Browse 26 essential credit card processing terms and definitions used by professionals in Long Beach.
Term Index
Open any term below for a dedicated definition page.
Acquirer is a financial institution or bank that processes credit and debit card payments on behalf of merchants, enabling them to accept card payments from customers. Acquirers facilitate transaction authorization, settlement, And funding by connecting merchants to card networks like Visa, Mastercard, And American Express. While assuming financial liability for approved transactions.
Address Verification Service is a fraud-prevention tool used by payment processors and merchants to confirm that the billing address provided by a cardholder matches the address on file with the card-issuing bank. It compares numeric portions of the address—typically the street number and ZIP code—during card-not-present transactions to reduce unauthorized use and lower chargeback risk.
Batch Processing is the practice of collecting multiple credit card transactions over a set period—typically a business day—and submitting them together as a single group to the payment processor for settlement. This method contrasts with real-time processing, where each transaction is authorized and settled individually at the point of sale.
Card Not Present is a transaction type in which the physical payment card is not presented to the merchant at the time of purchase. These transactions occur primarily online, over the phone, via mail order, Or through recurring billing, requiring merchants to rely on card details like the number, expiration date.
Card Present is a transaction type in which the physical payment card is physically present and read by a payment terminal at the point of sale. Card Present transactions occur in face-to-face settings such as retail stores, restaurants, Or service counters, where the card’s magnetic stripe, EMV chip, Or contactless NFC interface is used to capture payment data directly from the card.
CVV is a three- or four-digit security code printed on credit and debit cards to verify that the cardholder physically possesses the card during a transaction. CVV stands for Card Verification Value and is also known as CVC, CVV2, Or CID, depending on the card network. This code is not embossed or stored in the magnetic stripe, making it harder for fraudsters to obtain during data breaches.
Discount Rate is the fee a merchant pays to a payment processor for each credit or debit card transaction, expressed as a percentage of the transaction amount plus a fixed per-transaction fee. This rate covers the cost of processing the payment, including interchange fees, assessment fees, And the processor’s markup.
EMV Chip is a small microprocessor embedded in payment cards that generates unique transaction codes for each purchase, replacing static magnetic-stripe data. EMV stands for Europay, Mastercard, And Visa—the three companies that developed the global standard. EMV Chips reduce fraud by making card duplication nearly impossible and are now the worldwide norm for secure in-person payments.
Federal Trade Commission Compliance is adherence to laws and regulations enforced by the U.S. Federal Trade Commission (FTC) to protect consumers from deceptive, unfair, Or fraudulent business practices. It applies to credit card processing, marketing, data security, And financial services, requiring transparency, accurate disclosures, And fair treatment of customers. Non-compliance can result in legal penalties, fines.
FTC Compliance is adherence to regulations enforced by the Federal Trade Commission (FTC) that protect consumers from deceptive, unfair, Or fraudulent business practices. It applies to credit card processing, marketing, data security, And financial transactions, requiring businesses to disclose terms clearly, avoid hidden fees.
Independent Sales Organization is independent Sales Organizations (ISOs) are third-party companies authorized by payment card networks (like Visa and Mastercard) to solicit, underwrite, And support merchant accounts that accept credit and debit card payments. ISOs act as intermediaries between merchants and acquiring banks, handling sales, customer service.
Interchange Fee is a non-negotiable transaction cost set by card networks like Visa, Mastercard, And Discover, paid by merchants to the card-issuing bank for each credit or debit card purchase. Interchange Fee covers fraud risk, processing costs, And network operations, varying by card type, transaction method, And merchant category.
Magnetic Stripe is a thin band of magnetically encoded data embedded on the back of credit, debit, And other payment cards. Magnetic Stripe stores account information, such as card number, expiration date, And cardholder name, which is read by swiping the card through a magnetic stripe reader. This technology has been a standard for card payments since the 1960s but is gradually being replaced by more secure alternatives like EMV chips.
