Payment processor

Definition
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.