It is crucial to conduct thorough research and analysis prior to selecting an online payment processor. The best payment processor should accommodate the payment methods your customers are using, and also provide options to safeguard against fraud and chargebacks. Our editors have studied, rated and compared several top-performing products in relation to their features such as coverage options, customer experience. They also looked at cost and customizability as well as other factors.
A business needs an account for merchants, a payment gateway, and a payment processor to process credit card payments. A payment processor is an organization that manages all transactions and transfers transactions across the processing network, and cooperates with banks to make sure that you get paid for your products or services.
The process begins when a customer purchases something from your site with credit or debit card. The customer fills in their payment information into the form on your website, and securely transmits the information to the payment processor through an online payment gateway. The processor communicates with the card issuer and confirms if the cardholder has enough credit to cover the transaction. When the issuing bank either accepts or denies the payment the processor then sends a reply to the gateway as well as to your website. The message can be simple: “Your payment has been approved” or more detailed: “Your payment has been declined.”
The processor then transmits the details of the transactions for the day to the card network, and transfers funds from card issuers to the merchant bank. After a short period of settlement, the acquiring bank deposits the funds into your merchant’s account. The entire process usually takes just a few minutes.