Payment Processor

A payment processor is the service that handles the movement of money in a card transaction — communicating with the card network, the customer's issuer, and the merchant's acquirer to authorize the payment and settle the funds. Where a payment gateway captures the card details, the processor is the engine that actually moves the money.

What the processor does

• Routes authorizations — passes the authorization request to the issuer and returns the approval or decline.
• Handles settlement — coordinates settlement so funds flow from the issuer through the acquirer to the merchant.
• Manages fees — collects the processing fee, which bundles interchange, scheme fees, and the processor's own margin.
• Reports and reconciles — produces the records that let a merchant tie payments to payouts.

Processor vs gateway vs acquirer

These three roles are often blurred by modern platforms that do all of them at once:

• The gateway captures the card data at checkout.
• The processor talks to the banks to move the money.
• The acquirer is the bank that holds the merchant account and receives the funds.

Stripe, for example, packages the gateway and processing together and manages the acquiring relationship underneath, so a merchant sees a single provider.

Why it matters

The processor determines your cost per transaction, how fast you get paid, and which payment methods you can offer. Its processing fee is deducted before you ever see the money, which is why the amount that lands in your account is smaller than the amount charged — a gap worth tracking so your revenue numbers reflect what you actually keep.