By Vannessa Guevara February 11, 2019
Introduction:
Every craftsman will agree that knowing the tools of your trade is the difference between feast and famine. Now, your trade may not be payment processing, but knowing how to choose a payment processing company is the difference between your business thriving and dying. However, you can’t begin to research good payment processors without learning the lingo that you will certainly find in your reading. So we’ve compiled a small list of the most important terms for you to understand before picking a processor—especially before signing that contract.
Acquiring Bank
An acquiring bank offers merchant accounts—typically an entity which has relationships with Visa® and Mastercard®, to make transactions run smoothly. The acquiring bank is contractually responsible for ensuring that deposits are transferred smoothly from one entity to another.
Interchange Fee
This is a transaction fee issued by MasterCard and Visa in order to successfully transfer a payment from the client’s bank account into the merchant’s account. This fee is strictly based on credit card regulations and is mitigated through capturing the necessary data to complete the transaction. Such data includes, but is not limited to, the address, electronic signature and the swipe itself.
Loyalty solutions
Loyalty solutions is just another term for customer loyalty in merchant services. This can be anything from sign on bonuses to 3% cash back on gasoline purchases. These are the providers that offer frequent flyer miles or reduced APRs and other such benefits to incentivize their consumers towards their product.
Pay-Per-Use Model
The Pay-Per-Use Model is a payment structure which works on a database with a Google-like vibe. In this model, merchants are enabled to have access to an array of relevant resources. However, in these merchant services merchants are only charged for the tools and services they actually use. This allows business owners to find an all-encompassing credit card processing provider and create their own custom package within the provision. This is highly appealing to merchants who have fantastic tech skills—so need less in the way of IT—but struggle with physical installation of products. This model allows merchants to receive and pay only for the services they need; saving money, time and resource.
Conclusion:
While there are several other terms that need to be understood before you sign a contract, these are some of the most basic—but easily confused—terms to get you started. At the end of the day, knowing your basic terms will help you navigate exactly what credit card processing service will best suit your needs and your budget.