Reviewing the Best Merchant Account Providers

The following is a list of basic terms that you’re likely to hear once you start getting serious about setting up a merchant account.

Cardholder: The owner of the card used to make a purchase.

Merchant : An individual or business that sells products or services.

Acquirer: The financial institution or other organization that provides card processing services to the merchant.

Credit Card Association: A network such as VISA® or MasterCard® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions

Issuer: The financial institution or other organization that issued the credit card to the cardholder.

Credit Card Authorization: The process that ensures the person charging an amount to their credit card has the available credit to cover the cost of the purchase. An authorization also verifies the billing information.

Payment Gateway: A service that provides a network among merchants, customers, and financial networks to process authorizations and payments. A third-party supplier like GeoTrust usually oversees the service.

Processor: A huge data center that processes credit card transactions and settles funds to merchants. The processor is connected with a merchant’s site on behalf of an Acquiring Bank through a Payment Gateway.

Settlement: Think of this as the final step. It is the method by which transactions with authorization codes are sent to the processor for the merchant to receive their payment. Settlement is like an electronic bookkeeping procedure that causes all the money from completed transactions to be directed to the merchant’s acquiring bank for deposit.