A special type of bank account which allows for the processing of payment card transactions. Each merchant must have at least one Merchant Account and will typically have one Merchant Account per location, branch and/or franchise. A Merchant Account will be associated with one federal tax id (EIN) and one checking account for the deposit of funds and the withdrawal of fees.
Terminal, Account, Batch
Each Merchant Account in PayJunction will have at least one terminal associated with it through which transactions are processed. In some cases, multiple terminals are used by merchants to logically separate transactions for accounting purposes. A "batch" refers to either the group of open (non-settled) transactions or a group of transactions that were settled together for each individual terminal.
A common example would be an auto dealership. The dealership might have only one Merchant Account for one location, but will have a sales department, a finance department and a parts/service department. To make accounting and reconciliation easier, each department would have its own terminal and corresponding batches.
There are two transaction stages involved in fully processing a payment card transaction, starting with the authorization stage. During authorization, the initial transaction amount is sent to the gateway provider's service (PayJunction). The gateway then transmits the transaction details to the card issuing bank for an approval. If the issuer approves the transaction, the funds are held under the authorization code by the bank on the assumption that the transaction will eventually be captured and transferred out of the account. During this stage the funds have not been moved out of the bank account, only reserved until the funds are either captured by settlement, the authorization is reversed by the gateway (voided), or expires per the issuers policy. This is critical to understand when considering Address Verification Security (AVS) and card security code (CVV) declines.
Settlement, often referred to as "batching out", is the stage in which authorized transactions are finalized in a batch and the information is transmitted to the processing company, which in turn starts the actual transfer of funds. In other words, all of the transactions that have been Authorized are sent off to be processed and deposited to the merchant's bank account. Once a transaction has been settled it cannot be voided and updates to the amount, such as adding a tip, are no longer available.
Terminals vs Smart Terminal
"Terminals" refers to specific batches set up in PayJunction while "Smart Terminals" refers to the actual hardware units sold by PayJunction for taking swiped, dipped (chip card), and NFC transactions (e.g. ApplePay & AndroidPay).