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What does everything mean?

We love our acronyms. MCC, MOTO, MID, POS, SSL and IPSP are just some of the ones we love to use. However what do they mean?

Below is a list of commonly used words and terminology that you may come across when trying to set-up or understand payment processing, including merchant accounts, payment gateways and credit card terminals. Please also check out 'how online payments work'

3D Secure

The 3-D Secure™ protocol was developed by Visa to improve the security of Internet payments. The protocol is offered with the service name Verified by Visa. MasterCard has also adapted a similar protocol called MasterCard SecureCode. Both are designed to allow authentication of cardholders by their Issuers at participating merchants.

Acquiring bank

An acquiring bank is a bank that is used by merchants to accept credit card transactions. Acquiring banks are often also referred to as merchant bank. In order for a merchant to be able to accept credit card transactions online, the acquiring bank sets up a credit card merchant account.

Aggregated Processing

Aggregated processing lets you accept payments without a merchant account of your own. Instead, the acquiring bank lets you use their merchant account under their own terms of service. Please also see Third party processing



The Address Verification Service (AVS) enables the address, including postcode, entered by the shopper to be compared against the UK card issuer's records.


CVV / CVV2 Code

AKA "The 3 digit number on the back of the card" - A card security code (CSC), often called card verification value (CVV or CVV2) are different terms for a security feature for "card not present" payment card transactions. The card security code is located on the back of MasterCard, Visa and Discover credit or debit cards and is typically a separate group of 3 digits to the right of the signature strip.



Cookies are data files written to your hard drive by some Web sites when you view them in your browser. These files can contain information the site can use to track such things as passwords, lists of pages you've visited, browsing habits or can store information from a shopping cart.



When a user sends email or points a browser to an Internet domain such as web-merchant.co.uk, the DNS translates the names into Internet addresses (123.456.78.9). The term refers to two definitions: naming hosts and how domain names are handled on the Internet.



A payment gateway provides a secure connection between your online shopping cart (or other website where payments are taken) and your internet merchant account. A Gateway fee is applied by the transaction processor to cover the costs of receiving and processing the transaction.

Interchange Fee

Interchange is the money transferred from the acquiring bank to the issuing bank for each card transaction. Interchange fees account for the majority of credit card processing costs and are established by the card brands (Visa, MasterCard, Discover). However there are instances where the interchange fee is paid from the issuer to acquirer, often called reverse interchange.

Interchange Plus Pricing

Interchange plus is the term used to describe a merchant account pricing model where a fixed markup is applied directly to interchange fees published by Visa, MC etc.

Interchange = Credit card processing rates set by the card brand (Visa, MasterCard

Plus = Refers to the processor's markup that's applied to each credit card transaction (typically expressed as basis points)

Interchange Plus Plus Pricing

Interchange Plus Plus pricing works by adding a constant, flat margin on top of Interchange and Scheme Fees. So typically, Interchange Plus Plus pricing models will also be written in the three component format, with a percentage fee and per-transaction fee above Interchange and Scheme Fees.


If you are unable to qualify for a direct internet merchant account, you can still process credit card transactions using an account issued to you by an Internet Payment Service Provider (IPSP). An IPSP is a payments organization that can issue accounts for payment processing without going through an acquiring bank.



An ISO (Independent Sales Organisation) is an organization that is not an Association member (meaning not a Visa or MasterCard member bank), but which has a bank card relationship with an actual Association member. Such a relationship can involve various things, such as acquiring or issuing functions.



A Merchant Category Code (MCC) is a four-digit number assigned to a business by MasterCard or VISA when the business starts accepting one of these cards as a form of payment. The MCC is used to classify the business by goods or services it provides



Merchant Service Charge – a charge paid by a merchant to their acquirer, calculated as a percentage of credit card turnover for card transactions or a fixed charge per transaction for debit cards.


Multi-Currency Processing

The multi-currency processing system enables you to offer your products, and to receive payment, in many different currencies. Our standard merchant account sets up GBP, US Dollar and Euro as standard and for FREE.



Point of Sale (sometimes meaning Point of Service). Typically the physical location at which a merchant is sited and where card transactions are conducted - see also VPoS



A retrieval request, also known as a Request for Information (RFI) is raised by a credit card issuer when a cardholder disputes a transaction on their statement. This usually occurs when they don't recognise the transaction and need more information to work out whether they made it, or if it was fraudulent or unauthorised. If you don't respond in time, it may become a chargeback.


Settlement Period

The amount of time from someone paying you online via a credit or debit card to getting your money put (settled) into your chosen bank account.



Commands and/or code that can be integrated into HTML pages which are processed by the server when users request a file/page. It is commonly used to display content in the header or footer areas of web pages which allow you to make one page or content and share it among many and/or all pages of the website.


