What is a Credit Card “Processor?”

A Processor is the company that actually routes an Authorization Request from a Point of Sale device (such as a Verifone credit card terminal) to Visa or Master Card, and then arranges for Fund Settlement to the merchant. Such processors are traditionally accessed via direct dial out modems connecting to their system.

-Processors need to have a Sponsoring Bank in order to gain access to the Visa and Master Card networks. When a Processor or other entity has made such an arrangement with a Sponsoring Bank to resell their services, they are called an Agent of that bank.

-Any entity that sells Visa or Master Card must disclose themselves as an Agent of their Sponsoring Bank. Such sales entities may be a Processor, or an ISO/Agent of the Processor or Processor/Bank alliance.

-Some banks are also their own processors, while other banks will use a Third Party Processor to handle this processing for them (in their own brand name in some cases).

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