Choosing a Payment Processor: What to look for in 2026

Key takeaways

• Choosing a payment processor comes down to six core factors: fees and pricing structure, supported payment methods, authorisation and fraud tools, payout speed, cross-border and foreign exchange (FX) capabilities, and the ease of integration with your existing tools.

• There's no single best processor for every business – the right choice depends on where you sell, how you sell, and how much international volume you process.

• Modern fintech platforms like Airwallex go beyond basic payment processing, combining payments, multi-currency accounts, and FX tools in one place. This can cut cost and complexity for businesses selling internationally.

Picking a payment processor feels straightforward until you're comparing fee schedules, decoding pricing models, and wondering whether your checkout will work for customers overseas. The wrong choice can cost you more than you'd expect – in fees, failed transactions, and time spent managing systems that don't connect. 

This guide walks you through what a payment processor actually does, how the process works, and the six factors that matter most when you're making your decision.

What is a payment processor?

A payment processor is the platform that moves money between your customer's bank and your business account every time someone pays you. Think of it like a courier: when a customer pays at checkout, the processor picks up the payment details, delivers them to the right banks, and brings back a confirmation – all in seconds. Without one, you can't accept card or digital payments online.

How does payment processing work?

Every online payment triggers a short chain of events behind the scenes. It moves fast – usually in two to three seconds – but each step matters.

1. Customer pays: The customer enters their card or digital wallet details at checkout.

2. Data is sent: The payment gateway encrypts the data and passes it to the processor. A payment gateway is the tool that securely collects your customer's payment details – think of it as the front door of your checkout.

3. Authorisation request: The processor contacts the customer's bank – called the issuing bank – to confirm the funds are available.

4. Approval or decline: The bank approves or declines the transaction and sends the result back instantly.

5. Settlement: Approved funds transfer to the merchant's account, minus any processing fees, usually within 1–3 business days.

How do a payment gateway, payment processor, and merchant account differ?

Payment gateways, payment processors, and merchant accounts come up together constantly, and it's easy to mix them up. Each plays a different role in getting a payment from your customer to your account.

Some providers bundle all three into one platform. That means less setup, fewer logins, and fewer relationships to manage – which is worth considering when you're comparing options.

How do you choose a payment processor?

There's no universal "best" processor. The right one depends on where you sell, what currencies you deal in, and how your business is set up. The six factors below give you a practical framework for comparing your options.

What fees will you actually pay?

Fees are where most businesses get caught out. The advertised rate is rarely the full picture – always ask for a complete fee schedule before signing up.

The main payment fee types to check are:

• Transaction fees: A percentage of each sale, sometimes with a fixed per-transaction charge on top.

• Monthly fees: A flat subscription charge some gateways apply for platform access, customer support, and reporting tools.

• Chargeback fees: Charged when a customer disputes a transaction – these add up quickly at high volumes.

• FX and currency conversion fees: Applied when funds convert between currencies. For businesses selling internationally, these are often the least visible fee and the most costly.

• Setup fees: A one-off charge to activate an account – not always present, but worth confirming upfront.

Pricing models also vary. Flat-rate pricing charges the same percentage on every transaction – predictable, but can cost more at high volumes. Interchange-plus pricing passes the base card network cost through to you with a fixed markup – often cheaper at scale, but harder to forecast month to month.

Which payment methods should your processor support?

If a customer can't pay the way they prefer, they'll leave. That's why payment method coverage directly affects your checkout conversion rate.

If you're selling across multiple markets, check that your processor supports:

• Card schemes: Visa, Mastercard, and American Express are the baseline for many markets.

• Digital wallets: Apple Pay and Google Pay are now expected by a large share of mobile shoppers.

• Buy now, pay later (BNPL): Afterpay has deep roots in Australia, while Klarna is widely used across Europe – particularly the Nordics and Germany.

• Local payment methods: In markets across Southeast Asia and Europe, many customers prefer local options over international cards.

A processor that only supports card payments may limit your reach in markets where other methods are dominant.

Can it improve authorisation rates and reduce fraud?

Your authorisation rate is the share of attempted payments that are successfully approved. A low rate means real customers are being turned away – and that costs you revenue directly.

Better processors use machine learning (ML) to optimise how transactions are routed and retried. Dynamic three-domain secure (3DS) logic – a fraud verification step that adds extra checks only when the risk is high – can lift approval rates without adding friction for genuine customers.

On the fraud side, look for:

• Tokenisation: Card details are replaced with a unique code so they're never stored in raw form.

• Address verification: Checks that the billing address matches the card issuer's records.

• Real-time risk scoring: Flags suspicious transactions automatically before they're approved.

Payment Card Industry Data Security Standard (PCI DSS) compliance is a baseline requirement for any credible processor. Think of it as the minimum safety standard for handling card data – like a food safety rating for a restaurant. Any processor you consider should be PCI DSS Level 1 certified.

How fast and predictable are payouts?

Settlement speed is how quickly funds from sales reach your account. Most processors settle within 1–3 business days, but some offer same-day or next-day payouts depending on the payment method and region.

Speed matters, but so does predictability. Knowing when money will arrive is just as important as how fast it gets there. Check whether there are minimum balance requirements or holds on new accounts, as these can delay access to funds in your first few months.

Can it handle cross-border payments and FX costs?

If you sell to customers in other countries or pay overseas suppliers, FX costs deserve close attention. Most processors apply a markup on top of the base exchange rate when converting currencies – and at volume, even a small markup adds up to a significant annual cost.

