Payment processor is a service or company that handles transactions between buyers and sellers, making sure money moves from one account to another securely.
Origin: Financial technology (fintech) term, widely used in e-commerce and retail.
What is a payment processor?
Think of a payment processor as the digital middleman that makes sure money goes where it’s supposed to. When you buy something online or swipe your card at a store, the payment processor takes care of verifying your payment details, making sure you have the funds, and then transferring that money to the seller’s account. All of this happens in a few seconds, often without you even noticing.
These processors work with banks, credit card networks (like Visa or Mastercard), and digital wallets (like Apple Pay or PayPal). Popular examples include Stripe, Square, and Adyen. They’re not just moving money — they’re also checking for fraud, encrypting your data, and making sure everything is up to legal and industry standards.
In short, if you’ve ever bought something with a card, your transaction probably went through a payment processor. They’re essential for online shops, subscription services, and even your local coffee spot with that sleek card reader.
👉 For more, check out this guide from Stripe.
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