Browse 24 essential credit card processing terms and definitions used by professionals in Austin.
Term Index
Open any term below for a dedicated definition page.
Address Verification Service is a fraud-prevention tool used by payment processors and merchants to confirm that the billing address provided by a cardholder matches the address on file with the card issuer. This service checks the numeric portions of the address—typically the street number and ZIP code—against the issuer’s records during authorization to help reduce unauthorized card-not-present transactions.
Batch Processing is the practice of grouping multiple credit card transactions together and submitting them for settlement as a single unit, rather than processing each transaction individually in real time. Batch Processing typically occurs at the end of a business day, allowing merchants to finalize sales, reconcile funds.
Card Not Present is a transaction type in which the physical payment card is not presented to the merchant at the point of sale. These transactions occur primarily in online, phone, mail-order, Or recurring billing environments where the cardholder provides card details verbally, digitally, Or in writing rather than swiping, inserting, Or tapping the card. Card Not Present transactions carry higher risk and typically incur elevated processing fees and chargeback liability compared to in-person transactions.
Card Verification Value is a security feature consisting of a 3- or 4-digit code printed on payment cards, used to verify that the cardholder physically possesses the card during card-not-present transactions. Card Verification Value codes are not stored in merchant databases or magnetic stripes, reducing fraud risk by ensuring the code must be manually entered or visually confirmed.
Chargeback is chargebacks are forced refunds initiated by a cardholder’s bank when the cardholder disputes a transaction, claiming it was unauthorized, fraudulent, Or not as described. Chargebacks reverse the payment flow, withdrawing funds from the merchant’s account and returning them to the cardholder, often accompanied by fees and potential penalties for the merchant.
Discount Rate is a percentage fee charged by a payment processor to a merchant for handling credit or debit card transactions. This rate covers interchange fees, assessment fees, And the processor’s markup, deducted directly from the transaction amount before funds are deposited into the merchant’s account.
EMV Chip is a small microprocessor embedded in payment cards that generates a unique transaction code for each purchase, replacing the static magnetic stripe. EMV Chips comply with global standards set by EMVCo to reduce counterfeit fraud, authenticate cardholders.
Encryption is a security process that converts readable data, such as credit card numbers, into an unreadable format using algorithms and cryptographic keys. This transformation protects sensitive information during transmission or storage, ensuring only authorized parties with the correct key can decode and access the original data.
Independent Sales Organization is independent Sales Organizations are third-party entities registered with credit card networks like Visa and Mastercard to solicit, underwrite, And manage merchant accounts on behalf of acquiring banks. They act as intermediaries between merchants and payment processors, facilitating credit card acceptance without directly processing transactions themselves.
Interchange Fee is a non-negotiable fee paid by merchants to the card-issuing bank for each credit or debit card transaction. Set by card networks like Visa and Mastercard, this fee compensates the issuer for processing costs, fraud risk, And the cost of funds. It typically ranges from 0.5% to 3% of the transaction amount plus a fixed per-transaction charge.
Merchant Category Code is a four-digit number assigned by payment card networks to classify businesses by the type of goods or services they provide. Merchant Category Codes determine interchange fees, fraud risk assessments, And eligibility for rewards programs, ensuring consistent transaction categorization across credit card processing systems.
National Automated Clearing House Association is the nonprofit organization that owns, operates, And governs the ACH Network, the electronic payment system used in the United States for direct deposits, bill payments, And business-to-business transactions. It establishes rules, standards, And protocols to ensure secure, efficient, And reliable movement of funds between financial institutions.
Near Field Communication is a short-range wireless technology that enables secure, contactless data exchange between devices over distances of approximately 4 centimeters or less. Near Field Communication operates at 13.56 MHz and supports three modes: reader/writer, peer-to-peer, And card emulation, making it ideal for mobile payments, access control, And device pairing without requiring manual setup or pairing codes.
Payment Card Industry Data Security Standard is a global information security framework created by major card brands to protect cardholder data from theft, fraud, And breaches. It applies to any organization that stores, processes, Or transmits payment card information, establishing requirements for secure networks, encryption, vulnerability management, access control, monitoring.
Payment Processor is a financial technology company or service that handles electronic payment transactions between merchants, customers, And banks. Payment Processors authorize, transmit, And settle credit card, debit card, And other digital payments, ensuring funds move securely from the buyer’s account to the seller’s account without direct involvement from either party.
PCI Compliance is a set of security standards established by the Payment Card Industry Security Standards Council (PCI SSC) to protect cardholder data during credit and debit card transactions. PCI Compliance requires businesses that handle payment card information to implement specific security measures, undergo regular assessments.
Point of Sale is the physical or digital location where a retail transaction is completed, including the hardware, software, And processes that record the sale, accept payment, And generate a receipt. Point of Sale systems integrate payment processing, inventory tracking, And customer data to streamline operations for merchants and improve the checkout experience for buyers.
Recurring Billing is a payment model in which a merchant automatically charges a customer’s credit or debit card on a fixed schedule for ongoing goods or services. This process relies on stored payment credentials and prior authorization, eliminating the need for manual re-entry each billing cycle while ensuring predictable revenue for businesses.
Retrieval Request is a formal inquiry issued by a cardholder’s bank to a merchant, requesting documentation or evidence related to a specific credit or debit card transaction. This request typically precedes a potential chargeback and is used to verify transaction legitimacy, clarify details.
Secure Sockets Layer is a cryptographic protocol designed to provide secure communication over a computer network, primarily the internet. Originally developed by Netscape in the 1990s, SSL encrypts data transmitted between a client (such as a web browser) and a server (such as an e-commerce website), ensuring confidentiality, data integrity, And authentication of the server to prevent eavesdropping, tampering, Or message forgery.
Settlement is the process by which funds from credit or debit card transactions are transferred from the cardholder’s issuing bank to the merchant’s acquiring bank, finalizing the payment. Settlement typically occurs in batches at the end of each business day, ensuring merchants receive payment for authorized transactions after fees, chargebacks, And adjustments are accounted for.
Tokenization is a data security process that replaces sensitive cardholder information, such as a primary account number (PAN), with a unique, non-sensitive identifier called a token. This token retains no exploitable value if intercepted, reducing the risk of data breaches while enabling secure payment transactions across systems, networks, And storage environments.
Transaction Fee is a per-operation charge levied by payment processors, acquiring banks, Or card networks each time a merchant accepts a credit or debit card payment. Transaction Fee covers the cost of authorization, clearing, settlement, fraud screening, And network routing.
Virtual Terminal is a web-based application that allows merchants to manually enter and process credit card payments without requiring a physical card reader or point-of-sale hardware. Virtual Terminal operates through a secure browser interface, enabling businesses to accept card-not-present transactions from any internet-connected device, including computers, tablets.
