The processor essentially serves as the go-between for the merchant and the card issuer. They make it possible for information gathered from your card at the cash register to be transmitted to the card issuer.
There are four credit card payment processors, also known as card networks:
Visa
Mastercard
Discover
American Express
As mentioned before, Discover and American Express serve as both the card issuer and processor for their cards. Other credit cards have both an issuer and a processor. With the CardName, for example, Chase is the issuer and Visa is the processor.
Who is the card processor matters because not all merchants work with all card networks. Costco is a good example of this. If you want to pay with a credit card at one of the warehouse club’s locations, you’ll need a Visa card. The retailer doesn’t accept credit cards processed by other networks.
For the most part, though, all four processors are widely accepted for payment at U.S. banks. However, if you are traveling overseas, you may find businesses don’t accept Discover and American Express as readily as Visa and Mastercard.
It should be noted that the term processor can also apply to what are known as merchant services providers. These are companies, such as Square, that send credit card data to a card network.