In one line
The company that moves a card or bank payment from your client's account to yours.
Also called a payment gateway, a card processor, or an acquirer.
What it means in practice
The processor handles the authorisation, the settlement and the disputes, and takes a percentage plus a fixed fee for doing it. Which one suits you depends on the size and shape of your payments rather than the headline rate.
Small frequent payments are hurt most by the fixed fee. Large payments are hurt most by the percentage, which is why bank transfer is often the right rail for a five figure invoice.
Covered in full in the guide to payment links and qr codes.
Example. On a $50 payment a 30 cent fixed fee is 0.6%; on a $5,000 payment the percentage is what matters.
Where it shows up on the paperwork
Nothing of the processor appears on your paperwork except the methods you list and the link you provide.
What goes wrong
- Choosing on the headline rate without checking the fixed fee, the settlement time or the dispute process.
- Using a card rail for a five-figure invoice where a bank transfer costs almost nothing.
- Adding a surcharge without checking whether your state and card scheme allow it.
The tools for this
Related terms
- Merchant accountThe account that lets a business accept card payments and holds the money until it settles to your bank.
- ChargebackA card payment reversed by the client's bank after it has already reached you.
- Payment portalA hosted page where a client can pay an invoice by card or bank transfer.
Common questions
Which payment method costs me least?
Bank transfer or ACH on large invoices, where a percentage fee gets expensive. Cards and wallets on small ones, where speed is worth more than the fee.
How long until the money reaches my bank?
Depends on the processor, and commonly one to three business days. Ask before you rely on it for a payroll date.