In the simplest terms, a payment processor is a company that handles transactions between two parties, such as a merchant and a customer. It accomplishes the payment by relaying the payment information, like a credit card, from the customer to the merchant’s preferred bank account.
In most traditional transactions, payment processors involve the following parties:
- the customer;
- the merchant/business owner;
- the payment processor;
- the payment gateway — if not already combined with the processor;
- the bank/credit card company of the customer; and
- the bank of the business.
As a retail marketer, you’ll know that choosing a payment processor is not solely a decision for the finance department. That’s because it’s an important (some would say the most important) part of the user experience, and choosing the wrong option could negatively affect your conversions.
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