What is Payment Processor?

Approvals & Underwriting

Payment Processor

The company that moves a transaction between the customer's bank, the card networks, and the merchant's acquirer — handling authorization, clearing, and settlement. The processor is the engine that turns a card swipe or checkout into deposited funds.

Processors handle the technical and financial plumbing of every transaction. The right processor for a high-risk merchant is one that supports the category and offers redundancy so a single outage cannot stop checkout.

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Related terms

Approvals & Underwriting

Acquirer

The bank that holds a merchant account and enables the business to accept card payments, ultimately depositing settled funds. The acquirer carries the risk if a merchant cannot cover its chargebacks, which is why underwriting exists.

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Approvals & Underwriting

Payment Gateway

The technology that securely captures payment details at checkout and passes them to the processor for authorization. The gateway is what your customer interacts with online — it encrypts card data and returns an approved or declined response.

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Payments & Settlement

Authorization

The step where a customer's bank confirms a card is valid and has funds available, placing a hold on the amount. Authorization approves the sale but does not yet move money — that happens at capture and settlement.

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Payments & Settlement

Settlement

The process of moving funds from captured transactions through the networks to the merchant's account, usually in daily batches. Settlement is when a sale actually becomes money you can spend, minus fees and any reserve.

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