Credit Card Processors
Credit card processors are service providers that manage credit card transactions for an issuer bank. This includes a wide range of tasks from providing the technical basis to approvals and monitoring credit limits. Credit card processors are mandatory in cashless payment transactions with a credit card. However, some credit card companies still perform these tasks themselves and are thus a credit card company and processor in one.
Well-known credit card processors
In recent years, numerous smaller credit card processors have been bought by large companies. This applies in particular to the European markets. The former German company GZS has also been taken over by First Data in the meantime. Among the largest credit card processors are the companies First Data, Atos Worldwide and Global Payments.
Services provided by credit card processors
Credit card processors perform a wide variety of tasks. On the one hand, these involve the technical basis for processing credit card payments and, on the other, a wide range of processing services that arise in transaction processing. The processor receives the transactions and authorizes the payments. It monitors compliance with the agreed credit limits for each customer and maintains accounts for merchants and customers for this purpose. The entire clearing, i.e. the processing of payment transactions, is the task of the credit card processors. The extent to which these tasks are performed by a processor or handled directly by the credit card company varies in practice. Various variants are practiced, ranging from complete outsourcing to complete in-house processing. However, credit card companies always rely on the network of a credit card processor, which forms the technical basis for credit card payments.
Security in credit card payments
The task of credit card processors is also to ensure the security of the payment. To this end, credit cards are checked for authenticity. Day by day, service providers are developing new ways to detect counterfeits even better and prevent misuse. Credit card processors also check the plausibility of credit card payments, among other things. If payments are made with a credit card that does not match the customer’s normal usage behavior, the processors become alert and ask the customer whether he or she is still in possession of the credit card and can rule out misuse. A survey conducted by Eurostat in 2010 revealed that around three percent of Internet users in Germany have already been duped by credit card fraudsters and suffered financial losses.
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