Payment processor
Payment processor
Checkout
The company that moves payment data and funds between the customer's bank, the card networks and the merchant's bank.
What is Payment processor?
When a customer pays by card, the processor sends the transaction through the card network (like Visa or Mastercard) to the customer's bank for approval, then handles settling the money into the merchant's account, usually within a few business days.
Processor vs gateway: the gateway captures and encrypts payment details at checkout, and the processor moves the transaction and the money. Many modern providers, including Shopify Payments, Stripe and PayPal, bundle both, so merchants see one service and one set of fees.
Example
For example, a customer pays $50 at checkout. The processor gets approval from the customer's bank in a few seconds, and a few days later deposits $50 minus processing fees into the merchant's bank account.
Why Payment processor Matters
Your processor affects approval rates, fees and how fast you get paid, all of which add up on recurring orders.
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