Key Payment Processing Terms To Know

December 20, 2018

Merchant Services 

Payment processing services that are provided to businesses. Merchants are able to accept credit, debit or electronic payments through secure channels. They do not have to accept cash or checks only. Common merchant services are point of sale systems, credit card processing and customer loyalty programs.

Automated Clearing House 

An online financial institution that handles the transfer of online payments from one institution to another. The clearing house ensures that electronic payment is available and clears in order to reduce fraud.

Chargeback

The return of funds to a payer’s bank account by the bank. This occurs when a payment is made but there are insufficient funds, when an unauthorized charge is made or when a charge is made incorrectly.

Credit Card Processing

The payment processing of goods using money that is borrowed on credit. Credit is charged to the card holder’s bank account and must be paid later.

Debit Card Processing

The payment processing of goods using money that is borrowed on debit. Debit is automatically charged and withdrawn from the card holder’s bank account.

Encryption

The concealment of data and information during its transfer from one source to another. The data is encoded and has to be decrypted using a private or public key. Credit card processing is protected using encryption that keeps the customers’ information private. Encryption protects data that is sent using ATMs, cell phones or intercom systems.

Overdraft

The over-withdrawal of money from a bank account. Some banks charge overdraft fees when this occurs.

Payment Gateway 

A service that mediates payments from one source to another, usually from a retailer to a bank. The payment gateway receives encrypted data from the merchant and forwards it to the payment processor.

Payment Service Provider

Online companies that mediate the transfer of payments from consumers to merchants. The main purpose is to safeguard the bank or credit card information of online buyers. They can resolve transaction disputes between the consumer and the merchant.

PSPs provide merchant services for small businesses that do not have e-commerce websites. The providers are connected to various banks, credit card companies and other financial institutions.

Point of Sale 

The location where customers make a financial transaction, usually at a terminal with a cash register. A POS software may also include additional features, like order information, inventory management and warehousing.

Real Time

The automatic processing of payments or transfer of data online.

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