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Payment processor

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Definition Edit

A payment processor is a company (often a third party) appointed by a merchant to handle credit card transactions for merchant banks. They are usually broken down into two types: front-end and back-end.

  • A front-end payment processor has connections to various card associations and supplies authorization and settlement services to the merchant banks' merchants.
  • A back-end payment processor accepts settlements from front-end payment processors and, via the Federal Reserve Bank, transfer the money from the issuing bank to the merchant bank.

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