Selecting an online payment processor is a significant choice that requires careful analysis and research. The right payment processor should accommodate the payment methods your customers use, and also offer solutions to protect against fraud and chargebacks. Our editors have studied and rated the top alternatives based on features the options for coverage, customer satisfaction as well as cost, customization, and more.
A business will require a merchant account, payment gateway and payment processor to process credit card payments. A payment processor is a business who handles all transaction details, carries the transaction through the processing network and collaborates with the bank to make sure you receive a payment for your goods or services.
The process starts when a user purchases a product from your website using a debit or credit card. They input their payment information into the form on your website, which then securely transmits it to the payment processor using an online payment gateway. The processor communicates with the card issuer and confirms whether the cardholder has sufficient credit to cover the transaction. When the issuing bank accepts or denies the transaction, the processor sends a response to the gateway and to your website. The message may be simple, “Your payment was approved,” or more detailed, “Your payment was declined.”
The processor sends information about transactions from the day to the card network and then transfers funds from card issuers to the merchant bank. After a short period of settlement, the acquiring bank deposits the funds into your merchant account. The entire process generally takes just a few minutes.