Welcome to the world of payment processing. There’s a lot of lingo that’s specific to merchant accounts and merchant services. When you’re shopping for a merchant services provider, you might be confused at some of the commonplace terminology. We’ve put together a list of 10 terms you absolutely need to know.
- Average Ticket Size
The average ticket size refers to the average amount of each credit card transaction. You’ll be asked for the average ticket size when you’re opening a new merchant account. If you’ve never taken credit cards before, then you will be asked to give an estimate.
The batch is the total amount of a day’s card transactions. When you process the batch at the end of the day, no more changes can be made to the transactions. Also, some service providers will charge a small fee whenever you process the batch.
A chargeback is a transaction that has been disputed by a cardholder. A merchant has 10 days to dispute the chargeback, as long as he has proof of purchase. Until the dispute has been settled, the requested amount is taken from the merchant’s account. Whenever a merchant incurs a chargeback, his merchant services provider requires a chargeback fee.
- Credit Card Processing
Credit card processing refers to the electronic process of carrying out a credit card transaction. Everything occurs electronically. Once the payment is authorized, a transfer carries money from the customer’s bank to the credit card processor. And then the funds go to your merchant account.
- High-Risk Merchant Account
A merchant account is considered high-risk whenever the business belongs to a high-risk industry (such as tobacco, multi-level marketing, or adult services). Also, if a merchant has low credit or has had his credit card processing services revoked in the past, his account will likely be labeled high-risk. Simply put, high-risk merchant accounts are considered unreliable.
- Merchant Account
A merchant account is established between you and a credit card processor. You need a merchant account in order to accept credit and debit cards.
- Merchant Services Provider
Your merchant services provider gives you everything you need to handle credit card transactions. They act as the middleman between you, issuing banks, and credit card networks.
- Merchant Processing Agreement
A merchant processing agreement, or MPA, is the contract between you and your service provider.
- Monthly Minimum
Some merchant services providers require you to meet a specific number of transaction, discounts, and funds each month. This will be outlined in the MPA. If you don’t meet the monthly minimum, then you’ll be charged with a monthly minimum fee.
- Terminated Merchant File
The Terminated Merchant File, also known as the MATCH, is an extensive database of merchants who had their credit card processing privileges revoked due to fraud, excessive chargebacks, or contract breaches. If you’re on the TMF, you are probably going to be considered a high-risk merchant.
Featured Image Source: Depositphotos/©belchonockPosted on May 26, 2017