Merchant Category Code is a four-digit number assigned by payment card networks to classify businesses by the type of goods or services they provide. These codes help processors, banks, And card networks determine interchange fees, assess risk levels, And apply regulatory rules like chargeback protections or spending limits based on the merchant’s industry.
Near Field Communication is a short-range wireless technology that enables secure, contactless data exchange between devices within approximately 4 centimeters of each other. Near Field Communication operates at 13.56 MHz and supports three modes: reader/writer, peer-to-peer, And card emulation, making it ideal for mobile payments, access control, And quick data transfers without physical contact or pairing.
Payment Card Industry Data Security Standard is a global security framework established by major card brands (Visa, Mastercard, American Express, Discover, And JCB) to protect cardholder data from theft and fraud. It sets mandatory technical and operational requirements for any organization that stores, processes, Or transmits payment card information, ensuring consistent security across the payment ecosystem.
Payment Processor is a financial technology company or service that facilitates electronic transactions between merchants, customers, And financial institutions. Payment Processors handle the authorization, clearing, And settlement of credit card, debit card, And other digital payments, ensuring funds are securely transferred from the customer’s bank to the merchant’s account.
PCI Compliance is a set of security standards designed to ensure that all companies that accept, process, store, Or transmit credit card information maintain a secure environment. Established by the Payment Card Industry Security Standards Council (PCI SSC), these standards aim to protect cardholder data from breaches and fraud. Compliance is mandatory for any business handling payment card transactions, regardless of size or transaction volume.
PCI SAQ is a set of self-assessment questionnaires developed by the Payment Card Industry Security Standards Council (PCI SSC) to help merchants and service providers validate their compliance with the Payment Card Industry Data Security Standard (PCI DSS). These questionnaires simplify compliance reporting by allowing eligible organizations to self-evaluate their security practices without requiring a full on-site audit by a Qualified Security Assessor (QSA).
PCI Self-Assessment Questionnaire is a compliance validation tool used by merchants and service providers to evaluate their adherence to the Payment Card Industry Data Security Standard (PCI DSS). It consists of a series of yes-or-no questions covering security practices, policies, And technical safeguards that protect cardholder data. Completion of the appropriate questionnaire is required annually for businesses that handle credit card transactions but do not undergo a formal on-site audit.
Recurring Billing is an automated payment process that charges a customer’s credit or debit card at regular intervals for ongoing services or subscriptions. It eliminates manual payment collection by securely storing payment details and initiating transactions on predefined schedules, such as monthly, quarterly.
Retrieval Request is a formal inquiry initiated by a cardholder’s bank to obtain transaction documentation from a merchant, typically before a chargeback is filed. It serves as an early warning that a customer disputes a charge and requests proof of purchase, authorization, Or delivery. Unlike a chargeback, a retrieval request does not immediately deduct funds but requires prompt merchant response to avoid escalation.
Settlement is the final step in credit card processing where funds from a customer’s transaction are transferred from the cardholder’s bank (issuing bank) to the merchant’s bank (acquiring bank). This process ensures merchants receive payment for sales after authorization and batch processing are completed, typically within 1-3 business days.
Swipe Fee is the per-transaction cost merchants pay to accept credit or debit card payments when a card is physically swiped, dipped, Or tapped at a terminal. Swipe Fee covers interchange costs, assessment fees.
Tokenization is a data security process that replaces sensitive payment card information, such as a 16-digit card number, with a unique, non-sensitive identifier called a token. This token has no intrinsic value and can't be reverse-engineered to reveal the original card details, reducing the risk of data theft during transactions or storage.
Virtual Terminal is a web-based application that allows merchants to manually enter and process credit card payments through a computer or mobile device without requiring a physical card reader. Virtual Terminals enable Card Not Present transactions by providing a secure interface for businesses to input payment details, verify customer information, And complete transactions remotely, often used for phone, mail, Or invoice orders.
