Monday, April 20, 2009

What is a payment processor?

Payment processors can process payments using credit cards, debit cards, checks, e-checks, money orders, cashiers checks and bank accounts. Payment processors make it very easy for the average person to accept payments online for merchandise or services without the headache of needing to pay for a credit card processing service.

Not only do payment processors allow users to accept payments but payment processors handle sending payments as well. Once of the best examples of this is PayPal. Paypal is owned by eBay and was originally intended to be used for eBay auctions. When a user wins an auction or item, if the seller accepts PayPal for payments, the buyer can then send the seller the funds for the purchase using a credit card or his/her bank account through PayPal. An other famous payment processor would be Alertpay.

The amount is then deducted from the users bank account or charged to the users credit card depending on which preference the user has selected. Payment processors also allow you to house your funds sent to you, acting as a form of online bank. So when you’ve received money from an online payment you can choose to deposit it to your bank account or withdraw the funds by requesting a check in the mail.

Payment processors are usually free to sign up and to use, the only charges are that of fees taken from the amounts that are sent and received. Each payment processor charges a different set of fees and percentages.


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