The Payment Processor System

A payment processor acts as a facilitator between the merchant and the financial institutions connected to the customer’s card, insuring that the transaction is authorized or rejected.

A customer visits your website (or makes a phone purchase/POS purchase) and makes a product or service purchase.
The payment gateway software captures the customer’s card information; encrypts all of the payment details including card number, cost of purchase etc. and forwards it to the processing network.
The payment processor (merchant service) takes this information, and forwards it instantly to the credit card issuer (issuing bank) for authentication.
The sale is either approved or rejected by the issuing bank depending on if the there is enough credit to pay for the purchase.
The credit card issuer transfers the funds to your merchant bank account.
The money is forwarded to your business bank account where you can access the funds.


Defining Basic Payment Process Terms

Acquiring Bank

An acquiring bank (merchant bank, acquirer or clearing bank) holds merchant bank accounts for businesses and also is a licensed member of credit card networks like MasterCard and Visa. When a cardholder makes a purchase the acquiring banks receives the card information from the card’s issuing bank; clears the transaction and deposits the funds into the business bank account.



When a consumer decides to dispute a transaction they have made using their credit card. The consumer’s card issuing bank sets in motion a retrieval request and the disputed amount is withdrawn by the issuing bank from the merchant’s account and held until the matter is concluded. There are 10 days in which the merchant can dispute the chargeback claim by showing proof of purchase or delivery or he may choose to issue a refund or do nothing and let the chargeback be processed. After the card holder is refunded the merchant account provider charges the merchant a chargeback fee. Credit card providers may levy fines against merchant acquiring banks if they have high chargeback frequency and these fines are passed on to the merchants.


Business Debit Cards

The difference between a debit card and credit card is that when a debit card is used the emoney is immediately deducted from the card holder’s bank account. With a credit card the card holder is charged at the end of the month for payments made that month. With a credit card you can also pay in instalments and there are interest and other charges.


Merchant Services

Merchant services encompass the systems used by businesses to process credit and debit card payments. There are many different payment processing options available as merchant services.


Take a look at the general card payments scheme below:
Players Involved in a Card Payment Transaction
It is important to understand the roles of different players involved in card payment transactions.
The card holder (an individual or person using the card on behalf of a company) who makes the purchase or payment using the card in his possession.
The merchant; a company offering a service or product that can be paid for by card.
The issuing bank (also called the “issuer”) that issues cards under agreed upon contractual conditions. The issuer can be a bank or in some cases a large corporate entity. The issuer is responsible for transactions made using their issued cards and for debiting funds from the cardholder’s account following use of the card.
The acquiring bank (also called the “acquirer”) processes the card payment for the merchant and guarantees payment to the merchant. The acquirer is usually a bank but can also be financial institutions or large corporations. Within the SEPA zone an acquirer must meet the EU’s Payment Service Directive requirements.


Top eCommerce Payment Processors in Europe

The payment processor (also called Merchant Account Providers) facilitates card payment processing and acts as a mediator between the merchant, issuing banks and credit card networks. At the end of the process it is the payment processor that is responsible for depositing funds in the merchant’s bank account.

To help you find the best payments service providers, specifically for an ecommerce company we have compiled this shortlist:


PayPal – A popular and reliable online financial service that is widely used in the ecommerce industry as a payment gateway. This giant company offers fast, easy transactions with streamline technology, fraud protection, support services and many more features. You can use PayPal with all of the well-known ecommerce platforms and shopping carts. However, PayPal fees can be expensive for smaller online businesses charging merchants 3.5% when receiving funds and an additional 2.5% for currency conversion. This can add up to about 6% which can be a burden to small ecommerce businesses.


Amazon Payments – is a popular payment gateway for small ecommerce businesses. Amazon Payment provides millions of customers with an easy way to receive payments. Installing Amazon Payments as a payment gateway for online businesses is straightforward and they can also be used for mobile payments.
2Checkout – This is another reliable payment gateway used by millions of ecommerce businesses. One of 2Checkout’s special features is that they provide the merchant with a demo of their customers’ buying experience before actually using it. With 2Checkout you can offer your customers payment options in 15 languages and 87 currencies. Their wide spread global reach promotes growth for ecommerce businesses. Installing 2Checkout is done by incorporating a payment API directly on your site.


Let’s take a look at the best payment processing systems for high risk companies and specifically online businesses. Payment processors ensure a streamlined online payment process. Each online business chooses a payment processing service to handle payments made through different channels including debit and credit cards. The process usually takes just a few seconds but it plays an essential role in any online business. The payment processor receives the client’s payment details and verifies them by forwarding them to the appropriate issuing bank or card association. During the process a number of other important payment verifications are made including anti-fraud checks; origin of the card and payment history in order to ascertain whether there is any chance of the transaction being denied.

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