Education · A–Z reference

Payment Processing Glossary

Plain-English definitions for every term you'll encounter on your merchant statement — so you know exactly what you're paying for.

ACH Reject

The attempt from a processor to collect fees from the merchant failed because the merchant's bank account has insufficient funds.

Additional / Other Authorizations

Usually reflects excessive authorizations over the total number of sales. Can also refer to extra per-item charges, voice authorizations, or gift card transactions.

Amex

Reports per-item fees for American Express transactions. A discount fee assessed towards the volume may also appear.

Annual Fee

The total annual charge divided into a monthly fee, which can include all annual fees lumped together such as admin, regulatory, and PCI charges.

Annual PCI Fee

An annual fee covering the cost of maintaining PCI compliance. Some companies may charge monthly rather than annually.

Application Fee

A one-time fee charged by the processor to cover the cost of the screening and application process. Only some processors refund this fee after approval.

Assessments

Usually a fixed percentage applied to the gross sales volume by each of the card associations (Visa, Mastercard, Discover, Amex).

AVS

The Address Verification System is a security tool that compares the billing address entered at checkout against the one on file for the card to help prevent fraud.

Batch Fee

A fee charged each time daily sales are settled, usually at the end of each business day.

Batch Settlement

The process of closing daily sales transactions — a fee is charged each time this settlement occurs.

Breach Protection

A fee that helps cover expenses a merchant can incur should a cardholder data breach occur.

Chargebacks

A fee incurred when a fraudulent charge occurs or a customer successfully disputes a charge with their bank.

Discount Collected

Fees due to the processor — collected either daily or monthly depending on the agreement.

Downgrades

This fee reflects Mid-Qualified and Non-Qualified surcharges applied when a transaction does not meet standard interchange criteria.

Effective Rate

The estimated total rate as a percentage that will be charged for all processing fees combined.

Estimated Total Fee

The estimated total dollar amount that will be charged for processing in a given period.

Interchange

A fee paid between banks for the acceptance of card-based transactions. Includes Visa, Mastercard, Discover, Amex, and international charges.

MC Access Fee

The MasterCard Network Access Usage Fee applies to US-acquired MasterCard gross sales and return transactions.

MC Annual License Fee (ALF)

Assessed to acquirers based on their total MasterCard annual sales volume.

MC Cross Border Fee

Applies to any transaction where the merchant's country differs from the country where the card was issued.

Misc Fees

Reflects charges that are not listed elsewhere — used as a catch-all for various processor fees.

Monthly Fee

A fee charged to maintain and service your merchant account, covering statement preparation and mailing.

Monthly Gateway

Monthly service fee to access internet or wireless payment gateways.

Monthly Minimum

The minimum discount fee amount your merchant account provider requires you to generate each month.

Monthly PCI Fee

A monthly fee covering the cost of maintaining PCI Compliance. Some companies charge annually instead.

Monthly Statement Fee

A fee charged for sending a monthly statement — mostly covers paper and postage costs.

Next Day Funding

A fee assessed so a merchant can receive their daily deposit one day earlier than the standard funding cycle.

PCI Compliance

Fees related to the mandatory PCI Compliance Service Program to protect cardholder data. Non-compliance fees may also be assessed.

PIN Debit

The per-item fee charged for PIN-based debit card transactions.

PIN Debit Access

Monthly service fee to use the PIN Debit networks.

Processing Fee

Discount and per-item fee assessed by the processor to maintain and support your merchant account.

Regulatory Fee

A fee assessed by processors to cover the cost of reporting merchant income to the IRS for tax compliance.

Reprogramming Fee

The fee for reprogramming a merchant's existing terminal, POS system, or software from another provider.

Retrieval / Retrievals

A fee charged when a customer or issuing bank requests a copy of a sales draft to substantiate a transaction. Also known as a 12B Letter Fee.

Setup Fee

A one-time fee charged by the processor when the merchant is established.

Signature Debit

Also known as Online Debit or Visa/Mastercard check cards — debit transactions processed without a PIN.

Transaction Integrity Fee

Assessed on transactions that are not eligible or fail to meet CPS qualification criteria.

V/MC/Disc Fee

Transaction fee charged for Visa, Mastercard, and Discover transactions.

Variance

Reflects small discrepancies such as rounding issues — used as a catch-all to balance the merchant's total fees.

Vendor Markup

The rate charged by the processor on transactions — does not include interchange, association, or other third-party fees.

Visa FANF

The Visa Fixed Acquirer Network Fee is charged to a merchant's acquirer based on the merchant's size and number of locations.

VS Access Fee

The Visa Authorization Processing Fee applies to all Visa-branded authorizations acquired in the US.

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