Plain-English glossary

Card processing terms, explained

The words on a card processing statement or a sales pitch, in the words you'd use yourself. Tap any underlined term on our site to see its definition without leaving the page.

ACH: A payment that comes straight out of a customer's bank account. Compared with a card, it cuts the cost of getting paid by two-thirds or more.; ACH stands for Automated Clearing House, the bank network that also moves paychecks and most bill payments. The money takes a few business days to arrive, so it suits invoices, rent and repeat billing better than a sale at the counter.; Example and related terms →; ACH & eCheck payments →
Assessments: Small fees Visa, Mastercard and the other card networks charge on every card sale. They're the same for every business.; Assessments are the second layer of every card fee, after interchange. Nobody can negotiate them, so a quote that claims to cut them isn't being straight with you.; Example and related terms →; Card processing rates explained →
Cash discount: Your posted price covers the cost of taking cards, and customers who pay cash get a discount off it.; It's a close cousin of dual pricing. The difference is how the prices are shown: one posted price with a cash discount, instead of two prices side by side.; Example and related terms →; Cash discount programs →
Chargeback: When a customer disputes a charge with their bank, and the bank pulls the money back from you while it's sorted out.; You can answer a chargeback with proof of the sale, like a signed receipt or a delivery record. Clear receipts and a recognizable business name on the customer's statement prevent a lot of them.; Example and related terms →
Dual pricing: You post two prices, a cash price and a card price, and the customer picks. It works the same for credit and debit cards.; Both prices are shown before the customer pays, on the menu, shelf tag or invoice. The card price covers the cost of taking the card, so you keep the full amount either way.; Example and related terms →; How dual pricing works →
eCheck: One payment pulled from a customer's checking account over ACH, often to pay an invoice online.; An eCheck and an ACH payment are the same thing for a business taking the money. Customers tend to say eCheck; banks tend to say ACH.; Example and related terms →; eCheck vs ACH, explained →
Effective rate: Your total card fees for the month divided by your total card sales. It's the one number that shows what taking cards really costs you.; Take last month's statement, divide the total fees by the total card sales, and you have it. It's the fairest way to compare two offers, because it counts every fee, not just the advertised rate.; Example and related terms →; How to lower your card fees →
Flat-rate pricing: One percentage for every card, like 2.9%. Easy to read, but you overpay on cheaper cards like debit.; A debit card costs far less to take than a rewards credit card. A flat rate charges you the same for both, so the rate is set high enough to cover the expensive cards.; Example and related terms →; Card processing rates explained →
Interchange: The fee the customer's bank charges on every card sale. It's the same no matter which processor you use.; Visa, Mastercard and the banks that issue cards set it. It's the biggest part of most card fees, and it varies by card: a plain debit card costs far less than a rewards card. No processor can lower it.; Example and related terms →; Card processing rates explained →
Interchange-plus pricing: You pay the bank's fee on each card at cost, plus one fixed markup you can see on your statement.; Because the markup is shown on its own, you can check it every month and compare it with other offers. When customers use cheaper cards, your fees go down with them.; Example and related terms →; Interchange-plus pricing →
Markup: The part of your card fee that goes to your processor. It's the only part anyone can negotiate.; Every pricing plan is a different way of showing, or hiding, the markup. Interchange-plus shows it on its own line. Flat-rate and tiered plans roll it into one number.; Example and related terms →
Merchant account: The account that lets your business take card payments and moves the money into your business bank account.; Example and related terms →
Merchant services broker: A company that compares processors for you and negotiates your pricing, instead of selling you one processor's plan.; Northwest Payment Brokers is a broker. We're paid by the processor you choose, and we stay on as your local contact after setup.; Example and related terms →; What a broker does →
PCI compliance: The card industry's security rules for any business that takes cards. They cover how card numbers are handled and stored.; Most small businesses meet them with a yearly questionnaire and secure card readers. Your processor can charge a monthly fee if the questionnaire isn't done, so it's worth checking your statement for one.; Example and related terms →
Processor: The company that runs your card payments and sends the money to your bank.; Example and related terms →
Surcharge: An extra fee added to a credit card sale to cover the cost of taking the card. It's allowed on credit cards only, never on debit cards.; The card networks cap it and require you to register first, post a notice, and show the fee on its own line of the receipt. Washington allows it within those rules.; Example and related terms →; Washington surcharge rules →
Tiered pricing: A plan that sorts each sale into a cheaper or pricier price level. The processor decides which level each sale lands in.; The levels are usually called qualified, mid-qualified and non-qualified. Because the processor picks the level, it's hard to predict or check what you'll pay.; Example and related terms →; Card processing rates explained →

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