When you’re running your business, you’ve got a lot on your plate. You shouldn’t have to slow down to think about payments.

The process of payments, especially card transactions, can be complicated, but it doesn’t have to be. Here’s a breakdown of some of the crucial terms to help you get an understanding of the world of payments.

Merchant services: Merchant services is a term that captures many different types of financial services and methods of collecting payments from customers. It can include anything from debit and credit card processing to gift cards to payment gateways and e-commerce transactions. Though online transactions are growing, in-person sales remain the vast majority of transactions.

Merchant: In a credit card transaction, the business accepting the payment is the merchant, and they create a merchant account as part of the process of accepting cards as payment.

Cardholder: As the name implies, the person whose name the card is in. They are paying for the goods and/or services.

Terminal: The location where the card is physically accepted. While simple, standalone terminals overtook manual carbon copiers years ago, smaller options are now in many cases being phased out in favor of that offer more capabilities, like loyalty tracking, discounts, reporting data, PIN steering, and more.

Point-of-sale (POS) system: A point-of-sale system combines with a terminal to create a more powerful checkout experience with a wider suite of capabilities and data tracking. POS systems are not used by all merchants, but are increasing in popularity due to their ability to simplify many of a business's tasks.

EMV: EMV is the technology behind chip cards, which became the standard in America after the major liability shift in 2015. Short for “Europay, MasterCard, Visa,” EMV has significantly lowered fraud and made in-person card transactions safer among merchants who accept these cards.

Acquiring Bank:  The acquiring banks are the middlemen between the merchants and the banks that issue cards—they do the work on the merchant’s behalf during a credit card transaction. When a card is swiped, it goes to the acquiring bank before the issuing bank.

Issuing Banks: These banks issue credit cards on behalf of the card brands (Visa, MasterCard, etc). During transactions, the issuing banks will receive the transaction information from the acquiring bank, and then they offer the actual approval.

Settlement: Merchants are not reimbursed immediately. A group of transactions are generally sent at a later time in batches to be settled and finalized, with the money eventually being funded into the merchant’s bank account.

Want to know more? Contact us and we’d be happy to tell you a little bit more about the process and how we can make life simpler for you.

​​Payments 101: A Glossary of Important Terms

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