Transaction Charge

Credit cards charge a percentage of the sale for use and this amount is referred to as a transaction charge.




Basis Point

The term basis point is thrown around a lot in the credit card processing industry, but many sales people fail to realize that most people aren't quite sure exactly what a basis point is. Basis points are percentage points of a sale a merchant pays on every purchase made with a credit card to the acquiring bank. One basis point is equal to one hundredth of one percent (0.01%)

For example a transaction rate of 1.6% is 160 basis points.


The BIN (Bank Identifying Number) is the first four to six digits of a credit card. The bank identification number identifies the institution issuing the card (Visa, MasterCard, Amex etc.). It is critical to the correct matching of transactions to the issuer of the charge card.



A chargeback is the result when a merchant's credit card customer successfully disputes a transaction on their bill. Disputes typically arise from the customers dissatisfaction with the merchandise or services received.



A DMA (direct merchant account) is a merchant account you already have direct with a bank or PSP (payment service provider)

Dynamic currency conversion

Dynamic currency conversion (DCC) is a financial service in which credit card holders, when making a payment in a foreign country, have the cost of a transaction converted to their home currency at the point of sale. DCC allows customers to see the amount their card will be charged, expressed in their home currency. The currency conversion is done by the merchant or his representative card processor at the point of sale instead of by the credit card company when the account is charged



AKA eCommece (Electronic Commerce) is basically doing business online. Most times the site will integrate a shopping cart, SSL certificate, and a merchant account to process payments.



An algorithm used to scramble data which makes it unreadable to everyone except the recipient. This is often used by e-commerce sites to secure credit card data. Secure sites use encryption.


IP Address

This is a unique string of numbers that identifies a computer or server on the Internet. These numbers are normally shown in groups separated by periods. Example: is Google’s IP address. Hosting accounts for websites can have either a shared or unique IP address.



Know Your Customer (or ‘KYC’) is the due diligence that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. KYC policies have become increasingly important globally to prevent identity theft, fraud, money laundering and terrorist financing.


Merchant Account

A Merchant Account is an account opened through a bank that is a member of the Visa, MasterCard, or other credit card network which allows merchants to accept credit cards from purchasers. The funds are then transferred electronically to the merchants bank account.



For a business to accept online payments they need a Merchant ID. This number identifies the merchants specific bank account of which credit card funds are transferred.


Multi-Currency Conversion

Facilitating geo-location technologies, Multi-Currency Conversion can automatically deliver country-specific currencies or redirect to country-specific websites. Multi-Currency Conversion enables merchants identify a credit card's country of origin and offer the customer a choice between their home currency or the merchant's local currency. The Multi-Currency Conversion solution immediately accesses current exchange rates and calculates prices in the requested currency. The buyer then selects the transaction currency of choice and final settlement will occur in the merchant's home currency.



In order to have payments from your web site processed by the credit card networks you will have to apply to an approved Payment Service Provider, known as a 'PSP' Their function is to integrate your e-commerce enabled web site with the international credit card networks so that orders generated by your chosen 'shopping cart' software can be authorised and payment collected for you. This payment will be transferred to your Merchant Account for payment into your bank account.


Rolling Reserve

The rolling reserve holds a percentage (5 - 10%) of total approved gross transactions over the previous six month period. Following the seventh month of operation (and every month thereafter) the reserves generated from the first month of operation (and every month thereafter) will be forwarded to the merchant of each sale for a specified period, after which time it is paid to you.



SQL (Structured Query Language), pronounced "sequel," not "squeal." SQL is used to construct database queries and manipulate data help within relational databases. It was developed by IBM.



Encryption method for transferring data between a client and server (Secure Socket Layer)



If the acquiring bank ends the processing contract with the merchant on negative terms (not simply because of a change of policy), it is most likely that the account will be terminated. A TMF merchant account also known as a terminated merchant facility is the worst thing that can happen to your business. If your merchant account comes under a “TMF” it means that your account has been blacklisted and will remain so for a minimum of 5 years.


Virtual Terminal (VT)

Similar to the terminals used in stores that “swipe” the purchasers credit card. The virtual terminal allows the merchant account holder to enter the credit card information securely for processing of debits and credits.



The VPOS (Virtual Point Of Sale) is a Windows-based software application that provides all the necessary features required for processing credit and debit card transactions quickly and easily in situations where cards are not present. The VPOS is a straightforward, powerful and effective tool that helps companies boost sales.


Velocity Controls

Velocity controls are settings that determine transaction thresholds for a particular Merchant. i.e. how many times a merchant can try to process a card per day

Third Party Processing

A company accepting and processing credit cards on behalf of an entirely different business. Third party processing accounts are ideal for merchants that have difficulties getting or maintaining their own merchant facility. However they usually have very high transaction rates (10% plus).



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