What is payment processor? | Definition from TechTarget (2024)

FAQs

What is a payment processor in simple terms? ›

A payment processor manages the credit card transaction process by acting as the mediator between the merchant and the financial institutions involved. A processor can authorize credit card transactions and works to ensure merchants get paid on time by facilitating the transfer of funds.

Top-rated payment processors for 2022 are Stripe, PayPal, and Square. The best payment processor companies can be used in-store and as online payment software for eCommerce and other suppliers' needs.

Duties include: opening, sorting, balancing, encoding, scanning, and batching payments; utilizing our accounting system to look up utility accounts; researching payments without invoices; creating form letters to correspond to customer requests received through the mail; researching bank corrections; and preparing ...

Payment processors help businesses determine the best mix of payment alternatives to serve your customers. From direct bank transfers to pre-paid cards, gift cards to buy-now, pay-later options, payment processors help you maintain happy customers by letting them pay the way they want.

Payment processing is the series of actions that occur when digital payment transactions are initiated by a business. This includes everything from processing a card and opening secure gateways to communicating with issuing banks and consumer accounts.

The Zelle service has expanded, and as of 2022 processed the largest dollar amount of peer-to-peer payments in the United States every year among comparable services.

Payment processors must have a high school diploma or GED certificate, and at some smaller banks, that may be all that is necessary. However, larger institutions often require an associate or bachelor's degree in a subject such as accounting or statistics.

Payment processors make money by receiving a commission. The fee is calculated as a percentage of the transaction between the customer and the merchant and relies on the last one. It also could be a fixed price per transaction.

The answer varies widely by provider and pricing structure, but in general, they're 1.5% to 3.5% of the transaction.

If your business wants to accept card payments, having a payment processor is a must. Some payment processing companies combine payment processing with point-of-sale systems and hardware, while others focus mostly on payments.

Is PayPal a payment processor? ›

As your payment processor, gateway, and online merchant account, PayPal authorizes transactions and helps protect electronic payments that come through your website. So you can easily accept online payments and earn money for your business.

Venmo is a peer-to-peer payments app that lets customers transfer funds to businesses' accounts. However, Venmo for business is not a point-of-sale system or payment service provider. It doesn't sell POS hardware or software, or offer businesses a way to securely accept payments from their online store's website.

Payment Processor / Processor

Also called a “payment gateway” or “payment service provider” (PSP).

The 'payments system' refers to arrangements which allow consumers, businesses and other organisations to transfer funds usually held in an account at a financial institution to one another.

By implementing a payment processing system, businesses can offer a variety of payment methods, such as credit cards, debit cards, mobile wallets, and online payment platforms. This enables customers to choose their preferred payment method, increasing customer satisfaction and repeat business.

The payment processor receives the payment information and sends a request for authorization to the customer's issuing bank or financial institution. The bank verifies the customer's account details and checks for sufficient funds or credit.