Payment Processor

A payment processor is a company that handles transactions between merchants, acquiring banks, and card networks (Visa, Mastercard, etc.). It facilitates the movement of funds and ensures that payments are securely processed.

A payment processor is the middleman that securely moves transaction data between the merchant, acquiring bank, card networks, and issuing bank.

The payment processor is responsible for:

• Transmitting transaction data between the merchant, acquiring bank, and card network
• Encrypting sensitive payment information to prevent fraud
• Handling authorization requests from card issuers
• Ensuring compliance with security standards (PCI DSS)
• Managing refunds, voids, and chargebacks

Examples of Payment Processors: Stripe, PayPal, Square, Adyen, Worldpay, Fiserv, Authorize.net

Refund

A refund is when a merchant voluntarily returns the transaction amount to the customer, typically due to a return, dissatisfaction, or an issue with the product/service.

Chargeback

A chargeback is when a customer files a dispute with their issuing bank, asking them to forcibly reverse the transaction. Merchants should prioritize refunds to avoid chargebacks whenever possible.

Gross Payments

Gross Income/Revenue: The total amount of money earned before deductions like taxes, expenses, or costs.

Net Payment

Amount of money an individual or entity receives after all deductions, such as taxes, fees, and other withholdings, have been subtracted from the total (gross) amount.

Interchange in 1,000 words - Matt Brown's Notes

Payfac in 1,000 words - Matt Brown's Notes