Basic Credit Card Processing Terms Defined

Do you know all you should about basic credit card processing terms? Credit card processing can be a confusing industry. There are many terms and a lot of players, but it pays to understand how it all works to make sure you get the best services for your business. A lot of companies who provide payment processing don’t want business owners to know how it works – this way, they can get away with charging very high markups and unnecessary fees without argument from their customers.

Below is a brief list of some key terms you will find in the credit card processing industry. This list is by no means exhaustive but will provide a good summary of key players and institutions you may encounter as you research the best options for your company.

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Merchant Services

These are authorized financial services organizations that allow businesses to accept credit or debit cards online or in person. Any business that wishes to accept credit cards must have a merchant services account.

Independent Sales Organization

This is a third-party company that is authorized by banks to handle merchant services accounts for businesses. Banks also offer their own merchant services for businesses, but oftentimes you will experience better customer support, lower rates, and more advanced technology with Independent Sales Organizations.


If you have a debit or credit card, then you are already pretty familiar with this role. This person holds a card from an issuing bank that can be presented for payment.

Card Association

Card associations are made up of VISA, Mastercard, Amex, and Discover. These are not banks, but rather governing bodies with responsibilities such as setting interchange fees, arbitrating between issuing and acquiring banks as well as maintaining and improving their card networks.


Interchange is the lowest possible cost of accepting cards for business owners. Card associations charge interchange in exchange for the business to be able to accept their cards. Every merchant pays interchange if they accept credit cards, regardless of size or industry.

Acquiring Bank

The acquiring bank is the merchant’s bank. These banks hold the merchant’s funds and acquire the money from purchases made. In the context of credit card processing, acquiring banks accept the money from a card transaction once the card is authorized and deposit that money into the merchant’s business account.

Issuing Bank

The issuing bank is the cardholder’s bank. They issue cards to the cardholders and are members of associations like VISA or Mastercard. Issuing banks pay the acquiring banks for the purchases their cardholders make. The cardholder then has the responsibility to pay back the issuing bank in accordance with their credit card agreement.

In some cases, acquiring banks will contract with merchants and set up merchant accounts. These accounts allow the merchant to accept credit cards. The other option merchants have is processing credit cards through an Independent Sales Organization, or ISO. As mentioned above, these companies are certified and handle the day-to-day activities of merchant accounts and have unique benefits over bigger banks.

Stax is one of the only ISOs on the market that is dedicated to the success of businesses of all sizes. With leading technology and dedicated customer support, Stax helps small businesses stay competitive and grow with the ability to accept credit cards.

To learn more about our suite of payment processing solutions or to request a custom quote, speak to a Payments Consultant today.

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