Merchant Accounts Key Terms

Don't get boggled by unfamiliar merchant account terms

When setting up a merchant account, it's important to understand all the financial jargon that accompanies this type of account. Because merchant accounts process credit and debit cards and electronic checks, the technology is more advanced than a typical savings account.

Knowing the correct terminology allows you to select the right merchant account for your business without sacrificing any necessary features. Customers will also appreciate a business owner who is knowledgeable about the company's security when accepting credit cards.

 

Dynamic currency conversion

A merchant account that offers dynamic currency conversion allows business owners to accept foreign currency with little hassle. Dynamic currency conversion works by automatically converting the foreign currency to U.S. dollars and then depositing the amount into the merchant account.
Try: Visit the Wachovia website for an example of how a financial institution provides currency conversion service. To see an illustration of a receipt of a transaction that has been processed with dynamic currency conversion, visit DCC Merchant Services.

Point of sale (POS)

In its most basic definition, the point of sale is where the customer enters the credit card information for the transaction. Often referred to as simply POS, this term can be applied to a terminal connected to a cash register, the checkout page on a business's website or the application software that processes the information.
Try: For a detailed explanation of how point-of-sale applications work, visit the Microsoft Developer Network (MSDN).

Secure socket layer (SSL)

Secure socket layer, also called transport layer security, is a necessity for any business conducting transactions online. Secure socket layer is a system of encryption that ensures the customer's credit card number and other personal information are safe from hackers. Customers can make sure their information is protected with secure socket layer be looking for a small gold padlock on the website and a web address that begins with "https://".
Try: For answers about secure socket layer in layman's terms, read through frequently asked questions about secure socket layer encryption at RapidSSL.com.

Payment processor

A payment processor, also called a payment gateway, acts as the middleman between online sales and the merchant account. Although it's not necessary to have a payment processor, some companies choose to use one because many offer additional security for the business by requiring the customer to enter their credit card's verification number.
Try: Learn more about the types of services a payment processor offers at Google Checkout. Review the definition of a payment processor and other detailed information from the Federal Deposit Insurance Corporation (FDIC).

Mail order/telephone order

Mail order/telephone order transactions are often referred to as MOTO transactions. Accepting MOTO transactions ensures the company doesn't overlook customers who aren't comfortable entering information into a website. Some merchant accounts include MOTO processing in their basic features.
Try: Read more about how credit cards are processed over the phone or by mail at GSPAY. Merchant Warehouse offers a step-by-step model that explains how MOTO transactions are processed.

Real-time processing, batch processing

With real-time processing, the customer's transaction is processed during the checkout process. The alternative to real-time processing is batch processing, in which credit card numbers are stored and then manually processed at a later date. Payment processors offer real-time processing and are an option when the merchant account does not include the service.
Try: Read more about real-time processing at MerchantSeek. For an example of a services offered with a batch processing account, visit Sage Payment Solutions.

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