Payment processing services and how to choose a payment processor
The choice of payment processor carries financial and operational weight, shaping everything from approval rates to dispute handling. Understanding the services they provide can guide merchants toward a provider that matches their business needs.
What is a payment processor?
A payment processor is a company that manages the steps required during a transaction to move money between a customer and a merchant. These include transmitting payment details securely, checking with banks and card networks for authorisation, and returning an approval or decline to the merchant. In the broader ecosystem, three elements work together:
- Merchant: The business selling goods or services.
- Customer: The buyer paying with a credit card, debit card, or digital wallet.
- Banks and card networks: The issuing bank (customer’s side) and acquiring bank (merchant’s side), plus the card networks that set the rules.
It is important to distinguish between related services:
- Payment processor: Routes payment details between banks and card networks to approve or decline a transaction.
- Payment gateway: Connects a merchant’s website to the processor for online card payment solutions.
- Merchant account: A special account that holds customer payments before they are settled into the merchant’s business bank account.
Types of payment processors
Payment processors are generally classified into two categories:
- Front-end processors: Connect directly with card networks to authorise transactions, ensuring that the customer has available funds or credit.
- Back-end processors: Handle settlement by moving money from the issuing bank to the acquiring bank and into the merchant account.
Both types are necessary for completing the full payment process. Some providers combine these functions, offering complete payment processing solutions for different business needs.
Key payment processing services
Transaction authorisation
When a customer pays with a card, the payment processor first checks three things: whether the card details are valid, whether there are enough funds in the account, and whether the transaction matches common fraud patterns. If all checks pass, the payment is authorised. If not, it is declined immediately.
Settlement and clearing
After authorisation, the customer’s bank transfers the money to the merchant’s bank. This step is called settlement. Clearing ensures that both banks record the movement correctly. Most processors complete settlement within one to two business days, which is why merchants do not always see funds instantly after a sale.
Payment gateway integration
Online businesses need a payment gateway to accept cards directly on their websites or apps. The gateway encrypts the card details and sends them securely to the processor for authorisation. Without a gateway, customers would have to leave the site to complete the payment, which usually reduces conversion rates.
Fraud prevention and security
Payment processors offer security features such as tokenisation, PCI DSS compliance, and 3D Secure. Many also use automated fraud detection tools that flag unusual transactions, for example, if a card is used in two countries within minutes. Antom Shield is one such system, designed to review transactions in real-time and block suspicious ones before they go through.
Multi-currency support
Businesses that sell internationally often need to accept payments in different currencies. A payment processor with multi-currency support can convert payments into the merchant’s preferred currency. For example, a US merchant can accept euros from a French customer and still receive US dollars in their account. This reduces the need for separate bank accounts in each market.
Recurring billing and subscriptions
Subscription businesses—such as software platforms, gyms, or streaming services—use recurring billing to charge customers automatically at regular intervals. Payment processors store payment details securely and debit the customer’s account each cycle. This avoids manual invoicing and reduces the risk of missed payments.
Dispute and chargeback management
If a customer disputes a charge, the bank may issue a chargeback. The payment processor manages the communication between the merchant, the customer, and the bank. Merchants can submit evidence, such as proof of delivery, to defend against invalid claims. Good chargeback management tools reduce financial losses and help businesses stay within acceptable chargeback ratios.
Reporting and analytics
Most payment processors provide dashboards and reports showing sales volume, authorisation rates, chargeback statistics, and fees. Merchants can use this data to monitor performance and identify problems, such as unusually high declines in a certain region. Detailed reporting also helps finance teams reconcile transactions with accounting records.
Benefits of using a payment processor
With the right provider, merchants can improve efficiency, reduce risk, and support business growth. Key benefits include:
- Faster and more reliable payments: Payment processors ensure that funds move quickly from customers to merchants, with predictable settlement times. This keeps cash flow steady and helps businesses manage day-to-day operations without delays.
- Secure transactions: Compliance with industry standards like PCI DSS, combined with tools such as tokenisation and fraud screening, protects both merchants and customers. Antom’s fraud prevention system, Antom Shield, analyses transactions in real time to reduce the risk of fraudulent activity.
- Global reach: With multi-currency support, businesses can sell internationally and accept payments in local currencies while settling in their preferred denomination. This makes it easier to expand into new markets without complex banking arrangements.
- Convenience for customers: By offering secure online checkout, recurring billing, or mobile payment options, merchants provide customers with flexible ways to pay. A smoother payment experience often leads to higher conversion rates and improved customer satisfaction.
- Operational efficiency: Features like recurring billing, chargeback management, and automated reporting reduce the manual work for finance teams. With Antom, for example, merchants can view all transaction data in one dashboard, making reconciliation and planning more efficient.
- Scalability: As businesses grow, payment needs change. Processors allow merchants to start with basic card acceptance and later add services like subscription billing, multi-currency support, or advanced fraud tools without switching providers.
How much do payment processing services cost?
Payment processors typically charge based on pricing models:
- Flat-rate pricing: Merchants pay a single, consistent rate for every transaction, regardless of card type. This model is simple and predictable, making it easier for small businesses or startups to estimate costs.
- Interchange-plus (IC+) pricing: This model separates the actual card network cost (the interchange) from the processor’s markup. Merchants see the true base cost plus a clearly defined fee from the provider. Interchange-plus can be more transparent, especially for businesses with higher volumes.
- Tiered pricing: Transactions are grouped into categories such as “qualified,” “mid-qualified,” and “non-qualified,” each with its own rate. While common, this model can be harder for merchants to predict since the rate depends on how the card and transaction are classified.
While the core model sets the baseline, payment processors may also apply other charges. These can include transaction fees, chargeback handling fees, and costs for add-on services like recurring billing or fraud prevention.
Antom provides clear visibility into both pricing structure and optional services, so merchants can select the plan that aligns with their business size and growth stage. Speak with our team today to learn more.
Choosing the right payment processor
- Pricing model and transparency: Understand whether the payment processor uses flat-rate, interchange-plus, tiered, or subscription pricing. Look for clear explanations and transparent reporting, so you know exactly what you’re paying.
- Integration and ease of setup: The processor should connect smoothly with your existing website, app, or point-of-sale system. A well-documented API and simple gateway integration reduce development time and prevent disruptions.
- Security and fraud prevention: Strong fraud detection tools, PCI DSS compliance, and real-time monitoring are essential. Payment processors like Antom offer advanced security options such as Antom Shield to help businesses protect themselves and their customers.
- Support for your business model: If you run a subscription service, recurring billing is a must. If you sell internationally, multi-currency support becomes critical. Match the processor’s features to your current needs while keeping future growth in mind.
- Settlement speed and reliability: The time it takes for funds to reach your account affects cash flow. Choose a processor with predictable settlement timelines and a track record of uptime and reliability.
- Reporting and analytics: Access to clear dashboards and transaction reports allows you to monitor performance, identify problems, and plan strategically. A processor that offers actionable insights will provide value beyond moving money.
- Customer support: Issues with payments can directly affect sales. Look for a processor that offers responsive customer support, with multiple channels for quick resolution when problems arise.
For global merchants, Antom offers merchant services with broad coverage, multi-currency settlement, and advanced fraud protection While many payment processors exist, decision makers should choose the one that aligns best with their long-term strategy and customer needs.
