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How Does The Credit Card Processing Industry Work in 2023?

The credit card processing industry is a department of the financial industry that take cares of electronic payment transactions. It includes businesses that offers payment processing services, for instance, debit card processing, credit card processing, online payment processing, and electronic fund processing.

All these services enables your business to securely transfer money electronically and make online or in-store purchases via payment cards or other electronic payment methods. You can find the best online payment processing services, only if you have complete insights on how this industry operates and what are its trends. This blog will provide you with a complete knowledge of everything you need to know about how does credit card processor operates.

What Is A Credit Card Processor?

A credit card processor is a basically a vendor service that allows business owner and merchant to accept different payments from buyers who use other payments than cash and check. A credit card processor shifts the interface between the customer’s and merchant’s banks.

While most of the times people tend to confuse it with one another, a credit card processor (often referred as “payment processor”) and a payment gateway are entirely different entities, although both are essential to a transaction. A payment gateway transfers data securely, on the other hand, credit card processor transfers funds. A payment processor often serves as a middleman for retailers, handling debit and credit card transactions.

Credit card processor does the following:

  • Seek approval for the performed transaction.
  • Communicate with the issuing bank of the cardholder.
  • Lastly, it transfers funds into the merchant’s account.

Businesses have a variety of options for payment processing services, so it’s important to understand the differences in order to choose the most economical option.

Interchange-Plus Credit Card Processor

In this category, merchants can sustain fees per debit/credit card transaction. These fees can also include an interchange rate, also known as swipe fee which is typically charged by the issuer of credit card.

Flat-Rate Credit Card Processing

For this category, fees are a static rate, usually above the interchange rate. A credit card processor might charge a percentage fees depending on the transaction, which might cover the expense of the interchange rate.

Subscription-Based Payment Processing Service

This service usually comes with a monthly fee and have various pricing models. This plan might include extra fees per-transaction, even though these are occasionally lower than other providers. This plan offered by best online payments processing service providers can benefit both businesses and merchants with higher transaction volumes.

How Huge Is The Global Payment Processing Industry?

A report submitted by a Business Research Company has suggested that that global credit card processing industry will record a growth of or more than $612.04 billion in the year 2023 at a CAGR (compound annual growth rate) of 8.9%.

The analysis also indicates that, at a CAGR of 8.5%, the worldwide payment market would grow to or above $847 billion in 2027. To start with, new real time payment platforms enables consumers and businesses to transfer money more securely, reliably, quickly across various banks and institutions.

There is an increased focus on the data privacy and security for payment processing. For example, financial institutions are executing stronger authentication process to protect against fraud, along with introducing new advanced technologies such as block chain and biometrics to strengthen security measures.

Price Right Global Solutions LLC takes pride in itself for contributing to this evolving industry by offering top-notch point-of-sales system to the businesses of all sizes and niches. We

Key Participants In Credit Card Processing

The key participants involved in the settlement and authorization are the cardholder, the merchant, the acquiring bank, the issuing bank, and lastly the card associates.


If you already have a debit or credit card, then you must already be familiar with the role of the cardholder. To be clear, a cardholder (consumer) is a person who holds a bank card from a bank that issues cards. The consumer then presents that card at a business to pay for the services or goods he/she has availed.


Technically, a merchant is any business that sells services or goods. However, the merchants who only accept only different payment types using different POS system such as Aldelo point of sale system are pertinent to our explanation. With that being said, a merchant is any business that owns and maintains a merchant account that allows them to accept credit or debit card as payment from customers for services or goods provided.

You as a business owner is the merchant. A common misunderstanding is that merchant is the payment processor, this confusion comes in because of the term merchant services – but what it real means is services provided to you, a merchant.

Acquiring Bank

Acquiring bank is a registered member of the card associations (MasterCard and Visa). It is also known as merchant’s (business) bank as they sign a contract with businesses to create and maintain their accounts that enables them to accept debit and credit cards. Acquiring banks offers merchant’s with software and equipment to accept cards and manage customer service and other required aspects involved in card acceptance. It also deposits funds from customer’s credit card sales into merchant’s account.

Cardholder Bank (Issuing Bank)

As you must have guessed, an issuing bank issues credit cards to the purchasers. The issuing bank is also a member of the card associations such as Visa and MasterCard. It pays the acquiring banks for purchases their cardholder has made. It’s then the responsibility of the cardholder to repay their bank under the terms of their agreements.

The Breakdown of Revenue In Payment Processing

Together, the payment processing chain enables retailers to accept credit cards and ensures that customers have a quick, easy, and secure way to pay. To avail this service, businesses included in the value chain split up an overall fees of 2.3% of the transaction amount, this is just a rough estimate. Merchants can easily pay from 2% (lowest) to 8% or 10% (highest). The fees that merchant (business) pay includes interchange fee along with other payment processing fees.

For example, a consumer pays $100 for a pair of high heels. To begin, the business gets around $97.70 and the credit card value chain gets the remaining $2.30. The card issuer takes the more portion of the fees, almost around 60-67%. First, the issuer does have to work hard to get the credit card in the consumer’s hand. Then, the service provider takes around 16% for offering the service, support, and software. Lastly, the remaining is evenly split between the credit card brand and the acquirer.

Trends In Payment Processing

Payment processing has be evolving rapidly over the last two decades. There are countless credit card process trends that are on-going and will have a significant impact on the industry over the time.

The main trends we see are the:

  • Open banking
  • Prevalence of internet
  • Prevalence of mobile devices
  • Digital currency
  • Artificial Intelligence

It is evident that credit card payments will leverage these trends to create a better experience for businesses and will also reduce the cost of payment processing.

Price Right Global Solutions LLC sees a future of payments where these transactions are borderless, low-cost, simple, and real-time. We provide point-of-sale systems like Clover and Aldelo point of sale system at reasonable pricing. If you have any questions or insights for us, feel free to reach out to us.

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