What distinguishes back-end processors from front-end processors?

Back-end processors are primarily distinguished by their role in providing settlement services. They are responsible for the processing of transactions after they have been authorized by the front-end processors. This involves settling the funds between the merchant's bank and the customer's bank, ensuring that the transaction is fully processed and that funds are transferred correctly.

Settlement services typically include finalizing the transaction amount, handling discrepancies that may arise, and ensuring that the financial exchange between the involved parties occurs smoothly. This is a crucial function that supports the overall payment processing system, as it ensures that merchants receive their funds in a timely manner and that customers are accurately debited for their purchases.

On the other hand, while back-end processors may interact with card issuers, their main function focuses on settlements rather than the direct connectivity aspect. Additionally, the notion that back-end processors only work with debit cards is incorrect, as they process transactions for both debit and credit cards, and they do not typically handle customer service directly. Customer service is generally managed by the merchant or the front-end processors, which are more involved with the consumer-facing aspects of payment processing. Thus, the correct characterization of back-end processors centers on their vital role in providing settlement services.