Payment Processor

A payment processor is the technology company that moves money between a customer's bank or card and a merchant's bank account. When a customer enters their card details and clicks "subscribe," the payment processor encrypts the data, routes it through the appropriate card network, communicates with the issuing bank for authorization, and returns the result — all in about 1-2 seconds.

In the subscription context, payment processors do much more than handle one-time transactions. They store tokenized payment methods for recurring charges, generate invoices, manage subscription lifecycle events (upgrades, downgrades, cancellations), calculate taxes, handle multi-currency conversion, and provide basic retry logic for failed payments. Popular subscription-focused processors include Stripe (the market leader for SaaS), Braintree (owned by PayPal), Adyen, and Recurly.

The payment processing ecosystem has multiple layers. The processor itself handles the API and merchant relationship. The acquiring bank (often separate from the processor) underwrites the merchant account and settles funds. The card network (Visa, Mastercard, Amex) routes the transaction. The issuing bank makes the authorization decision. Each layer can introduce failures — network timeouts, acquirer errors, and issuer declines all manifest as "failed payments" to the merchant.

Choosing a payment processor affects subscription performance in ways beyond pricing. Authorization rates (the percentage of charges that succeed) vary by processor based on their routing algorithms, network connections, and optimization features. Some processors offer network-level tokenization, which can improve authorization rates by 1-3%. Others have stronger presence in certain geographic regions.

LostChurn is processor-agnostic, integrating with 18 payment processors to provide unified recovery across your entire payment stack. The platform normalizes decline codes and retry behavior across processors, applying the same intelligent recovery strategy regardless of which processor handles the underlying charge.