What do payment processors do

This signals to users that your site is secure, which can help lead to higher sales and lower shopping cart abandonment. Although payment gateways were originally designed for traditional eCommerce transactions, gateway technology has evolved to keep pace with the changing payments landscape. Many modern gateways, for example, can also handle payment processing across a much wider range of channels and devices to deliver a more seamless omnichannel experience for merchants and customers alike.

This includes:. However, this can create difficulties whenever issues or disputes arise. Who is responsible if your online store suddenly stops accepting credit cards in the middle of the night? By securing all three from the same provider, however, you minimize interoperability issues. Whenever you face an issue, there is only one provider you need to call. Basically, if a business processes a chip card without using an EMV-enabled terminal, it could be held responsible for any fraud that results.

But it is a necessity for merchants in reducing their fraud and chargeback rates for card-present transactions. A trustworthy and experienced processor will provide the information, tools, and guidance you need to securely accept card payments.

Article What is a payment processor? Payment processor A payment processor manages the credit card transaction process by acting as the mediator between the merchant and the financial institutions involved.

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What is a Payment Processor? A payment processor is a company authorized to process credit card transactions between buyers and sellers. Payment processors enable merchants to receive debit or credit card payments online by providing a connection to an acquiring bank.

These processors perform many functions, such as evaluating whether transactions are valid and approved, using anti-fraud measures to assure that a purchase transaction is initiated by the source it claims to be.

Processors are held to standards and regulations organized by credit card associations. These standards include rules regarding fraud, chargebacks, and identity theft. If the shopper has used a credit or debit card to place the order with the merchant, the payment processor will transmit the transaction information from the gateway to the relevant card association.

What is a card association? A card association is a network of banks that process a particular brand of payment cards e. Visa, Mastercard, etc. The card association will either approve or decline the transaction directly e. What is an Issuing Bank? An issuing bank is any bank or financial institution that grants or issues credit or debit cards, through card associations. What is an Acquiring Bank?

An acquiring bank is a bank or financial institution that accepts debit or credit card transactions for a cardholder. The card network connects acquiring banks to issuing banks so that a customer transaction can be verified. Aside from managing transactions, an acquirer also assumes full risk and responsibility associated with the transactions it processes.

Because of this, the acquirer charges various fees for its services. The acquirer charges fees on behalf of themselves, the card network, and the issuing bank taking into account credit card interchange costs as well. What is a Card Authorization?

A card authorization is a request to see whether a card is approved for use to complete a given purchase transaction.

An authorization request first emerges when the card holder attempts to purchase a good or service using a debit or credit card. The next step is for the merchant to fulfill the order placed by the shopper. What is Credit Card Interchange? Credit Card Interchange is the process in which an acquirer or acquiring bank submits approved card transactions on behalf of its merchants.

Interchange refers to the clearing and settlement of records between payment system participants. The term can also be used to describe the fees or transfer pricing between issuers and acquirers. Participating acquirers and issuers pay or receive interchange each time a credit or debit card is used. For example, banks pay interchange for card-based transactions. In the interest of efficiency, merchants usually submit all their approved transaction to their acquiring banks — via their payment processors — at the end of every day, in a batch.