Account Basics

  Account Basics FAQs

How does credit/debit card processing work?

The process starts when the card or card number is entered into a terminal. This transaction is either authorized or declined. Once the payment is approved, it must be settled, either by batching or by automated settlement. After settlement, the funds are transferred or ACH’d (Automated Clearing House) into your selected bank account.

What is the benefit of accepting electronic payments?

By accepting electronic payments, such as credit/debit cards, you can improve your customer service, increase sales, reduce risk, and improve efficiency (speed of sale, record keeping, etc.).

What’s the difference between a credit card and debit card?

A debit card (also known as a bank card or check card) is a plastic card that allows funds to be withdrawn directly from either the bank account or from the remaining balance on the card.

A credit card is issued to users and grants them a line of credit, which the user can use to borrow money for payment or take a cash advance.

What’s a non-bankcard?

Transactions from Discover, American Express, Diners or JCB cards.

What is PCI?

The Payment Card Industry Data Security Standard (PCI DSS) is a set of comprehensive requirements for enhancing payment account data security and was developed to help facilitate the broad adoption of consistent data security measures on a global basis. The PCI DSS is a multifaceted security standard that includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures. This comprehensive standard is intended to help organizations proactively protect customer account data.

CBD Merchant Solutions requires all its merchants to comply with PCI DSS.

For more information please see the PCI DSS web site at

What is a discount rate?

The discount rate is the fee paid by merchants to debit/credit card processors as a fee associated with accepting general-use debit/credit cards (such as Visa, MasterCard, American Express and Discover). It varies depending on the nature of the transaction.

What is Interchange?

Interchange or “interchange fee reimbursement” is a complex pricing structure set by the payment networks that balances the costs of the card issuing bank and the merchant acquiring bank.  The Interchange rate is based on the card brand, regions or jurisdictions, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order, whether the card is present for the transaction, etc.).

Merchants do not pay Interchange.  Merchants pay merchant discount, which is set by the processor.

What are chargebacks? Is there a fee? How do I avoid them?

A chargeback is a transaction returned through a credit/debit card processing interchange by an issuer to an acquirer. Consumers may, under certain circumstances, dispute a purchase made from a merchant which could result in a chargeback. A transaction also may be returned because it was noncompliant with the merchant account rules.

In most cases, a chargeback fee is applied. Additionally, a series or history of chargebacks can place your business in a higher risk category causing your rates to increase. Some steps you can do to prevent chargebacks are: obtain the cardholder’s signature; check the cardholder’s identity; and do your best to resolve any issues before they are elevated to the card issuer or acquirer.

What is a transaction fee?

This term generally refers back to the discount rate. It can also be the flat fee charged per transaction. The transaction fee is charged every time you process a sale or return.

What is a retrieval fee?

A retrieval fee would be charged when a customer requested a copy of the transaction receipt for a purchase. Today’s technology of being able to reprint receipts in most instances has made this fee very rare to occur.

What is a transaction authorization?

An authorization is a communication between the card issuing bank and the merchant’s bank which verifies that there are enough funds or credit available to cover the transaction. The card issuing bank reserves those funds and provides an authorization code for the transaction.

How do I batch and settle?

Most merchant accounts are setup for auto-settle, however those accounts that utilize a batch settlement process, at the end of a day, the merchant reviews all the day’s sales to ensure they were authorized and signed by the cardholder. It then transmits all the sales at once, called a batch, to the acquirer to receive payment.

Settlement is the actual buying and selling of transactions among the merchants, processors and acquirers, along with the card-issuing entities.

How you batch and settle will depend on the technology that you are using.

What is a voice authorization and how do I do it?

A voice authorization is an approval response that is obtained through interactive communication between an issuer and an acquirer, their authorizing processors or stand-in processing are through telephone verification and authorization. Voice authorization transactions require a higher, per transaction fee.

Visa® & MasterCard® 800-228-1122

American Express® 800-528-2121

Discover® 800-347-1111

Diners Club® 800-525-9040

You will be required to give your merchant ID number.

What is the Address Verification System (AVS)?

The Address Verification System (AVS) is a system used to verify the identity of the person claiming to own the credit/debit card. The system will check the billing address of the credit/debit card provided by the user with the address on file at the card company. It is an important step in reducing the chance of fraud.

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