Glossary of Merchant Services Terms
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Questions and Answers

Average ticket size is calculated by dividing total sales by the number of products sold.

False

Brick-and-mortar businesses usually have lower operating costs compared to web-based businesses.

False

Trade shows often showcase products and services across various industries.

True

The EBT card allows participants to pay for items using cash benefits only at participating locations.

<p>True</p> Signup and view all the answers

Payment processors are responsible for transmitting information exclusively between customers and retail stores.

<p>False</p> Signup and view all the answers

B2B transactions occur between businesses and consumers.

<p>False</p> Signup and view all the answers

Companies that participate in trade shows do so to promote their competitors' products.

<p>False</p> Signup and view all the answers

The average ticket size is a key performance measurement for various business sectors, including retail.

<p>True</p> Signup and view all the answers

The interchange rate is a fee that merchants pay with every credit card and debit card transaction.

<p>True</p> Signup and view all the answers

The discount rate refers to the interest rate charged to consumers for long-term loans.

<p>False</p> Signup and view all the answers

NACHA stands for the National Automated Clearing House Association.

<p>True</p> Signup and view all the answers

ACH payments are primarily made through credit card networks like Mastercard and American Express.

<p>False</p> Signup and view all the answers

A PIN debit transaction is completed using a password entered by the customer at the point of sale.

<p>True</p> Signup and view all the answers

The Debit Network only allows for ATM cash withdrawals and does not support online transactions.

<p>False</p> Signup and view all the answers

Landing pages are only effective after a customer has made a purchase.

<p>False</p> Signup and view all the answers

Retargeting involves showing ads to users after they leave a website without making a purchase.

<p>True</p> Signup and view all the answers

Storytelling is a one-way interaction between the teller and the audience.

<p>False</p> Signup and view all the answers

Merchant Acceptance allows businesses to process payments through cash only.

<p>False</p> Signup and view all the answers

A Restricted Industry Addendum is not necessary for industries with low risk in payment processing.

<p>True</p> Signup and view all the answers

Bank Disclosure includes information about fees and terms associated with payment processing services.

<p>True</p> Signup and view all the answers

Storytelling does not require any interaction from the audience.

<p>False</p> Signup and view all the answers

Retargeting can display relevant ads to users based on specific pages they have visited.

<p>True</p> Signup and view all the answers

CRM systems help with contact management and sales management.

<p>True</p> Signup and view all the answers

Email marketing is only useful for the initial stages of the customer relationship.

<p>False</p> Signup and view all the answers

Community engagement focuses solely on geographic location.

<p>False</p> Signup and view all the answers

A fan page is a personal profile for sulking.

<p>False</p> Signup and view all the answers

Email marketing helps achieve objectives like notoriety, image, and action.

<p>True</p> Signup and view all the answers

CRM solutions are limited to customer interactions in sales only.

<p>False</p> Signup and view all the answers

One of the main benefits of email marketing is its scalability.

<p>True</p> Signup and view all the answers

Agent productivity is not a focus of CRM systems.

<p>False</p> Signup and view all the answers

A merchant account allows a business to accept and process electronic payment card transactions.

<p>True</p> Signup and view all the answers

Fees charge refers to a variable price charged for a specific service.

<p>False</p> Signup and view all the answers

CDP stands for Credit Discount Program and allows businesses to absorb credit card fees.

<p>False</p> Signup and view all the answers

The effective rate (AER) is calculated only for secured loans.

<p>False</p> Signup and view all the answers

Monthly volume is used to assess a merchant's risk by calculating average transaction volume.

<p>True</p> Signup and view all the answers

Surcharge downgrade specifically applies only to the ‘Qualified Discount Rate’ of the processing fee.

<p>True</p> Signup and view all the answers

A merchant service is necessary for a business to handle cash payments from customers.

<p>False</p> Signup and view all the answers

Average monthly transaction volume is calculated by dividing the total annual transactions by 12.

<p>True</p> Signup and view all the answers

Study Notes

Merchant Services Overview

  • Merchant service involves financial relationships enabling businesses to process card payments from customers.
  • A merchant account is a specialized business bank account allowing the acceptance and processing of electronic payment transactions, requiring partnership with a merchant acquiring bank.

Payment Processing Concepts

  • Cash Discount Program (CDP) allows passing processing costs to customers who pay with credit or debit cards, preventing businesses from incurring 3-4% in loss from fees.
  • Surcharges added to the “Qualified Discount Rate” of processing fees are known as surcharge downgrades, commonly classified as "Mid-Qualified" and "Non-Qualified".
  • The Interchange Rate is a fee charged per credit or debit card transaction, also referred to as "swipe fees".

Financial Metrics

  • Average monthly volume reflects a merchant's average transaction volume, calculated as annual transactions divided by 12, vital for evaluating merchant risk.
  • The Effective Rate (AER) represents the restated interest rate on loans, reflecting the equivalent annual rate for compound interest.
  • Average ticket size indicates the dollar amount of sales per customer, determined by dividing total sales by the number of customers.

Types of Transactions

  • ACH payments are electronic bank-to-bank transfers through the ACH network, classified into Direct Deposits and Direct Payments.
  • Pin debit transactions occur when a customer uses a bank-issued debit card linked to their checking account and enters a PIN at the point of sale.

Business Types and Marketing

  • "Brick-and-Mortar" denotes traditional businesses operating physical stores, facing challenges from e-commerce competitors due to higher operating costs.
  • Trade shows are industry-specific exhibitions where companies promote their products and services.
  • E-mail marketing fosters customer relationships through direct messaging and can enhance awareness, image, and action, with scalability for reaching many recipients.

Engagement and Relationship Management

  • Community engagement is a strategic approach involving collaboration with focused groups to address shared issues.
  • Fan pages on social media like Facebook serve as communication channels with audiences unified by interests in specific brands or topics.

Advanced Marketing Strategies

  • Retargeting targets previous website visitors with relevant ads after their initial engagement, enhancing potential conversions.
  • Storytelling in marketing engages an audience through interactive narratives, enriching listener involvement and response.

Compliance and Financial Transparency

  • Merchant Acceptance refers to processes enabling merchants to accept card payments.
  • Restricted Industry Addendum outlines specific regulations and additional conditions for high-risk industries in payment processing.
  • Bank Disclosure is critical information provided by banks to merchants detailing fees, terms, and conditions associated with payment processing services.

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Description

Test your knowledge of essential merchant services terminology with this quiz. Understand terms like Merchant Service, Merchant Account, and Cash Discount Program. Ideal for those interested in banking and payment processing terms.

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