Back-End Processing refers to all the tasks that a back-end processor performs. These include the following:
- receiving transaction information from the front-end processor or gateway
- processing the transaction
- settling funds
Once a transaction has been approved during front-end processing, the back-end processing stage begins. The back-end processor groups transactions together into batches and sends the batch to the appropriate card network (like Visa or MasterCard). The network then communicates with the issuing banks to transfer the funds for the transactions.
Once the issuing bank confirms the transaction and transfers the funds, the back-end processor then ensures the funds are deposited into the merchant’s account. In addition, the back-end processor handles other tasks such as chargeback management and reporting.