Merchant Services Key Terms

Learn about how merchant services work to process payments

Merchant services are the standard way merchants accept and process credit card payments. Merchant services work with all of the major credit card companies to provide a standard system for processing credit card payments through point-of-sale technology or online payment processing. Any businesses wanting to accept credit card payments from their customers needs to use merchant services offered through a merchant account. This will establish a connection between the merchant and the credit card company.

 

Merchant account

A merchant account is a system that processes credit card payments from the point of sale to the credit card company. Merchant accounts provide the money from the transaction to the business within two or three days.
Try: MerchantSeek explains the concept of a merchant account, the requirements for obtaining and using an account, plus the rates and fees associated with using the account.

Activity limit

An activity limit is the maximum amount of money or the maximum number of transactions allowed to be authorized within a specific amount of time.
Try: The Federal Deposit Insurance Corp. (FDIC) provides information on activity limits of merchant accounts in its Credit Card Activities Manual.

Arbitration

Arbitration is the process of resolving a charge-back dispute or fraud claim between the card holder and the merchant account. Fines are sometimes assessed and it is through the arbitration process that the parties determine who is responsible for paying the charges.
Try: The Finance Industry Regulastory Authority (FINRA) provides an outline of the arbitration and mediation process merchants and credit card companies go through when there is a dispute.

Merchant processing agreement (MPA)

A merchant processing agreement is a written agreement between a merchant and the acquiring bank that refers to the acceptance of bankcards.
Try: TechAgreements provides an example of an MPA with an option to purchase the complete document.

Per transaction fee

The per transaction fee a is a fee assessed and charged to the merchant for every transaction processed through the account.
Try: All Business provides information on credit card transaction fees and advice on how to choose merchant services that offer the lowest per transaction fee.

Merchant qualification standards

Merchant qualification standards are the minimum standards put forth by credit card companies to accept merchants. By these standards, the merchant is required to have a good financial standing and be financially responsible.
Try: VISA provides resources for download that include the standard merchant practices and qualifications.

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