What is a Processor?

A Processor is a company (often a third party) that handles credit card transactions for Merchant Banks. They are usually broken down into two types, front-end and back-end, with a gray area in between. In some cases, the Merchant Bank gets the settlement information from Front-End Processors, and in other cases, from the Bank-End Processors, this is the gray area.

It gets grayer when you consider that some third-party Processors are both Front-End and Back-End Processors, even grayer when you consider that some Merchant Banks are their own Front-End Processors, Back-End Processors, or both.

Processors are usually paid based on a per-transaction fee basis.