One way to reduce this is through like-for-like settlement: collecting and holding funds in the currency they were paid in, rather than converting everything immediately. If a customer pays you in euros, you hold euros – and only convert when you actually need to.

Local acquiring is another factor worth checking. When a processor has its own infrastructure in a given market, transactions are processed locally rather than routed through a central hub. This can improve approval rates and reduce cross-border fees.

Will it integrate with your existing tools?

A processor that doesn't connect to your other tools creates manual work. There are two types of integration to check.

For eCommerce, look for ready-made plugins for the platform you're on – Shopify, WooCommerce, Magento, and BigCommerce are the most common. For finance tools, integration with accounting software like Xero, QuickBooks, or NetSuite means transaction data flows automatically, so you're not manually reconciling at month end.

For businesses with custom setups, application programming interface (API) access matters. An API is a set of rules that lets two software systems share data – think of it like a waiter passing your order to the kitchen. You don't need to know how the kitchen works, just that the order gets there. With API access, your payment setup can connect to your existing systems without rebuilding anything from scratch.

Which payment setup fits your business?

The six factors above apply to every business, but the weight you give each one depends on your model.

All-in-one payment service provider vs dedicated merchant account

A payment service provider (PSP) pools multiple merchants under shared infrastructure. It's faster to set up, requires no underwriting, and typically uses flat-rate pricing – a practical starting point for most businesses. Think of it like a co-working space: you get everything you need without signing a long lease.

A dedicated merchant account is tied to a single business and usually requires a credit check and underwriting process. It can offer lower per-transaction costs at high volumes, but takes longer to set up and involves more ongoing administration. Neither is universally better – it depends on your volume and how much flexibility you need.

Which businesses need more than basic card processing?

Some business models have needs that go beyond standard card acceptance:

• International eCommerce sellers: Need multi-currency support, local payment methods, and local acquiring to maximise conversion across markets.

• Subscription businesses: Need recurring billing tools and automatic retry logic for failed payments, so revenue doesn't slip through when a card expires.

• B2B businesses paying overseas suppliers: Need reliable cross-border payment rails, competitive FX rates, and the ability to hold and pay out in multiple currencies.

• Businesses managing spend across teams or entities: Need expense controls, corporate cards, and visibility across accounts – not just a way to collect payments.

Standalone payments vs a broader financial platform

A standalone payment processor handles the act of collecting payment – and that's it. What happens to the money afterwards – converting it, moving it, reconciling it – is left to other tools.

A broader financial platform handles the full picture: collecting payments, holding funds in multiple currencies, converting at competitive rates, paying out to suppliers, and tracking spend. For businesses growing internationally, consolidating onto fewer tools means less time reconciling across systems and fewer provider relationships to manage.

Why growing global businesses choose Airwallex

If you're selling across borders, managing multiple currencies, or tired of juggling separate tools for payments, accounts, and FX, Airwallex brings it all together in one place.

Our global payment solution is built for businesses that need more than basic card processing. Here's what that looks like in practice:

• Accept payments in local currencies and methods: Our platform supports major card schemes and 160+ local payment methods across 180+ countries, with automatic local currency pricing at checkout to reduce cart abandonment.

• Like-for-like settlement: Avoid forced conversion by settling like-for-like for 20+ currencies. 

• ML-powered authorisation optimisation: Our platform uses machine learning and dynamic 3DS logic to maximise the share of transactions that are approved, with local acquiring in 35+ markets improving rates further.

• AI-driven fraud prevention: Built-in fraud tooling screens transactions in real time, reducing risk without adding friction for genuine customers.

• Integration with eCommerce and finance tools: Our Payment Plugins connect directly with Shopify, WooCommerce, Magento, and BigCommerce. We also integrate with Xero, QuickBooks, and NetSuite for automatic reconciliation, and businesses with custom setups can build via the Payments API.

• One platform for payments and financial operations: Airwallex combines Payments, Global Accounts, FX & Transfers, Corporate Cards, and Expense Management – so you're not managing five separate providers.

Frequently asked questions

What is the difference between a payment gateway and a payment processor?

A payment gateway collects and encrypts the customer's payment details at checkout, while the payment processor takes that information and routes it between banks to authorise and settle the transaction. Many modern platforms combine both functions, so you don't need to set them up separately.

What fees should you check before choosing a payment processor?

The key fees to confirm upfront are transaction fees, monthly subscription fees, currency conversion fees, and chargeback fees – always request a full fee schedule, not just the advertised headline rate, as the total cost can look quite different once all charges are included.

How hard is it to switch payment processors?

Switching typically involves updating your checkout integration, migrating any saved customer card data (which requires tokenisation portability from your current provider), and updating your payout bank details – and the complexity depends on how deeply your current processor is built into your tech stack.

Can a single platform handle payments, multi-currency accounts, and global payouts?

Yes – some platforms combine all three, which is particularly useful for businesses operating across multiple currencies, as it removes the need to reconcile across separate providers. Airwallex is one example, bringing Payments, Global Accounts, and FX & Transfers together in one place.

Do payment processors charge extra for international transactions?

Most processors apply additional fees for cross-border transactions – either as a flat surcharge, a currency conversion markup, or both – and businesses with significant international volume should compare these costs carefully, as they compound quickly over time.

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) it is important for you to read the Product Disclosure Statement (PDS) for the Direct Services, which is available here.