Merchant Solutions and Credit Card Processing

Merchant Solutions And Credit Card Processing

Are you an eCommerce business owner looking for merchant solutions for credit card processing?  You may be a little confused about all the words and phrases you’re encountering surrounding payment processing. Business owners have enough on their plates already concerning day-to-day business operations, let alone having to be concerned with confusing payment terminology and merchant solutions. But the truth of the matter is, if your business has no credit card payment processing solutions, you’d be leaving a huge chunk of revenue on the table. Additionally, if you’re an eCommerce merchant, you know how difficult it can be to get online payment processing solutions for your business. If you keep getting denied for credit card processing, or can’t keep your merchant account open through the aggregate payment processors like PayPal, Stripe, or Square, we’re here to help. Alternatively, if you’re looking for help with chargebacks, feel free to contact us for more information.

Merchant Account & Merchant Solutions Terminology

Merchant Account

Aggregate Merchant AccountA merchant account is almost like a personal bank account except it is for a business. It is the place where all your credit card sales are deposited after being processed.

Payment Gateway

A payment gateway connects a merchant’s POS or eCommerce cart software to its merchant account and initiates the payment processing journey.


Also known as CNPs, these are credit card purchases typically carried out in eCommerce shops, telephone orders, or recurring billing schedules. Moreover, these types of transactions are especially vulnerable to fraud due to limitations in ID verification.

Aggregate Merchant Account

An aggregate merchant account is a merchant account that is shared between multiple merchants. Furthermore, these types of merchant accounts are set up through PayPal, Stripe, and Square. In summary, here are a few key takeaways about these types of merchant accounts are:
  • Typically have quick approvals
  • Lowest processing rates
  • Vulnerable to being shut down due to chargebacks
  • Won’t accept high risk or CNP merchants

Dedicated Merchant Account

A dedicated merchant account is a merchant account that is set up just for one merchant. Important aspects of these types of merchant accounts you should know about are:
  • Takes a little longer for approval
  • Processing rates are higher
  • Resilient to chargebacks
  • Accept all business types, including high risk and CNP

High Risk Business Terminology

High Risk Business

A high risk business is a type of business within an industry that sees a higher than average rate of credit card chargebacks than a lower risk business. Due to their card-not-present nature, many eCommerce shops fall into a high risk classification. Payment processors that operate aggregate merchant accounts will not accept high risk merchants. Before you try to apply for a merchant account, make sure you know if you’re high risk. Factors that contribute to risk include:
  • Government regulations
  • Subscription or recurring billing models
  • Card-Not-Present processing
  • Reputational risk
  • Rate of fraud
  • Merchant has bad credit
  • Business does not have a long processing history

Credit Card Chargeback

A chargeback happens when a credit card user requests a refund on charges from their credit card provider instead of from the merchant. Customers dispute transactions for many reasons, the most common being:
  • Duplicate transactions
  • Item or service not as described
  • Identity theft or fraud

Chargeback Fraud

Also referred to as “friendly fraud,” chargeback fraud happens when customers fraudulently request chargebacks without a legitimate reason and with the intent to defraud a merchant. This is especially damaging to eCommerce and card-not-present retailers because it is hard to verify identity at checkout.

Bank and Finance Terminology

Credit Card Processing Terminology

Issuing Bank

 An issuing bank is an institution that extends a line of credit to a credit card user. Credit card networks like Visa, Mastercard, and Discover consist of several issuing banks. The credit card user is responsible for paying their issuing bank for their credit card transactions.

Acquiring Bank

 An acquiring bank is an institution that provides merchant accounts to businesses. In a standard credit card transaction, the customer’s issuing bank transfers funds to the acquiring bank. At the end of the day, the acquiring bank deposits funds into the merchant account minus interchange and acquiring fees.


An ISO is an abbreviation for an Independent Sales Organization. ISOs are a third-party provider that works on behalf of large financial institutions to provide day-to-day merchant services. PayKings is a registered ISO.

Payment Processing Terminology Video

Hopefully, by the end of the video, you will have a good understanding of the many intricacies that surround the payment processing industry. Being a registered ISO, the experts at PayKings are happy to assist your business in whatever payment processing needs you may have. We work with all business types, from low risk merchants to high risk businesses, to provide affordable rates on your merchant account and merchant services. Apply for a quote on your merchant account through our website, or call us at 1-727-300-0277 today.

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