Glossary
What is a payment processor? Front-end vs back-end processing explained
A payment processor is the company that technically handles card transactions between the merchant's acquirer, the card networks and the issuer. A front-end processor routes the authorisation request and returns the approval in seconds; a back-end processor clears and settles the batch afterwards. In everyday speech, PSPs such as Stripe or PayPal are also called payment processors because they bundle processing with acquiring.
- Payment processor
- A technology company that transmits and processes payment transaction data on behalf of an acquirer or issuer: it routes authorisation messages through the card networks and handles clearing and settlement files, usually without holding the merchant contract itself.
At a glance
| Authorisation time | Typically 1 to 3 seconds per card payment |
|---|---|
| Settlement to the merchant | Typically 1 to 3 business days after capture |
| Global Payments after acquiring Worldpay (January 2026) | More than 6 million merchant locations, about 94 billion transactions and $3.7 trillion volume a year |
| Who pays the processor | The acquirer or issuer, which passes the cost on in its merchant margin |
What does a payment processor do?
Card payments run as messages between four parties: merchant, acquirer, card scheme and issuer. The processor operates the systems that create, route and reconcile those messages. Many acquirers outsource this work, so the bank that signs the merchant is not necessarily the company whose systems process the transaction.
What is the difference between front-end and back-end processing?
Front-end processing happens while the shopper waits; back-end processing happens in batches afterwards. One company often does both, but the roles are separate.
| Stage | Processor role | What happens | Typical timing |
|---|---|---|---|
| Authorisation | Front-end | Request routed via the scheme to the issuer, approval or decline returned | 1 to 3 seconds |
| Capture | Front-end | Merchant confirms the authorised amount for collection | Immediately or within 7 days |
| Clearing | Back-end | Captured transactions sent to the scheme in batch files, interchange calculated | Same or next day |
| Settlement | Back-end | Funds move from issuer to acquirer and on to the merchant | 1 to 3 business days |
Payment processor vs acquirer vs gateway: who does what?
The acquirer holds the merchant contract, is a member of the card schemes and carries the merchant's risk. The gateway captures payment data at the checkout and passes it on. The processor sits behind both and does the network messaging, clearing and settlement work. A PSP usually bundles all three, which is why the guide to payment service providers treats them as one contract.
Which companies are payment processors?
The large merchant processors are Fiserv, which includes First Data and Clover, Global Payments, which completed its acquisition of Worldpay in January 2026 and sold its issuer processing business to FIS, Worldline in Europe, and Nexi, which combines Nets and SIA. Issuer-side processing is done by companies such as FIS and by the schemes' own services. For merchants, Stripe, Adyen and PayPal act as processor, gateway and acquirer in one.
How does the choice of processor affect cost and approvals?
Merchants rarely pick a processor directly, but it shapes the network tokens, 3-D Secure data and retry logic that reach the issuer, and with them approval rates. Processing costs are folded into the acquirer margin, which the payment processing fees guide breaks down. OrsunPay does not process payments itself; it routes each transaction between a merchant's own PSP and acquirer accounts.
Frequently asked questions
Is Stripe a payment processor?
Yes, in the everyday sense. Stripe processes card payments and also acts as gateway and, in many markets, as acquirer, so merchants sign a single contract.
What is a third-party payment processor?
It is a provider that accepts payments for many merchants under its own account, such as PayPal or Square, so the merchant needs no individual merchant account. In card scheme terms this model is called a payment facilitator.
What is the difference between a payment processor and a payment gateway?
The gateway captures and transmits payment data from the checkout. The processor handles the transaction through the card networks, including clearing and settlement.
Who pays the payment processor?
The acquirer or issuer that contracts the processor pays it. Merchants pay indirectly through the acquirer's margin or the PSP's blended rate.
How long does payment processing take?
Authorisation takes about 1 to 3 seconds. Clearing runs in daily batches, and the merchant typically receives the funds 1 to 3 business days after capture.