Who is the Processor?
The entity that has an established relationship with the Acquiring Bank. Transactions are processed via the Processor, sent to the Acquiring Bank for authorization, and then settled out to the merchant. The Processor underwrites the merchant account in the case of Third Party Accounts, and forwards documents for due diligence to the Acquiring Bank for underwriting in the case of Direct Merchant Accounts? In either case, the Processor supplies the Payment Gateway and customer service to the merchant. With Third Party Accounts, the Processor absorbs much of the risk because the merchant is using the Processor’s Merchant Account and the Processor is paying settlements to the merchant, in many cases, prior to receiving settlements from the Acquiring Bank. For this reason, it is common for Processors to impose high Reserves to cover their potential losses. However, in the case of offshore accounts, it is common for banks to do this even with Direct Accounts since it is often times the case
