A payment processor is a third-party service provider that securely facilitates electronic transactions between buyers and sellers. It acts as a bridge between merchants, banks, and payment networks, ensuring payments are authorized, processed, and settled efficiently.

How It Works:

• The customer initiates a payment using a credit card, debit card, or digital wallet like Google Pay.

• The payment processor securely transmits the data to the card network (Visa, Mastercard, etc.) and the issuing bank for authorization.

• The bank verifies the transaction and approves or declines it.

• The processor settles the funds, transferring money from the buyer’s account to the seller’s account.

Why is a Payment Processor Important:

• It ensures secure and fraud-free transactions using encryption and compliance measures (e.g., PCI DSS).

• Payment Processor Speeds up payment processing, reducing manual effort for businesses.

• It enables multiple payment methods, including credit/debit cards, e-wallets, and bank transfers.

• It also supports global transactions by handling currency conversion and cross-border payments.