A Reference Guide To Various Payment Processor Terms!

Payment Processor
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Payment Processor is a vital part of the modern business world. It is the transfer of money from a client’s account to the merchant’s account.

It’s important to understand the key concepts and terms in order to navigate payment processing efficiently.

This quick reference guide will help you understand the meaning of common payment processing terminology and how to apply it to your business.

A Payment Terms!

Account updater

Account Updater is a payment processor service, that automatically updates payment information such as credit card numbers to ensure smooth transaction processing. It allows merchants to maintain accurate, up-to-date customer data.

ACH (Automated Clearing House)

An Automated Clearing House is an electronic payment system used to transfer money directly from one bank to another. It allows for transactions like direct deposits, electronic checks, and bill payments.

Authorization

The authorization process is the verification of whether or not a customer has enough funds to complete a payment. This ensures the account of the customer can be debited or charged accordingly.

Batch

A batch is a group of transactions that are grouped for processing. It streamlines payment processing by consolidating transactions into one entity.

Card Verification Value (CVV)

CVV is the three- or four-digit code that appears on debit and credit cards. It is used to provide an extra layer of security during online transactions.

Chargeback

Chargebacks occur when a customer disputes an online transaction and asks for a refund. Chargebacks may occur for a variety of reasons, including unauthorized transactions, dissatisfaction with a product or service, and fraudulent activities.

Card Payment

Credit cards are payment cards that allow customers to purchase on credit. The card allows an individual to borrow money from a financial institution with the understanding they will pay back the amount borrowed plus any interest.

Debit Card

A debit card is an electronic payment card that’s linked to the customer’s account. The debit card allows customers to pay for purchases with funds in their account, making it a convenient payment method.

EMV (Europay Mastercard and Visa)

EMV is the global standard for safe payment transactions. Chip-enabled terminals and cards are used, providing enhanced security over traditional magnetic stripe cards.

EMV technology prevents card fraud by generating unique transaction data.

Fraud

Fraud is the deceptive, unauthorized activity of obtaining goods, services, or funds in a dishonest manner. Payment processors use robust security measures in order to detect and prevent fraud, protecting both merchants as well as customers.

Gateway

A gateway is the interface that connects a merchant’s website or payment processor. It transmits data securely, facilitates authorization, and ensures smooth information flow during the payment process.

Merchant

Merchants are businesses or individuals who sell goods and services to customers and accept payments. Payment processors are hired by merchants to accept and process customer payments.

Payment Processor

A payment processing company is one that manages the financial and technical aspects of payments. It is a company that acts as an intermediary for the merchant, customer, and financial institutions, facilitating secure funds transfers.

PIN (Personal identification number)

A PIN code is a numerical code that is used to verify the cardholder during certain transactions such as payments made with debit cards. Customers enter their PIN in order to authenticate and authorize the transaction.

Processing Fee

A fee refers to the amount charged by a payment processor. The processing fee is usually a percentage, also known as a discount rate. It may also be a flat rate per transaction.

When evaluating payment processors for merchants, they should take into account processing fees as these can have a significant impact on overall profitability.

Reconciliation

The process of reconciling is the comparison and matching of financial records to ensure accuracy and consistency.

It is important to ensure that the transactions recorded by the processor match the records of the merchant. The reconciliation process helps to identify discrepancies and errors that need to be corrected.

The Settlement

Settlement is the last stage of a payment cycle when funds are transferred to the merchant account from the customer account.

The settlement involves the finalization of the transaction including the authorization, verification, and actual movement of funds. The settlement ensures the merchant is paid for the goods and services they have provided.

Swipe

Swiping is the act of physically running a card through a reader. This can be a debit or credit card. The card reader captures payment information by reading the magnetic stripe of the card or the chip.

Tokenization

The Tokenization is used as a security measure to protect sensitive data. Tokenization involves replacing payment data, such as credit card numbers, with an identifier known as a token.

Payment processors use tokens to process transactions and store the data securely. This reduces the risk of data breaches.

Vault

A vault is an encrypted digital storage system that payment processors provide to protect sensitive payment information. It stores and encrypts customer payment data, allowing merchants to secure the processing of recurring transactions.

A transaction is a single payment or financial activity. A transaction is the exchange of money between a customer, a merchant, and other parties in return for services, goods, or obligations. To ensure a secure and smooth payment process, the system authorizes, processes, and settles each transaction.

In Conclusion

Businesses and merchants need to understand what are the terms and how payment processing works in today’s digital world.

You can make better decisions when it comes to payment processors, fees, and security measures by familiarizing yourself with the terms.

Stay informed about the latest trends in your industry and ask for clarification when necessary. This will ensure that you have a secure and smooth payment processing experience.

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