The 411 on mobile merchant jargon

The world of mobile merchant terminology is often intimidating. Even a trip to the bank can fill you with confusion as you try and interpret what all those acronyms stand for and what all the jargon actually means. And what’s a mobile merchant anyway? A mobile merchant is any entrepreneur or small business who transacts on the go with a mobile credit card machine – they don’t need to be in a set geographical location to receive payments. Whether they sell their good at markets or give personal training sessions at their clients’ homes, mobile merchants all have freedom and flexibility in common. We don’t want the liberation of being a mobile merchant be hampered by the jargon, so we’ve compiled a list of must-know terms – you’ll never get caught out again.

Automated Clearing House (ACH)

An automated clearing house is an automatic network for processing the billions of Rands worth of transactions that occur on a daily basis. These transactions are processed in batches, and include all manner of payment types from payrolls, merchant payments and direct debit transactions. These are usually high volume, low value payments. BankservAfrica, based in Johannesburg, is the biggest ACH in Africa.

Acquiring Bank

An acquiring bank (AKA acquirer) is the bank that accepts credit or debit card payments on behalf of a trader (someone who sells products or services). Payments are received into a merchant account that’s able to receive credit or debit card payments. In South Africa, most commercial banks offer merchant accounts.

Authentication

Authentication is the process of verifying an individual’s or business’ identity in order for the payment to be processed. Types of authentication include a PIN or a username and password for an online retail site.

Authorisation

When a customer uses their credit or debit card to pay for goods, the payment processor connects with the customer’s bank (the card issuing bank) to make sure sufficient funds are in their bank account. Once this has been confirmed by the bank, the payment is authorised.

Cardholder Authentication Programs

These are programs put in place by card associations to streamline the process of authentication for anyone using credit or debit cards provided by these associations. They offer defence to merchants, as well as security to customers. Verified by Visa and MasterCard SecureCode are two examples of these.

Chargeback

This is a return of the funds made in a transaction to a client’s account, if the transaction was not authorised by the customer in question. This might happen in the case of identity theft or if the customer doesn’t recognise a transaction made from their account.

Clearance

Payment clearance is the process by which transactions are conveyed, processed and confirmed before funds are released to the recipient.

Issuing Bank

The bank that issues credit or debit cards to patrons on behalf of the card association such as Visa, MasterCard or American Express. If you have a bank account with FNB, FNB would issue you an FNB Visa card on behalf of Visa.

Merchant Account

Owned by the merchant, this type of account is the business bank account into which funds are transferred from consumers paying with credit or debit cards.

Merchant Services Provider

Before a merchant can receive payments they must have a resources of doing so – an ecommerce site, or a point-of-sale device such as a credit card terminal or mobile credit card machine. The company that delivers these things is the merchant services provider. They have ties to many banks and card associations and take care of the admin involved in becoming ready to trade as a merchant.

Payment Gateway

A payment gateway is the linkage between a merchant and an ACH, allowing them to electronically submit their transactions to be processed.

PCI DSS

Payment Card Industry Data Security Standards are a set of stringent requirements put in place to protect cardholder data and ensure a reliable level of global data security.

Point-of-Sale (POS) Network

The place where purchases are made is called the point of sale. A POS network includes all the banks, credit and debit card holders and merchants involved in all the transactions that happen over these locations.

Processor

An acquiring bank must partner with a credit card processor in order to offer merchants the ability to accept credit or debit card payments into their merchant account. Visa and Mastercard are examples of credit card payment processors.