How to use this glossary
Find the term on your statement or in your contract, open its article, and read the "What is different in Canada and Québec" section first. Each article links to the next terms to read and to the rules that apply to you.
Fees and pricing
- Effective rate: Your effective rate is what you really pay to accept cards, shown as a percentage. You get it by dividing the total fees you paid in a month by your total card sales for that month. It folds interchange, network fees and your processor's markup into one number you can compare.
- Interchange fee: An interchange fee goes to the bank that issued a customer's card. It is paid each time the card is used. Your processor pays it for you. It then charges you inside its fees. Visa and Mastercard set the rates. They differ by card and by how the sale is taken.
- Interchange-plus pricing: Interchange-plus pricing splits a card fee into two clear parts. You pay the real card cost, which is interchange and network fees, at cost. Then you pay your processor's markup on top, as a small percentage, a few cents per sale, or both. Each part shows on your statement.
- Early termination fee: An early termination fee is a charge from your processor. It applies when you end your card processing agreement before the term is over. Some agreements call it a deactivation fee or fair compensation. Its size and the rules for it are in your contract. The Code of Conduct sets windows in which you can leave without a penalty.
Accounts and providers
- Merchant account: A merchant account is an agreement with an acquirer, a company that lets your business accept card payments. It also gives you the account where card sales are recorded before they reach your bank. You need one, directly or through a provider, to take Visa, Mastercard or Interac payments.
- Payment processor: A payment processor is the company that handles your card sales. It takes the sale from your terminal or website. It sends it to the networks and banks for approval. Then it settles the money to you. It charges you fees for the service. Some processors are also the acquirer. Others work with one.
- Payment gateway: A payment gateway is the service that carries a card sale from your website, app or virtual terminal to your payment processor, and brings the answer back. It does not hold your money. It is the link between the place where the customer pays and the company that handles the sale.
Hardware and point of sale
- Point of sale (POS) system: A point of sale (POS) system is the software and hardware you use to ring up a sale. It records what was sold, adds tax, takes the payment and prints or sends the receipt. Most also track stock and staff hours. The card payment itself runs through a payment terminal or a reader built into the POS.
- Payment terminal: A payment terminal is the device that reads a customer's card. It sends the payment to your processor for approval. It takes chip and PIN, tap and sometimes swipe. It shows the result and prints or sends a receipt. Some terminals work alone, and some connect to a POS system.
- Clover: Clover is a point of sale and payments platform that belongs to Fiserv. Merchants buy Clover devices with built-in software to take payments and run the business. In Canada, Clover devices work only with Fiserv processing. They cannot be moved to another processor.
- Virtual terminal: A virtual terminal is a payment screen in a web browser. Your staff type in a customer's card details to take a payment by phone or from a saved order, with no card reader. It works like a terminal, but the card is keyed in by hand instead of tapped, inserted or swiped.
Cards and payment methods
- Interac Debit: Interac Debit is Canada's own debit payment service. A customer pays with a bank debit card, by chip and PIN or by tap, and the money comes out of their bank account. Merchants usually pay a flat fee on each Interac sale, set by their processor's contract, and not a percentage.
- Visa Debit and Debit Mastercard: Visa Debit and Debit Mastercard are bank debit cards. They run on the Visa and Mastercard networks. They look like credit cards and can be used in store and online. The money comes straight from the customer's bank account. Their published interchange is much lower than on credit cards.
- Interac e-Transfer: Interac e-Transfer is a service that sends money from one Canadian bank account to another. Businesses can send, request and receive funds through their business banking accounts. It is not a card payment. The money moves between bank accounts. Each bank sets its own fees.
- Contactless payments (tap): A contactless payment is a card or phone payment made by tapping the device on the terminal instead of inserting or swiping it. The card or wallet sends the payment details over a short-range wireless link. Most small sales need no PIN. Above a limit, the terminal asks for one.
- Digital wallet: A digital wallet is an app on a phone or watch that holds a customer's cards and pays with them. Apple Pay and Google Pay are two examples. The customer taps the device at a reader or pays online. The wallet sends a stand-in number, called a token, and the real card number stays hidden from the merchant.
- Payment link: A payment link is a web address that opens a secure page where a customer pays a set amount by card. You send it by text, email or chat, or add it to an invoice. The customer types in their own card details, so your staff never have to handle them.
Security and disputes
- Chargeback: A chargeback is a card sale that is reversed after a customer disputes it. The customer disputes it with the bank that issued their card. The money is taken back from your account. You then have a short time to answer with proof. The card networks run it. Rules differ by card brand and by processor.
- PCI DSS: PCI DSS is the Payment Card Industry Data Security Standard. It is a set of security rules for anyone who stores, handles or sends card data. The PCI Security Standards Council writes it. Your processor and the card brands decide how you show that you follow it. That is often a questionnaire.
- 3-D Secure: 3-D Secure is an identity check for online card payments. The shopper's bank, called the issuer, looks at the sale and may ask the shopper to prove who they are before the payment is authorized. Visa and Mastercard both support it. It applies to card sales made online, not to chip or tap payments at a counter.
- Pre-authorization (authorization hold): A pre-authorization, also called an authorization hold, asks the cardholder's bank to set aside an amount on a card for a sale that is not finished yet. The card is not charged. The hold lowers what the cardholder can spend until the merchant completes the sale or releases the hold. A bar tab is a common case.
Bank transfers
- Pre-authorized debit (PAD): A pre-authorized debit, or PAD, lets a business pull money from a customer's bank account on agreed dates. The customer signs an agreement first. PADs run through the banks, not the card networks. They suit bills that repeat, like memberships, insurance and utilities.
- Electronic funds transfer (EFT): An electronic funds transfer, or EFT, moves money between bank accounts by electronic message. No cash or cheque is involved. In Canada, batch transfers like direct deposits and pre-authorized debits clear through Payments Canada's ACSS. Merchants also see EFT on statements, where it often means the deposit of their card sales.
Canadian and Québec rules
- Code of Conduct for the Payment Card Industry in Canada: The Code of Conduct for the Payment Card Industry in Canada is a set of rules. Card networks and the companies that serve merchants agree to follow it. It covers fee notices, contracts, statements and complaints. The Financial Consumer Agency of Canada (FCAC) watches over it. The current version has applied since 30 October 2024.
- WEB-SRM (MEV-WEB): WEB-SRM, called MEV-WEB in French, is Revenu Québec's online service for restaurant bills. A certified sales recording system sends each sale to it as the bill is made. Covered restaurants, bars and food trucks in Québec have had to use it since 1 June 2025.
