What is a payment processor?

January 19, 20239 min read
graphic showing illustration of a hand holing a credit card and title: what is a payment processor


Think you know what happens when you tap your debit or credit card while shopping, or on the bus, or when your card is billed for your favourite monthly subscription?

In this series Silverflow’s payments fanatics will help you gain some insights into the complex, but fun (we think so anyway) world of card payments processing.


Today we’re talking about payment processors. 

Payment processors are responsible for verifying transactions on behalf of the acquirer or the issuer. In this article, we will focus on the payment processors on the acceptance side of the ecosystem. Payment processing is a complex process of passing request and response data messages between the acquirer (and their payment gateway) and card schemes (Visa, Mastercard, Amex, Diners, JCB, etc.). Some acquirers will have their own in-house payment processing platforms, but many will use a third-party payment processor.

Payment processors are responsible for ensuring that payment processing data is secure at all times while also processing your payment quickly (fun fact: it takes 0.9 seconds for a payment request to make a round trip from your favourite coffee shop payment terminal – to the payment processor and back – that’s quick!).


What happens during the payment process?

In the context of a card transaction, you will always have the cardholder, the merchant and possibly an ecommerce platform, or point of sale system (POS). For now, let’s focus however on three entities: the acquirer, the issuer and the payment network, e.g Visa, Mastercard.

The acquirer is an entity that owns the relationship with the merchant and is responsible for the settlement (payout) of funds received from the card networks to their respective merchants. The acquirer or their gateway transmits payment requests to their payment processor. The payment processor formats, transmits this on to the card schemes and transmits the responses back to the gateway in the right format.

An Issuer is a financial institution that provides credit, debit and prepaid cards to consumers (you and me!).. During the payment transaction process, the issuer acknowledges the payment request and confirms whether the cardholder has the funds available for that transaction. The payment transaction is ultimately confirmed at the merchant website or store.

This informational flow is just the first step as the transaction may also need to be captured & cleared and the settlement of funds will need to occur from the Issuer to the card network to the acquirer and then finally to the merchant so they can be paid for the goods and services they have provided.


what happens during payment process

What happens during the payment process?


Payment processing is becoming more focused on meeting customer needs.

Payment-processing companies are not all created equal .There is an ongoing, persistent problem that acquirers, PSPs, Payment Facilitators (PayFacs), and Marketplaces face daily with payments processing. This problem is costing them time, money, lost revenue, and customer insights.

So how do you know which processor is the best fit for your business?


Here are some important things to consider when looking into a payment processor:



Firstly, make sure they’re up front about fees and nothing is hidden (such as additional gateway charges and professional services fees).



Look closely at the data you’ll have access to. Not only will this help reduce fraud, it can also help you make critical business decisions. For example, at Silverflow, by providing a direct connection to the card networks, we give our clients full and consistent data transparency leading to higher approval rates, uniform chargeback data, and valuable cardholder information, allowing for frictionless payments and the ability to make critical business decisions based on ALL available data.


Ease of use and set up

What does the implementation process look like? How quickly can you go live and start processing? In this day and age, clients should be able to go live and start processing quickly.



What technology do they use and how does that currently work with your infrastructure? Is this cloud-based? Is this secure and is it set up to scale?



As above, you need to understand how quickly your payment processor can grow with you. Can they handle a sudden influx of transactions or expanding globally and into new markets and sectors?

How aligned are they with the card networks? Can they adapt by adding their value-added services quickly and efficiently?


Next-generation payment processors are in it for the long haul

Payment processors have become a necessity as our world becomes more digitised and next-generation payment processors are in it for the long haul. They’re looking for long-term relationships with companies they believe can grow and prosper. They want to be a part of your success, so they’re willing to invest time and resources into helping you grow your business.

At Silverflow, we are committed to our clients’ growth. We offer a flexible and unique cloud-native payments processing solution with unrivalled access to data and ease of set up.

Clients are able to go live and start processing quickly, efficiently, and at a fraction of the cost of the normal decision of buy or build. Silverflow offers easy integration via APIs, full dispute resolution management capabilities, a 3DS (v 2.2) endpoint, interchange, and scheme fee calculation when the transaction clears, and making available all card network data.

If you are an acquirer, PSP, PayFac, or Marketplace, we would love to talk to you to see how we can help you grow your business. Contact us today!


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About Silverflow

Silverflow is a global payments technology company, founded by online payments industry veterans, with the mission to accelerate technological innovation in the payments industry. Silverflow’s cloud-based platform provides a state-of-the-art upgrade and direct access to the card networks for payment services providers, merchants and acquirers. Its intuitive product and scalable technology provides value, creates efficiencies, and drives new opportunities for all. Based in Amsterdam, Silverflow is backed by Crane Venture Partners, INKEF Capital and notable angel investors from Pay.On, First Data, Booking.com, and Adyen. 

Learn more: www.silverflow.com


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