Browse Definitions :
Definition

payment processor

Contributor(s): Corinne Bernstein

A payment processor is a company that facilitates communication between the bank that issued a customer’s debit or credit card and the seller’s bank. The processor’s job is to verify and authorize payment. Should the customer use a third-party payment gateway, such as PayPal, the payment processor carries out its tasks by communicating with the payment gateway and the seller’s bank.

In online transactions that do not go through a third-party payment gateway, the payment processing company relays information back and forth between the bank that issued the customer’s credit or debit card and the seller’s bank. As long as the processor determines the card is valid and the account in question has enough funds to complete the transaction, it can be finalized in seconds.

Payment processors should be vetted carefully to ensure that they can meet PCI-DSS compliance and security standards and have strong transaction-processing capabilities. In selecting a payment processor, merchants should consider what types of payments the processor accepts, what fees will be charged and on what platforms transactions can take place. Merchants should also select payment processors that can provide a good user experience; picking the wrong providers could have a negative impact on the seller's profits.

Software as a service (SaaS) payment processors typically offer an electronic portal that enables a merchant to scan checks, process single and recurring credit card payments (without the merchant storing the card data at the merchant site), process single and recurring automated clearing house (ACH) and cash transactions, process remittances and Web payments. These cloud-based features are often delivered through an integrated receivables management platform to facilitate customer experience management (CXM), help lower costs and improve time-to-market and transaction processing quality.

This was last updated in August 2018

Continue Reading About payment processor

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • reverse brute-force attack

    A reverse brute-force attack is a type of brute-force attack in which an attacker uses a common password against multiple ...

  • orphan account

    An orphan account, also referred to as an orphaned account, is a user account that can provide access to corporate systems, ...

  • voice squatting (skill squatting)

    Voice squatting is an attack vector for voice user interfaces (VUIs) that exploits homonyms (words that sound the same but are ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity policy

    Business continuity policy is the set of standards and guidelines an organization enforces to ensure resilience and proper risk ...

  • business continuity and disaster recovery (BCDR)

    Business continuity and disaster recovery (BCDR) are closely related practices that describe an organization's preparation for ...

  • warm site

    A warm site is a type of facility an organization uses to recover its technology infrastructure when its primary data center goes...

SearchStorage

  • cache memory

    Cache memory, also called CPU memory, is high-speed static random access memory (SRAM) that a computer microprocessor can access ...

  • disk array

    A disk array, also called a storage array, is a data storage system used for block-based storage, file-based storage or object ...

  • enterprise storage

    Enterprise storage is a centralized repository for business information that provides common data management, protection and data...

Close