 
This list of credit card
terms is intended to help you understand how the credit
card process works. It is by no means a definitive
list of terminology.
For a diagram of the 3 steps of credit card processing,
click here.
Authorization - The
verification done by the processing center that ensures
that your customer has the available funds to cover the
transaction
AVS - Address
Verification System is a security / fraud protection
system that helps protect merchants against fraudulent
purchases on stolen credit cards.
Capture - The
processing center converts an authorization into a
"billable" transaction with the daily batch of
transactions. This initiates the actual transfer of
funds from the customers account to the merchant's
account.
Chargeback -
Typically initiated by a cardholder, this is a reversal
of the credit card transaction. These reversals are only
completed after they have met the chargeback rules of
the processing center. Chargeback occur for a
variety of reasons, including fraud, customer disputes
over products or orders, processing errors, etc.
Discount Rate - The
amount (usually by percentage) charged by the processing
center to the merchant for each credit card transaction.
Merchant Account - A
merchant account is the agreement between a retailer and
a credit card / payment processing center to enable the
retailer to accept payment by credit cards.
Secure Gateway - An
internet connection between a virtual terminal and the
processing centers website that uses 128 bit encryption
to create a secure transfer of data.
Settlement - This
refers to the final posting of a finished transaction in
terms of the actual debit to the customer's account and
the credit to the merchant's account.
Terminal - Electronic
equipment that allow a merchant to "swipe" a credit card
and send the transaction to the processing center for
authorization, capture and settlement.
TID - This is the
Terminal Identification Number that is unique to each
physical transaction terminal and is connected to a
Merchant's processing account.
Transaction Fee - An
added cost per transaction that is usually a fixed
amount per transaction for accounts with no monthly
minimum transaction requirements.
Virtual Terminal - A
secure internet login account that enable merchants to
manually process credit card transactions over the
internet.
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