The key parties involved in payment processing are as follows:
Payer / Customer - The person or business that is sending the funds / making the purchase.
Payee / Merchant - The person or business that is receiving the funds / making the sale.
Issuing bank - The financial institution that provides the customer with their payment method (e.g. debit card) and is responsible for authorizing their transactions.
Acquiring bank - The financial institution that processes card payments on behalf of the merchant. It facilitates the movement of funds from the issuing bank to the merchant account (in many cases, the payment service provider serves as both the acquiring bank and the merchant account provider).
Merchant account - An account provided by the acquiring bank (or a separate third party) where funds from card transactions are temporarily held before being transferred to the merchant’s business bank account.
Payment gateway - The intermediary responsible for securely transferring customer payment data to the payment processor.
Payment processor - Software that handles the technical processes involved in sending payment information between the payment gateway, acquiring bank, and issuing bank.
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