Payment Processor
AdvancedA payment processor is a company that handles the technical steps of card and electronic payments, passing transaction information between merchants, banks and card networks so that payments can be authorised and settled.
When a customer pays by card, many parties must communicate within seconds. The payment processor routes the transaction data from the merchant to the card network and the customer's bank, receives the approval or decline, and later handles the movement of funds.
Processors may work for the merchant's bank, called the acquirer, or for card-issuing banks. Many companies combine processing with other services, such as payment gateways, fraud screening and reporting.
For example, when a customer taps their card at a café, the processor sends the transaction details for authorisation, receives approval from the customer's bank and passes it back to the terminal, all within a few seconds. At the end of the day, it helps settle the café's card sales into its bank account.
Merchants pay fees for processing, often as a percentage of each transaction plus a fixed amount. Choosing a processor involves comparing fees, supported payment methods, security, reliability and integration with the merchant's systems.
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