A Front-End Processor serves as a pivotal component that manages the preliminary stages of payment processing, notably the authorization of credit and debit card transactions.
The role of a front-end processor extends beyond just processing transactions. It involves real-time communication with the cardholder’s bank to confirm the availability of sufficient funds or credit.
Upon receiving a payment request, the front-end processor sends a query to the cardholder’s bank, which checks the customer’s account. If funds or credit are available, the bank sends an authorization code back to the processor, which then forwards this to the merchant, signifying approval of the transaction.
Conversely, if insufficient funds or credit are present, the bank sends a denial, which is then communicated to the merchant. In essence, the front-end processor acts as a bridge between the merchant and the cardholder’s bank, facilitating swift and secure transaction authorization.