Credit Card Processing 101 – The Major Players

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This is the first in a series to help business owners navigate the electronic payments industry. The series will provide a clear, concise and complete look at how businesses accept payments, including valuable information on topics like the interchange process and PCI Compliance. Lets start at the beginning and look at the Major players within the industry.

What is payment processing?

Payment processing boils down to the automation of electronic payment transactions between the merchant and the customer. Payment technology helps process, verify and accept or decline credit card transactions through specialized hardware and software.


The Major Players

These are a few main players involved in the payment process.

The Issuing Bank


This is the bank that provides the customer with his or her credit card. As an example, if you have an account with PNC Bank then you most likely also received your credit or debit card from them. This makes PNC the issuing bank, who receives most of the interchange fees charged by the card brands.


 Card Brands



Visa®, MasterCard®, Discover® and American Express® fall into this group. These companies work with governments     to determine rules regarding card use, acceptance and security, as well as determining the interchange rates.



The processor helps shuttle all of the information to the card brands and banks. Businesses are connected to the processor through the hardware or software they are using, and when they run a transaction the information is routed to the appropriate network. Then when a merchant “batches”, or closes out for the day, the funds are moved from the Issuing Bank to the merchant’s bank. They will then calculate the interchange fees and provide the data to the merchant and the card brands.

Payment Gateway


A payment gateway connects the payment technology (terminals, shopping carts, etc.) and the card processing networks. This can be integrated into your current solution with an Application Programming Interface (API). Many processors also have their own gateway as well.

Sponsor Bank


The sponsor bank is responsible for getting the funds to the merchant and ACH payments to the processor. They are also responsible for paying the card brands and the issuing bank their share of the interchange fees

About Clarity EPS

Clarity EPS is a leading provider of payment processing and technology solutions, working with businesses of all sizes helping them process payments in a more efficient, secure and affordable manner. We assist businesses in eliminating the guesswork regarding payment processing and provide clear, concise and understandable solutions. Our core values are rooted in honesty, fairness and transparency.

Please visit for more information on our offerings.

Contact: (561) 338-4446 | | Twitter: @clarityeps