Credit Card Processing: A Primer

2. They perform the mechanical functions of transmitting credit card data.

3. They make sure merchants comply with the Visa and MasterCard rules and regulations.

4. And they collect fees for themselves as well as for the Visa and MasterCard networks and the banks that issue the cards.

The first role — sponsoring merchants into the card-association networks — requires the payment processor to guarantee that a merchant will meet its financial obligations. If you, as a merchant, cannot pay for refunds, chargebacks or other obligations owed to the card networks or card-issuing banks, then your processor will. Effectively, this means the payment processor gives you a line of credit.