Browse 28 essential credit card processing terms and definitions used by professionals in San Diego.
Term Index
Open any term below for a dedicated definition page.
Acquirer is a financial institution or bank that processes credit or debit card payments on behalf of a merchant. Acquirers enable businesses to accept card payments by connecting them to card networks, handling transaction authorization, And ensuring funds are deposited into the merchant’s account after settlement.
Address Verification Service is a fraud-prevention system used by credit card processors to confirm that the billing address provided by a cardholder matches the address on file with the card-issuing bank. It compares numeric portions of the address, such as the street number and ZIP code, during authorization to reduce unauthorized transactions and chargebacks, primarily in card-not-present environments like online or phone orders.
Batch Processing is a method in credit card transactions where multiple transactions are grouped and processed together at a scheduled time, rather than individually in real-time. Batch Processing typically occurs at the end of a business day to streamline settlement, reduce processing costs, And ensure accurate reconciliation between merchants, payment processors, And card networks.
Card Brand is a payment network that establishes the rules, standards, And infrastructure for credit, debit, And prepaid card transactions. Card Brands define interchange fees, security protocols, dispute resolution processes, And merchant acceptance requirements, ensuring consistency across global payment systems.
Card Network is a payment infrastructure system operated by companies like Visa, Mastercard, American Express, And Discover that facilitates the authorization, clearing, And settlement of credit, debit, And prepaid card transactions between merchants, cardholders, And financial institutions. These networks establish rules, standards, And fees governing how transactions are processed globally.
Card Not Present Transaction is a payment processed without the physical card being swiped, dipped, Or tapped at a terminal. These transactions occur online, over the phone, via mail order, Or through recurring billing, where the merchant can't verify the cardholder’s identity in person. They carry higher risk and often incur additional fees due to increased fraud potential.
Card Present Transaction is a payment processing method where the physical payment card is physically present and read by a card reader or terminal during the transaction. Card Present Transactions typically occur in-person at a retail store, restaurant, Or other physical point of sale, enabling direct verification of the card’s EMV chip, magnetic stripe, Or contactless NFC signal.
Clearing is the multi-step process through which transaction data moves from a merchant’s payment processor to the cardholder’s issuing bank, verifying available funds and preparing the transaction for settlement. Clearing ensures that authorization holds are reconciled, interchange fees are calculated, And final amounts are approved before funds are transferred between financial institutions.
Credit Card Reader is credit Card Readers are electronic devices that capture and transmit payment card data to authorize and process transactions. They read magnetic stripes, EMV chips, Or contactless signals from credit and debit cards, converting the data into encrypted digital signals for secure transmission to payment processors, acquirers.
CVV is a three- or four-digit security code printed on credit and debit cards to verify that the cardholder physically possesses the card during a transaction. CVV stands for Card Verification Value and is also known as CVC, CSC, Or CVV2, depending on the card brand. It helps prevent fraud in card-not-present transactions, such as online or phone purchases, by ensuring the code is not stored in magnetic stripe or chip data.
Discount Rate is the percentage fee a merchant pays to a payment processor for each credit or debit card transaction, deducted from the total sale amount before funds are deposited into the merchant’s account. This fee typically includes interchange fees, assessment fees, And the processor’s markup, varying based on card type, transaction method.
EMV is a global payment technology standard developed by Europay, Mastercard, And Visa to enhance the security of chip-based credit and debit card transactions. EMV enables dynamic authentication of card data, reducing fraud by generating unique transaction codes for each purchase, unlike static magnetic stripe cards that reuse the same information.
EMV Chip is a small microprocessor embedded in payment cards that generates unique transaction codes for each purchase, replacing static magnetic-stripe data. EMV Chips enhance security by making card-present fraud significantly harder through dynamic authentication and encryption, And they comply with global payment network standards set by EMVCo.
Interchange Fee is a non-negotiable charge set by card networks like Visa, Mastercard, Discover, And American Express, paid by merchants to the card-issuing bank for each credit or debit card transaction. This fee compensates the issuer for handling risk, fraud protection, And the cost of funding the transaction before settlement occurs. Interchange Fee varies based on card type, transaction method, And merchant category.
