Credit Card Processing Glossary for Dealers

Cash Discount

A pricing model that gives customers a lower price for paying with cash instead of a card. Because it is structured as a discount off the standard price rather than a fee added for cards, it stays legal even in the states that ban surcharging.

Convenience Fee

A fee charged for paying through an alternate channel the business does not normally use, like a phone order or an online link outside its standard checkout. Unlike a percentage surcharge, a convenience fee is a flat amount and is only allowed in that alternate channel, which is what separates the two.

Credit Card Surcharge

A fee added to a credit card transaction to offset the cost of accepting it. It has to be disclosed to the customer before the sale, and it can never apply to debit or prepaid cards. On our surcharge program, customers pay a 3% surcharge on credit and the disclosure and compliance work is handled for you.

Dual Pricing

The umbrella term for displaying both a cash price and a card price on the same item. Cash discount and surcharge programs are the two ways dealerships implement it, so the card premium is visible on the price tag or menu, not sprung on the customer at the register.

Surcharge Cap

The maximum amount a merchant is allowed to add to a credit card transaction. Card network rules set one layer of limit, and some states add their own on top. See surcharge laws by state for how the network and state caps interact where you operate.

Zero-Cost Processing

An industry label for a surcharge or cash-discount setup marketed as carrying no processing cost for the merchant, since the fee is passed to the card-paying customer instead. It describes a category of pricing model, not a specific vendor's numbers.

Assessment

The card network's own per-transaction fee, charged separately from interchange. It is smaller than interchange but it is still a real line on every transaction that runs.

Card Network

Visa, Mastercard, American Express, and Discover. They write the rulebook every merchant, processor, and terminal has to follow, from surcharge limits to how a chargeback gets resolved.

Card-Not-Present (CNP)

A payment where the card itself is never physically read, like a phone order, a text-to-pay link, or an online payment. Our program covers card-not-present payments, with the required surcharge disclosure still applying to the transaction.

Card-Present

A payment where the card is physically dipped, tapped, or swiped at a terminal. It is generally lower risk and lower cost to process than a card-not-present transaction, since the terminal and chip can verify the card is real.

Durbin Amendment

The 2010 federal law that caps debit interchange fees for large banks and gives merchants a choice of debit routing networks. Durbin does not itself ban debit surcharging; that prohibition comes from Visa and Mastercard's own network rules, not this statute.

Interchange

The fee set by the card network and paid to the cardholder's issuing bank on every transaction. It is usually the largest single piece of processing cost, and it is not something a merchant can negotiate directly.

Merchant Category Code (MCC)

A four-digit code that classifies what kind of business a merchant is. It influences the interchange rates and rules that apply to that merchant's transactions.

Merchant Discount Rate

The total cost of accepting cards, expressed as a percentage of volume. Sometimes called the effective rate, it is a shorthand way to compare what card acceptance actually costs across a statement.

ACH

An electronic transfer directly between bank accounts, no card network involved. It is typically how processing fees and deposits actually move between your account and your processor's.

Address Verification (AVS)

A check that matches the billing address given on a card-not-present sale against the address the card issuer has on file. A mismatch does not automatically kill a sale, but it is a signal.

Authorization

The issuer's approval and hold on funds the moment a card is run. The money has not actually moved yet, it has just been set aside and confirmed available.

Batch

The group of authorized transactions from a given day, bundled together and submitted for settlement at once rather than one at a time.

Capture

Flagging an authorized transaction to actually go through settlement and get funded. A sale can be authorized and never captured, which is why the two steps are tracked separately.

Chargeback

A cardholder dispute that reverses a completed payment. The card issuer pulls the money back, and the merchant can be asked to prove the sale was legitimate to get it reversed again.

Retrieval Request

An issuer's request for the details of a specific transaction, usually the step that comes before a chargeback gets filed.

Settlement

The point where a batch of transactions actually clears and funds land in the merchant's account. Also called funding, it is the step that turns an authorization into money in the bank.

Cardholder Data

The sensitive information tied to a card, principally the card number, that PCI rules exist to protect. How it is captured, transmitted, and stored is what most security requirements are actually about.

EMV

The chip-card standard. It shifts liability for certain kinds of counterfeit fraud onto whichever party, merchant or issuer, did not support the chip at the point of sale.

P2PE

Point-to-point encryption. Card data gets encrypted right at the keypad, before it ever touches the store's network, so a breach downstream has nothing readable to steal. Our terminals run PCI-validated P2PE and it is included, no separate line item. See our security model for how it works end to end.

PAN

The primary account number, meaning the card number itself. It is the value P2PE and tokenization exist to keep out of anyone's hands but the processor's.

PCI DSS

The Payment Card Industry Data Security Standard, the baseline security requirements every business accepting cards has to meet, regardless of size.

Tokenization

Swapping a real card number for a stand-in token that is useless if it is ever stolen. The actual number is not stored on the merchant's side at all.

CDK Drive

A dealer management system many franchise stores run their whole operation on, service, parts, accounting, and more. Our payments post directly to the RO in CDK Drive, so nobody is re-keying a payment by hand. See our CDK integration for how the posting works.

Dealer Management System (DMS)

The core software platform a dealership runs on for inventory, service, and accounting. CDK Drive is one example; it is the system of record everything else, including payments, has to line up with.

F&I

The finance and insurance office, where financing, warranties, and other products get sold and paperwork gets signed at the point of sale.

Merchant ID (MID)

The unique identifier tied to a merchant's account with its processor. Every deposit, statement, and support call ties back to this number.

Payment Gateway

Software that routes card data from the terminal to the processor for authorization, then routes the answer back. It is a piece of infrastructure every card transaction passes through, not a brand name.

Payment Terminal

The physical device that reads the card at the point of sale, whether that is a dip, tap, or swipe. On our program, the terminals are the included P2PE units, no separate hardware purchase.

Processing Statement

The monthly statement a processor sends showing volume run, fees charged, and deposits made. It is the document to actually read line by line if you want to understand what card acceptance is costing a store.

Reconciliation

Matching every payment to the right repair order and the right deposit. It is tedious by hand and easy to get wrong; with CDK integration, payments post to the RO automatically, which closes most of that gap before it opens.

Repair Order (RO)

The service department's record of the work performed and billed on a vehicle, from the write-up to the final invoice.