Which of the following statements is true about front-end processors?

Front-end processors play a crucial role in the electronic payment transaction process, particularly in the aspects of transaction authorization. They serve as intermediaries between merchants and card networks, facilitating the communication needed to verify whether a specific transaction can be approved. When a customer makes a purchase with a credit or debit card, the front-end processor is responsible for supplying authorization services by checking the details of the transaction with the card issuer in real time.

This process of authorization ensures that the funds are available and that the card is valid, thereby allowing merchants to proceed with the transaction confidently. The swift and secure handling of authorization inquiries enables a smooth transaction experience for both the merchant and the customer, which is essential in retail environments.

The other statements present certain functions that front-end processors do not typically cover. They do not handle settlement directly, as this involves a different aspect of payment processing, nor do they usually engage in customer service inquiries, which are generally managed by the merchants or card issuers themselves. While they connect with card networks, their primary role is not about establishing connections to card issuers, but rather facilitating the authorization process itself.