What Does a Payment Processor Do?

Credit and debit cards are convenient pieces of technology. They let you carry large amounts of ‘cash’ without the physical bulk, and without feeling unsafe. They let you withdraw cash at ATMs anywhere in the world. Some of them allow you to gather points and bonuses that you can exchange for discounts and free services.

For a customer to make a purchase, they have to take money out of their bank account, pay it to the seller, and receive the product or service. The seller then puts the money into their own bank account. In card transactions, the buyer’s bank is called the issuing bank, and the seller’s bank is called the acquiring bank.

They link the buyer and seller’s banks

There are thousands of banks all over the world, and while their computer systems are interconnected, their portable devices are not. It’s not practical for all portable electronic keypads to be directly linked to all those banks, so instead, they are connected to payment processors. Processors then create a link between the issuing bank and the acquiring bank.

They protect the customer’s data

Card fraud is a real concern in all digital transactions. Criminals try to get hold of customer details so that they can impersonate card owners and access their funds. Financial institutions do their best to secure cards and accounts, but there are specific cases where their security procedures have limitations. A good example is e-commerce.

While banks have systems that connect them to one another, it’s not viable for banks to be directly connected to every website in the internet. This is where merchant processors come in. They link the banks to each other, and they link both ends to e-commerce sites. In addition to securing individual sales transactions, payment processors keep the site secure through SSL certification and PCI QR compliance.

They help the seller to get paid

Using high levels of encryption, payment processors make sure customer details can safely be uploaded onto the website and transacted to the acquiring bank. This encryption virtually impossible for hackers to crack. Once the cash has safely left the issuing bank, the payment processor ensures that it’s deposited into the seller’s account.

Payment processors don’t just deal with online card transactions. The card processor can consolidate all the seller’s payment systems, including web-based purchases, in-person sales, mobile non-contact payments, checks, and even cash transactions. They are organised into a single system so that businesses can control their cash flow on a single platform.

For more information about the role of credit card machines for small businesses, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.