What is a Processor? Definition and Meaning - Ikajo Glossary



What is the processor?

The processor defines effective features that allow traders to obtain payments as well as to store funds, dispense payments and perform many other operations. It is a platform that operates in the background to manage and maintain payment processing services of online vendors. Furthermore, it can also cooperate with other organizations that directly contact the sellers and buyers in order to provide such services.

The processor acts as a link between the trader and the card-issuing institution. It is in charge of transactions’ approval, funds requests, and reports along with billing. The processor enables prompt and secure data transmission. Besides, the processor allows for conducting immediate transactions.

It is actually a bridge that interacts with the issuing bank and acts as a moderator between the customer and the financial organizations which perform payment activities. The processor authorizes transactions. And it conducts a safe money transfer from the client’s account to the trader’s.

Besides this, processors offer plenty of additional services. The main tools we can mention are fraud and chargeback prevention ones. Then, to enable the transaction flow, the processor will offer merchants various integration types. Most commonly they are HPP and API. Also, merchants can enjoy features like smart routing, recurring billing, and more. The unity of these services helps merchants to conduct their online business in a better way.

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