Infrastructure
Payment Processor
Definition
Payment Processor a company that handles the technical aspects of processing card transactions, including routing authorizations, managing connections to card networks, and facilitating settlement. Some processors are also acquirers; others process on behalf of acquirers. The processor handles the technical plumbing while the acquirer handles the banking relationship and merchant underwriting.
Related Terms
Acquirer
A bank or financial institution licensed by card networks to process card transactions on behalf of merchants. Also called acquiring bank or merchant acquirer. The acquirer provides the merchant account, assumes liability for merchant behavior, manages settlements, and handles chargebacks. Major acquirers include Worldpay, First Data (Fiserv), Chase Paymentech, and Elavon. Different acquirers have different risk appetites for merchant verticals.
Payment Gateway
The technology that securely transmits transaction data between a merchant's website/application and the payment processor. The gateway encrypts sensitive card data, routes transactions for authorization, and returns responses. Can be provided by the PSP (integrated) or operated separately (standalone). Examples include Authorize.net, Braintree, and NMI.
Payment Service Provider (PSP)
A company that provides payment processing services to merchants, typically bundling acquiring, processing, and gateway services into a single offering. PSPs like Stripe, Adyen, and Checkout.com handle the entire payment stack, simplifying integration for merchants. PSPs may operate as PayFacs (aggregating merchants under their own MID) or facilitate direct merchant accounts with acquirers.
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