contractual agreements with merchants for accepting and processing transactions.

Gateway
A payment processing solution that protects cardholder data during the payment transaction process.

ISO
ISO stands for Independent Sales Organization. ISOs are merchant service providers that work with one or more acquirers to resell payment processing technology and services.

ISV
ISV stands for Independent Software Vendor. ISVs create applications and platforms that integrate payment processing functionality into existing solutions, such as point-of-sale (POS) systems, e-commerce platforms or customer relationship management (CRM) tools.

Interchange
The exchange of transaction data, in this case credit card payments, between a merchant bank and the issuing bank.

POS
A POS (point of sale) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Processor
A company (often a third party) that handles credit card transactions for merchant banks and is usually paid per transaction. They are usually broken down into two types: front-end and back-end. However, there is a gray area.

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