A Guide to Merchant Account Terminology
Whether you’re new to credit card processing or your business has been accepting credit cards for years, there’s a lot of terminology in the industry that can cause confusion—and it’s not always easy to find an explanation. Merchant Service Group LLC believes in transparency when it comes to your account, and this means making sure all business owners have the information needed to understand how their credit card processing works. Here are a few terms to get you started.
Merchant account – the industry term for your credit card processing account. Most processors will set up a seperate account for each business.
Underwriting – Once your application is submitted, a team of underwriters will examine your application including your credit history, financials, and other details about your business to determine if it’s a good fit for a merchant account.
Boarding – a term used for the process of opening a merchant account, beginning with the application.
Merchant ID (MID) – The number associated with your merchant account. This number is helpful to have on hand when calling customer service or technical support so that they can easily locate your account. This can typically be found on your terminal or monthly statement.
High-risk – a term used by processors for business types that come with greater liability because of the history of the industry. Reasons for this include high ticket size and a high number of chargebacks.
Terminal – a stand-alone machine that is used to accept credit cards. These devices take up less space and are easy to use.
POS – a point of sale (POS) system is a more advanced system that has other capabilities in addition to accepting credit cards. These typically look like a large tablet or computer and may also include a cash drawer, separate printer, and other attachments.
Batch-out – Batching out, or settling, the terminal clears it of all transactions and sends the information to the bank processor in order for you to receive your funds.
Settlement Report – the receipt that displays the details of a batch including the total sales and batch number. Some systems may also include the card types of each transaction and other details. Also known as a batch report.
Auto-close – Many terminals and POS systems have the option to set a time for the equipment to automatically close a batch every day. Abbreviated “AC”.
Chargeback – The industry term for when a customer disputes a transaction with their credit card company. Merchants have the ability to dispute a chargeback to the credit card company it was issued from by providing information to prove the sale was legitimate.
ACH Reject – This occurs when the bank processor attempts to withdraw money from a merchant’s bank account for fees and there is an issue with the withdrawal, often due to insufficient funds in the bank account. Multiple failed attempts can result in additional fees.
PCI Compliance –Refers to the security standards set by the Payment Card Industry for electronic transactions and is mandated by card associations to ensure your business is accepting, processing, storing, or transmitting information securely. All merchants are charged a monthly fee until they take the steps to become PCI Compliant.
TIN – This is the abbreviation for the Tax ID associated with your business. If your business is classified as a sole proprietorship, this is often the same as your social security number.
With years of experience in credit card processing, Merchant Service Group LLC knows that the industry can seem complicated. Our team of technical experts and customer service can explain any terms you may come across while you’re researching the best option for your merchant account. Once you board with us, we’ll continue to support you to ensure you never get lost in industry jargon.
For more information, please email us at hello@merchantservicegroupllc.com
