Front-End Processor

A front-end processor is a crucial component in the payment processing ecosystem, primarily responsible for handling the initial stages of credit and debit card transactions. This includes the capture of transaction data, authorization of the transactions, and communication with the acquiring banks. Front-end processors maintain connectivity with all major card companies, routing transactions to the appropriate card network (such as Visa, MasterCard, American Express, or Discover) for authorization.

The roles of a front-end processor include:

In contrast, back-end processors come into play post-authorization. They handle the final stages of the transaction process, including the settlement of funds. Back-end processors accept settlement data from the front-end processors and manage the transfer of funds from the card-issuing bank to the merchant's bank account, thus completing the financial transaction.

In the USA, prominent examples of front-end processors include TSYS and First Data. These processors are integral for merchants as they provide the necessary infrastructure and services to securely and efficiently process card payments, connecting the merchant's point-of-sale system to the broader financial network required to accept electronic payments.