The world of credit card processing has a language of its own. To help you understand a few of the most commonly used terms in the industry, North American Bancard has put together a guide for some of the most common, misunderstood terms in the industry.
Payment Gateway
A payment gateway is defined as an e-commerce application service provider that authorizes credit card payments for e-businesses, online retailers or traditional brick and motor stores.
Simply put, a gateway is any network that connects merchant POS terminals with transaction processing and settlement networks, such as the MasterCard and Visa settlement networks. Gateways can also provide related services, including transaction management and reporting. Gateways more commonly refer to an Internet Gateway, which allows merchants to set up shopping carts or accept transactions when the card is not present.
High Risk Gateway
A high risk gateway offers everything a payment gateway offers but for merchants who are considered high risk. But what makes a merchant high risk? Some credit card processors consider certain industries, like the adult industry, bail bonds and vaping shops high-risk because there is a higher potential for added fraud and chargebacks.
ACH
Automated Clearing House, or ACH, is commonly associated with payroll direct deposit and other recurring payments that networks commonly use to settle merchant card accounts or merchant cash advances.
Card Present and Card-Not-Present Transactions
A lot of talk, for some merchants, centers on card present and card-not-present transactions. NAB defines card present transactions as transactions that are made when a credit card is physically present. Merchants are charged different levels of fees by the card transaction processors (such as Visa, MasterCard), depending on the level of fraud risk involved during a transaction. Card present transactions, because the card is available for inspection, are considered less risky and carry lower fees than online or phone transactions.
Card-not-present is almost the complete opposite of card present transactions. They mostly occur on card transactions via the Internet or Mail Order/Telephone Order (MO/TO) purchases, during which the customer's card is not physically present and not handled by the merchant. Interchange fees are set higher on these transactions because there is a greater likelihood of fraud involved during the transaction process.
For more information on the industry, please visit our website. For information about merchant services, call 877-840-1952.
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