ISO is an Independent Sales Organization, a third-party entity registered with card networks like Visa and Mastercard to solicit, underwrite, And manage merchant accounts on behalf of acquiring banks. ISOs act as intermediaries, handling sales, support, And sometimes processing services while the acquiring bank retains ultimate risk and regulatory responsibility.
Issuer is a financial institution, such as a bank or credit union, that provides credit or debit cards to consumers or businesses. Issuers authorize transactions, extend credit, And manage cardholder accounts, including billing, fraud monitoring, And customer service. They play a critical role in the payment ecosystem by determining approval or denial of transactions based on account status and available funds.
Merchant Category Code is a four-digit number assigned by credit card networks to classify businesses by the type of goods or services they provide. Merchant Category Codes determine interchange fees, fraud risk levels, And regulatory compliance requirements for transactions processed under each code.
Merchant Identification Number is a unique numeric or alphanumeric code assigned to a business by its payment processor or acquiring bank to identify the merchant account during credit and debit card transactions. This identifier ensures accurate routing of funds, transaction tracking, And compliance with card network rules, distinguishing one merchant from another within the payment ecosystem.
Near Field Communication is a short-range wireless communication technology that enables secure data exchange between devices within approximately 4 centimeters of each other. Operating at 13.56 MHz, NFC allows contactless transactions, data sharing, And device pairing without requiring manual configuration or internet connectivity, making it integral to modern payment systems, access control.
Payment Processor is a financial technology company or service that acts as an intermediary between merchants, card networks, And banks to authorize, clear, And settle credit and debit card transactions. Payment Processors handle the technical and financial workflows required to transfer funds from a customer’s issuing bank to a merchant’s acquiring bank, ensuring transactions are secure, compliant, And completed in real time or near real time.
Payment Settlement is the final stage in the credit card transaction lifecycle where funds are transferred from the cardholder’s issuing bank to the merchant’s acquiring bank, completing the payment process. This step follows authorization and clearing, ensuring merchants receive the net amount of their sales after fees, chargebacks.
PCI Compliance is adherence to the Payment Card Industry Data Security Standard (PCI DSS), a set of security requirements designed to protect cardholder data during credit and debit card transactions. PCI Compliance applies to any organization that accepts, processes, stores, Or transmits payment card information, ensuring consistent security measures to prevent data breaches and fraud.
PCI DSS is a global security standard created by the Payment Card Industry Security Standards Council to protect cardholder data from breaches and fraud. PCI DSS applies to any organization that stores, processes, Or transmits credit or debit card information, requiring strict security controls, regular assessments.
Point of Sale is point of Sale (POS) is the physical or virtual location where a retail transaction is completed, including the exchange of payment for goods or services. It encompasses the hardware, software, And processes used to capture payment details, authorize transactions, And generate receipts, typically involving credit or debit cards, cash, Or digital wallets.
Refund is the process of returning funds to a customer’s credit card or payment method after a previously completed transaction has been reversed. Refunds occur when a merchant cancels a sale, corrects an error, Or honors a return policy, ensuring the customer receives their money back in full or in part.
Settlement is the final step in credit card processing where funds from a customer’s transaction are transferred from the issuing bank to the merchant’s acquiring bank, completing the payment cycle. Settlement ensures merchants receive the net amount of their sales after fees, holds, And adjustments are deducted, typically occurring within 1-3 business days of authorization.
Tokenization is a data security process that replaces sensitive information, such as credit card numbers, with unique identification symbols called tokens. These tokens retain essential data without exposing actual details, reducing the risk of fraud or data breaches during transactions. Tokenization is widely used in payment processing to comply with security standards like PCI DSS while maintaining transaction functionality.
Virtual Terminal is a web-based application that allows merchants to manually enter and process credit card transactions without requiring a physical card reader. Virtual Terminals enable businesses to accept payments over the phone, via mail order.
