What Is A Payment Processor And Why Do You Need One?

Online payment processing supports a variety of payment methods, including digital wallets like PayPal, Cash App, etc., and options like Buy Now, Pay Later (BNPL) services such as Afterpay. These options enhance convenience by enabling customers to pay in easy installments, making it essential for online businesses. ACH, or Automated Clearing House, simplifies electronic fund transfers between bank accounts, commonly used for transactions directly through checking accounts, particularly for larger B2B payments.

Payment Gateway Vs Payment Processor

In addition, reputable processors will comply with PCI-DSS standards, outlining how to store, retain, dispose of, and control sensitive information. The company charges $20 per month for accepting online payments and $10 per month for accepting in-person payments. This service verifies and authorises the customer’s payment information and communicates with the customer’s and merchant’s banks to complete the transaction. Understand exactly when funds will reach your account and how settlement timelines vary by payment method or market. The ability to track settlements and reconcile payments in real time can make cash flow planning more accurate. Without question, it’s better to spend twice as much time checking every aspect and analyzing the payment processor contract thoroughly to ensure that the right choice was made.

Direct Merchant Account

• When these protocols find something suspicious, they reject the transaction, saving the merchant from potential loss.
• It’s projected to grow at a compound annual growth rate of 21.4% from 2025 to 2030, reaching $361.3 billion by 2030.
• Yet, it’s essential to carefully scrutinize the transaction fees, as they may be higher under subscription models.
• From authorization to settlement, the entire process can take seconds to several business days, influenced by diverse factors such as bank policies and transaction types.

Furthermore, it has contributed heavily to taking businesses to a global scale, making electronic fund transfers faster and purchasing from any part of the world. Explore our API’s helping you integrate and embed payments within your software platform. Unlock new revenue streams and enhance user experiences with financial services that integrate seamlessly into your platform. Accept payments online, in person, and around the world with a payments solution built for any business – from scaling startups to global enterprises.

Major providers include Fiserv, FIS (Worldpay), Global Payments, and Chase Paymentech. Your customers need a reliable and simple way to pay for the things they want, and a payment processor provides that. Even with a basic knowledge of credit card processing technology, it can be difficult to understand how the system works with various payment methods. Payment processors are only one component in the card network for companies accepting transactions. You’ll also need to understand the role of payment gateways and merchant accounts too. Payment processing, which seems like a one-tap process, is actually a very complex process that requires on-point communication from multiple mediums.

These additional fees can significantly influence a business’s overall payment processing expenses. You can use BILL as a payment gateway for ACH payments or accept credit card payment with low processing fees. For merchants, that’s a glaring incentive to accept credit and debit cards. Payment processors help transfer money between two parties, such as a consumer and a merchant. A payment processor acts as an intermediary, securely moving funds from the consumer’s bank to the merchant’s and ensuring payments are received. It’s a popular payment processor for small businesses with physical storefronts, and Square offers several hardware options for POS payment gateways.

They offer features like fraud detection and chargeback management, as well as integration with various payment methods such as credit cards, debit cards, UPI, and mobile wallets. Mobile payments, including most mobile point-of-sale (mPOS) transactions, are primarily processed with credit cards. They can be facilitated through various means, such as payment apps, chips, Chatpayment1 contactless methods, or mobile device-connected swipers. The payment routes to your payment processing system for verification and settlement. Then, it results in the funds being credited to your business bank account, with applicable fees deducted. Mobile payments are gaining popularity due to their speed and ease of use, making them suitable for both in-store and online purchases.