A payment processor is a company or service that facilitates electronic payment transactions. It acts as a mediator between the merchant, the customer, and the financial institutions involved in the transaction.
Payment processors are responsible for verifying and authorizing transactions, ensuring that the funds are transferred from the customer's bank account or credit card to the merchant's account. They offer a range of services such as fraud detection, chargeback management, and currency conversion. Payment processors are essential for e-commerce businesses, allowing them to accept a variety of payment methods, including credit cards, debit cards, and e-wallets. Popular examples of payment processors include PayPal, Stripe, and Square.