Meow Technologies, Inc.
Accepting payments is an essential part of running any business. But the process behind these transactions is complex, involving multiple parties to securely facilitate the transfer of funds. Understanding payment processors is key to navigating this process smoothly. This guide will explain what payment processors are, how they work, and tips for choosing the right one.
A payment processor is a company that handles credit card or digital wallet transactions between a customer and merchant. The payment processor authorizes payments, ensures sufficient funds, safeguards financial data, and transfers money between banks. Without a processor, businesses cannot accept card or digital wallet payments.
Payment processors provide several critical functions:
Ultimately, processors enable businesses to conveniently accept electronic payments both online and offline. Their services relieve merchants from handling lengthy payment procedures themselves.
Though the checkout experience seems simple for customers, behind the scenes payment processors are hard at work communicating with various institutions to finalize sales.
Here is the step-by-step process:
This all happens in seconds behind the scenes without friction for customers. But as you can see, processors play an indispensable role in each transaction.
Payment processors earn revenue through various transaction-based, subscription, or incidental fees including:
These costs are factored into the overall payment processing rates offered by providers.
With so many processors available, selecting the best solution takes some savvy comparison shopping across a few key criteria:
Consider transaction volume, average order size, and business growth trajectory when evaluating pricing. Explore interchange-plus plans from high volume processors for possible cost savings.
Choose a processor supporting all payment types your customers use – credit cards, mobile wallets, COD etc.
Prioritize processors with robust security protections against fraud and breaches. All providers should be fully PCI DSS compliant to handle sensitive data properly.
Opt for simple, intuitive reporting interfaces and check for readymade integrations or APIs linking the processor with current business software.
Excellent customer service is crucial for resolving transaction issues promptly. Evaluate available support channels and response times.
As critical intermediaries between consumers and businesses, payment processors empower businesses to securely accept electronic payments in-store, online, and increasingly through mobile channels. By understanding processors, pricing models, and important evaluation criteria before deciding on a platform, merchants can conveniently accept payments anywhere while saving on costs and friction.