Understanding Merchant Account Terms


    Accepting debit and credit card payments in exchange for goods and services is a universal business concept. This means a company needs to establish a merchant account to process payments electronically. Most understand the idea at a basic level – a merchant account moves funds from a customer’s authorized payment method to the business’ bank account. While the principle is simple, to be an informed merchant, one must understand some basic merchant account terms regularly encountered when it comes to digital payment processing. Read on to learn more or check out our full payment glossary on our website to become a merchant account expert!

    Address Verification Services (AVS)

    A fraud tool useful in keyed credit card transactions such as telephone orders, mail, or purchases via the internet to reduce risks. A customers’ billing address is verified with the issuing bank to confirm they match.

    Automated Clearing House (ACH)

    ACH is an electronic check payment from your customer’s bank account to your business checking account. A company initiates a transaction by receiving authorization to debit their checking or savings account for a specific amount and obtaining the routing and account number. A file then passes to your merchant service provider for processing.

    Batch Processing

    A group of payment transactions received throughout a business day refers to a batch. Batch processing involves closing the group of transactions at one time. A batch is usually closed daily, either via a manual or automatic process.

    Card Not Present (CNP)

    A CNP payment is any electronic payment transaction where the card is not physically present and swiped. It encompasses all MOTO and web payment transactions.


    Chargebacks reverse a previous payment received from your customer. Common reasons for chargebacks include fraudulent or unauthorized charges, or the amount is disputed.

    Convenience Fee Processing

    Fee-Free Payments alleviates the majority of payment processing costs by passing a nominal fee on to the consumer in exchange for using an electronic card or ACH payment.


    Electronic payment encyption encodes and secures sensitive financial data.

    Integrated Voice Response (IVR)

    This telephony system utilizes a series of predetermined responses to capture and automatically process payment information from a customer without ever having to speak to a live agent.

    Payment Card Industry Security Data Security Standards (PCI-DSS)

    This network established a set of rules merchants must abide by to protect cardholder information and reduce the risk of data theft. Meeting these requirements makes a business PCI compliant.

    Real-Time Processing

    The ability to process payments in a live environment without any delays.

    We hope this quick run-down helps you understand basic merchant account terms. At Payment Savvy, we always want to ensure you are educated and informed on the payment process from start to finish. Have more questions? We’d love to know how we can create the perfect payment for your business. Be sure to reach out to our knowledgable team today!

    Responsible for keeping Payment Savvy running like a well-oiled machine, Eli has extensive experience with everything related to technology and financial services. Maintaining back-end operations efficient and productive isn't his only strong suit, Eli is also a key component of our sales team and is in constant pursuit of perfection. In charge of ground-breaking partnerships, he is always on the lookout for the next innovative product offering for our Savvy clientele. Eli's knowledge of the payment processing cycle and critical compliance standards ensure our customer base always has an educated and expert opinion if needed.


    high-risk merchant accounts

    High-Risk Business with Stripe, PayPal, Square, Venmo

    By Chad Deatherage | May 17, 2023

    Certain activities, or the industry you work in, may cause payment processors to characterize your merchant account as high risk. It isn’t uncommon for some businesses to process online payments and get higher-than-average returns, but your reputation and industry play an important role. Having your merchant account suspended will undoubtedly lead to revenue loss and…

    Automated Clearing House acronym with marker

    Instant ACH Transfers Online

    By Chad Deatherage | May 16, 2023

    Our current era has been shaped by digitization with a fundamental impact on all sectors, including banking and finance, where it has brought unprecedented convenience, security, and efficiency. The backbone of these developments is none other than America’s Automated Clearing House (ACH) which facilitates seamless electronic transactions between banks and financial institutions within its network.…

    FedNow instant payments service

    A Comprehensive Guide to FedNow

    By Chad Deatherage | May 15, 2023

    The Federal Reserve Bank is currently developing a new instant payment service called “FedNow” that will allow financial institutions to make instant payments. The FedNow Service will begin operating in July 2023 and it is the first U.S. government-created and -backed portal that will enable financial institutions to send and receive payments in real-time 24…