Statement terms
Merchant Services Glossary
Plain definitions for the terms used in card processing and on merchant statements.
Short answer
What do the terms on a merchant statement mean?
Merchant statements use terms for payment activity, pricing, and account charges. Interchange relates to the issuing bank, assessments relate to card networks, and processor markup is an added processor cost. Use this glossary to understand a label, then check your agreement for how that term applies to your account.
Terms from A to Z
Definitions
- Assessments
- Fees the card networks themselves charge on card volume and on some transactions. Like interchange, they are set by the networks, not by your processor.
- Batch
- The group of card sales a business closes and sends for settlement, usually once a day. Some processors charge a fee every time a batch closes.
- Card not present
- A sale where the card is not physically at the terminal: online, by phone, by invoice or keyed in by hand. These sales usually cost more to process than a tapped or dipped card.
- Cash discount
- A program where posted prices include the card cost and customers who pay cash get a discount. Rules differ by state and by card brand, so confirm them before you use one.
- Chargeback
- When a cardholder disputes a charge and the bank pulls the money back from the merchant. Processors usually charge a fee for each chargeback, whatever the outcome.
- Flat rate
- One rate for every card sale, whatever the card type. Simple to read, but the processor keeps the difference when the underlying cost of a card is lower.
- Interchange
- The fee the card issuing bank charges on every card sale. Visa, Mastercard, Discover and American Express publish the interchange tables, and the amount depends on the card type and how the card was taken.
- Interchange plus
- A pricing model where you pay the actual interchange and assessments, plus a fixed markup that is shown separately. It is the easiest model to check on a statement.
- ISO
- Independent sales organization: a company that sells merchant accounts and processing on behalf of a processor or bank. Many merchants buy from an ISO without knowing it.
- Merchant account
- The account that lets a business accept card payments and receive the money. It is approved by a processor's underwriting team based on the business, the owner and its history.
- Payment gateway
- The service that passes card payments from a website, app or virtual terminal to the processor. A gateway can bill its own monthly and per transaction fees on top of processing.
- PCI compliance
- Meeting the card industry's data security standard. Processors often charge a monthly or yearly PCI fee, and a separate non compliance fee if a yearly questionnaire is not completed.
- Processor markup
- What your processor adds on top of interchange and assessments. It is the part of your cost that is negotiable, and it can hide inside rates, per item fees and monthly fees.
- Surcharge
- An extra charge added to a credit card sale to cover processing. Card brand rules and some state laws limit how and where it can be used, and it cannot be added to debit cards.
- Tiered pricing
- A pricing model that sorts sales into buckets such as qualified, mid qualified and non qualified, each with its own rate. The processor decides which bucket a sale lands in, which makes the true cost hard to see.
- Tip adjust
- Changing an authorized card sale to add the tip after the guest signs. If the final amount strays far from the authorization, the sale can cost more to process.
- Virtual terminal
- A web page where staff type in a card to take a payment, often over the phone. Payments taken this way are card not present.
Put the terms in context
Follow the guide to reading a merchant statement to connect fee labels with sales, deposits, and your processing agreement.
Common questions
Still not sure? Ask us directly.
Do all statements use the same fee names?
No. Providers may use different labels or combine charges. A definition helps explain the concept, but your agreement and provider should confirm what a specific statement line covers.
Is processor markup the same as interchange?
No. Interchange relates to the card issuing bank. Processor markup is an added processor charge. Whether they appear separately depends on the pricing model.
Is a chargeback the same as a refund?
No. A refund is a return of money initiated by the merchant. A chargeback follows a cardholder dispute through the card issuing bank and may involve a separate processing fee.
Can this glossary tell me whether a fee is correct?
It can explain a term, but it cannot verify a charge by itself. Compare the statement with your agreement, transaction records, and any notices about changes to your account.
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