Know the Lingo: Basic Terminology for Merchant Accounts

Jul 12, 2016 by

When you’re trying to research something new, like credit card processing, you’re going to need some foundation for the lingo so you understand what is being discussed. There are many terms related to merchant accounts, almost too many to list in a single article, so these terms are some of the most important. After reading this guide, you should have a firm understanding of terminology you can use to help find the best merchant account for your business.

Merchant Bank

The merchant bank is responsible for providing the means to facilitate a transaction, also known as a payment gateway. They may not design that gateway, but they allow customers to utilize it in order to securely send money online or in-store. Aggregators, like PayPal, design their own solutions and allow transaction processing without the “bank” nomenclature.


The processor is the middleman for your transaction, which routes the credit information. When you slide a card through a credit card machine, the processor passes the information to the gateway that sends the data to the merchant bank.

Issuing Bank

The customer’s bank, or the bank issuing funds to cover the costs of the transaction (including the purchase, and associated taxes). These institutions give credit cards to consumers, and usually pay the costs up front while charging customers interest to pay those costs back.


Secure Sockets Layer, a form of encryption that helps anonymize and protect financial data as it is passed from the issuing bank to the merchant bank.


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