MSPs (managed services providers) often overlook providing a service that could create a significant recurring revenue stream: payment processing. You may have dismissed the idea because your clients aren’t retailers or restaurants, but businesses in virtually every industry — from field service organizations and professional offices to self-storage and parking facilities — accept credit cards. And you could be receiving a cut of every transaction.
Before you can start setting up accounts and collecting residuals, though, you need to learn about the payments space, and a good place to start is familiarizing yourself with payment processing terms.
Here are some basic payment processing terms you’re likely to hear in any meeting with a potential payment processing partner.
- Card Present: This is a type of transaction in which the customer physically uses the card and can present it to the merchant for verification. Conversely, Card Not Present refers to transactions where the merchant can’t see the card, for example, online orders, telephone orders, or payments made through the mail. It’s essential to determine how your customer accepts payments to provide them with the right payment processing solution.
- Payment Terminal: Also known as Credit Card Terminals or Credit Card Readers, payment terminals are the devices that enable electronic fund transfers in card-present transactions. Standard payment terminals can be used with a point of sale (POS) system, but there are also mobile payment devices that allow your clients to take credit card payments anywhere, including at their customers’ facilities or remote locations. In some cases, you may have the option to offer your client a Smart Payment Terminal, a standalone solution that manages transactions without using a POS system and provides the business with reporting and some management capabilities.
- EMV: This technology, first used in the U.S. in 2015, uses chip cards for payment transactions. EMV cards are embedded with microprocessor chips that create unique codes for each transaction. This technology has dramatically reduced card-present fraud — Visa reports EMV has decreased fraud by 82 percent in the first four years alone after the liability switch in the U.S.
- P2PE: Point-to-Point Encryption (P2PE) technology encrypts payment data from the Point of Interaction (POI), while the data is in transit, and until it’s decrypted for transaction approval. Encryption ensures that if hackers were to gain access to data, it would be useless to them unless they broke the complex code to decrypt the data.
- Tokenization: This technology allows merchants to associate payments with specific accounts and retrieve information without storing card numbers. Tokenization replaces payment card data with a unique token. Again, this data is useless to a hacker.
- NFC: Near Field Communication technology allows two devices that are near each other to communicate. It enables contactless payments, such as mobile wallet payments made with Apple Pay, Android Pay, and Samsung Pay.
The Payments Ecosystem
You’ll also need to understand the terms that apply to players in a payment card transaction:
- Payment Processor: This is the company that you will partner with to handle payment card transactions for your clients.
- Issuer: This is the bank or other financial institution that issues credit cards. The issuer sends payments to the merchant when the cardholder makes a purchase with a card.
- Payment Gateway: This e-commerce service sends payment card information from a website to the payment processor.
- Acquiring Bank: This bank maintains a merchant account for your client and makes deposits of funds from transactions into the merchant’s bank account.
Merchant Billing
There is also a list of payment processing terms that center on rates, fees, and settling disputes.
- Interchange: These rates charged by issuers are usually the largest fee that a merchant pays. They can vary depending on the card network, the type of card and your client’s Merchant Category Code (MCC).
- Average Ticket Size: This is the average dollar amount of a merchant’s credit card transaction. Payment processors require this information on applications for processing.
- Monthly Processing Volume: This is the gross monthly payment card sales, which is also required on the processing application.
- Chargeback: When a cardholder disputes a charge, the amount of the charge is withdrawn from the merchant account. Merchants have a set time to dispute the chargeback by providing the necessary documentation of the sale. A chargeback fee is often imposed as part of this process.
Regulation
It’s also vital that you familiarize yourself with payments industry regulation:
- PCI SSC: The Payment Card Industry Security Standards Council is a global organization that develops security standards for the industry.
- PCI DSS: The Payment Card Industry Data Security Standard is the set of standards that all merchants accepting credit card payments must comply with — and that will ensure they are maintaining a secure payment environment.
Talk the Talk, and then Walk the Walk
Now that you’re familiar with payment processing terms, keep learning by speaking with potential payment processing partners to see how their solutions can benefit your clients — and how a partnership can mean a new source of recurring revenue for your business. 
