A payment processor is a company (often a third party) appointed by a merchant to handle transactions from various channels such as credit cards and debit cards for banks acquiring merchants . They are generally divided into two types: frontal and dorsal. Front-end processors have connections to various card associations and authorization to supply and establish services to merchant bank merchants. Back-end processors accept colonies of front-end processors and, through the Federal Reserve Bank, for example, move money from the issuing bank to the merchant’s bank.
In an operation which generally takes a few seconds, the payment processor will both verify the details received by transferring them to the respective card of the issuing bank association or card for verification and also perform a series of anti-fraud measures against the transaction. Other parameters, including the country of issue and its previous card payment history, are also used to assess the likelihood of the transaction being approved.
Once the payment processor has received confirmation that the credit card details have been verified, the information will be relayed through the payment gateway to the merchant, who will then complete the payment transaction. If the verification is refused by the association of the card, the payment processor relays the information to the merchant, who will then refuse the transaction.
In the 16th century, paper money became a means of trading raw material resources, such as tobacco leaves stored in a warehouse. A producer would deposit their harvest with the deposit and the depository would give a note at the request of the holder to the depositor that he could negotiate on the free market for other goods and services.
Due to the numerous regulatory requirements imposed on businesses, the modern payment processor is generally associated with merchants through a concept known as software-as-a-service (SaaS). SaaSPayment best high risk payment processor offer a single, regulatory-compliant electronic portal that allows a merchant to scan checks (often called remote deposit capture or RDC), single credit card payments, and recurring processes (without the merchant storing them card data on the merchant site), ACH process single and recurring and cash transactions, process remittances and web payments. These cloud computing features occur regardless of origination across the payment processor’s integrated claims management platform. This results in reduced costs, faster time to market, and improved quality of transaction processing.
The Quality Of Transaction Processing
Electronic payments are very susceptible to fraud and abuse. Liability for misuse of credit card data can expose the merchant to significant financial loss if they were to attempt to manage these risks themselves. One way to reduce this exposure to costs and liability is to segment the transaction from the sale of the payment of the amount owed. Many merchants offer subscription services, which require payment from a customer every month. SaaS payment processors relieve the responsibility of managing the merchant’s recurring payments and maintain security and secure payment information, passing the merchant a “token” payment or single placeholder for card data.
Thanks to kenization , merchants can use this token to process charges, make refunds, or empty transactions without ever storing payment card data, which can help make the merchant system PCI-compliant . Another method of protecting payment card data is point-to-point encryption which encrypts cardholder data so that clear text payment information is not accessible in the merchant system in case of breach of data. Some payment processors also specialize in high-risk processing for industries subject to frequent chargebacks, such as adult video distribution.