In one or two paragraphs, explain what a payment processor does and identify the types of online businesses that might use its services

Processing payment card transactions that might be from a debit card or a credit card, that might need open loop or closed loop processing, or that might even involve the ACH directly is a complex task. Large online businesses have entire departments of highly skilled employees who build and maintain the systems needed to accomplish this work. Mid-sized online businesses often purchase software (separately or as part of an electronic commerce software package) that handles the processing, but they must hire skilled employees to manage the system.
Small online businesses often do not have the resources to manage this function in-house, even with purchased software. They generally rely on a service provider either to assist them in processing payment card transactions or to handle the entire function for them. These service providers are called payment processing service providers or payment processors and are usually grouped into two general types, front-end processors and back-end processors.