A payment processor is the company (often a third party) designated by the merchant to handle transactions from various channels such as credit and debit cards for the bank that acquired the merchant. They are usually split into two types: front-end and back-end.
Front-end processors have connections to various card associations and provide authorization and settlement services to bank merchant merchants. The back-end processor receives the completion of the front-end processor and, via The Federal Reserve Bank for example, moves money from the bank issuing it to the merchant bank.
In operations that typically take a few seconds, the payment processor will check the details received by forwarding them to the card-issuing bank or their respective card associations for verification, as well as carrying out a series of anti-fraud actions against the transaction.
Additional parameters, including the country of card issuer and previous payment history, are also used to measure the likelihood of an approved transaction.
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 rejected by the card association, the payment processor will pass the information on to the merchant, who will then refuse the transaction.
Video Payment processor
History
In the 16th century, paper currency became a way to trade commodity sources, such as tobacco leaves stored in warehouses. A producer will store their crops with a depot, and the depot-guard will provide bearer notes-to the depositor he can trade on the open market for other goods and services.
Maps Payment processor
Modern implementation
Due to the large number of regulatory requirements imposed on businesses, modern payment processors typically partner with merchants through a concept known as software-as-a-service (SaaS). The SaaS payment processor offers a single, regulatory electronic portal that enables merchants to scan checks (often called long-distance or RDC shipping), processing single and repeatable credit card payments (without merchants storing card data on merchant sites), processing ACH and cash transactions single and recurring, money transfer process and Web payments. These cloud-based features occur regardless of origination through integrated receivable payment processor payment management platform. This results in cost reductions, speeding up time to market, and improving transaction processing quality.
Transaction processing quality
Electronic payments are particularly vulnerable to fraud and abuse. The liability for misuse of credit card data may expose the merchant to significant financial loss if they attempt to manage the risk themselves. One way to reduce these costs and obligations is to segment sales transactions from payment of amounts due. Many merchants offer a subscription service, which requires payment from customers every month. The SaaS payment processor waives the responsibility for managing recurring payments from merchants and maintaining secure and secure payment information, returning to a payment token merchant or unique placeholder for card data. Through Tokenization, merchants may use this token to process bills, refund or cancel transactions without ever saving payment card data, which may help to make the PCI merchant system compliant. Another method of protecting payment card data is Point to Point Encryption, which encrypts cardholder data so that clear text payment information can not be accessed in the merchant system in case of data breach. Some payment processors also specialize in high-risk processing for industries that are often subject to chargebacks, such as adult video distribution.
Network architecture
The typical network architecture for modern online payment systems is the chain of service providers, each providing a unique value for payment transactions, and each adding a fee for the transaction: the merchant <-> point of sale software (PoS) as a service (SaaS) < -> aggregator <-> credit card network <-> bank. Traders can be a brick-and-mortar outlet or an online outlet. SaaS PoS providers are usually smaller companies that provide customer support to merchants and are recipients of merchant transactions. PoS providers represent aggregators for merchants. The volume of transactions of small PoS providers is compared to the volume of aggregate transactions, so direct connection to the main credit card network is not guaranteed, due to low traffic. In addition, merchants do not handle enough traffic to ensure a direct connection to the aggregator. In this way, the scope and responsibilities are shared among various business partners to easily manage the emerging technical issues.
See also
- List of online payment service providers
References
Source of the article : Wikipedia
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