When credit card processing is delayed, it can take significantly longer for your company’s money to end up in your merchant account. By understanding how this process works, you can figure out when your money will arrive and how to achieve a fast credit card processing speed.
So, why do credit card payments take so long to process? And more importantly, what can you do to speed things up? Read on to learn more.
TL;DR
- Credit card payments typically reach merchant accounts in one to three days, but common delays can stretch this timeline to up to seven days.
- In order for cards to be processed, they must go through a multi-step process involving authorization, batch submission, clearing, settlement, and deposit. A delay at any point in this procedure can slow the whole process down.
- Weekends, holidays, bank policies, high-volume settlements, large payments, global transactions, and inaccurate information can slow down processing timelines.
- Because new merchant accounts often involve extra verification, processing timelines can be slower at first.
By working with the right payroll processor, you may be able to speed up your processing timeline.
How Does Credit Card Processing Work?
The way credit card processing works depends on the type of card used, the processor, and where the transaction takes place. For instance, an online transaction will be processed differently from an in-person transaction. Currently, 83% of point-of-sale (POS) payments are made up of credit cards, debit cards, or digital wallets.
The entire process begins when the cardholder enters their information online, swipes their card, or taps it against the credit card machine. Your payment gateway or POS system then transmits this information to the issuing bank so that the payment can be authorized. Based on fraud issues or the availability of funds, the issuer can decide to approve or deny this request.
Then, the issuer’s decision is sent to your POS system or payment gateway. If the transaction is approved, you can provide the customer with their goods and services. At the end of the day, this information is sent to the credit card processor when you settle the batch.
The card networks are then responsible for managing the transfer of your funds from the issuing bank to the acquiring bank. After the acquiring bank receives the money, the bank transfers the funds into your merchant account. Along the way, credit card processing fees worth 1.5% to 3.5% are removed from the transaction.
Why Do Credit Card Payments Take So Long To Process?
In most cases, it takes just one to three days for credit card payments to appear in your account. However, if you use an aggregator account, it can take three to seven days.
There are a few factors that determine whether you have fast credit card processing or not.
Major Factors That Slow Down Credit Card Processing
So, why do credit cards take so long to process? There are a few different factors that could be preventing fast credit card processing.
- Weekends and Holidays: If it is a weekend or holiday, the payment likely won’t move until the next business day. To avoid this issue, make sure to settle all of your customer payments before the settlement cut-off on a regular business day.
- Bank Policies: Each bank has its own timeline for releasing payments, which can add an extra day or two to the overall processing timeline.
- Global Transactions: A cross-border transaction involves currency conversions and extra compliance checks, so it can take an extra two to three days to process.
- Inaccurate Information: If the customer provides an incorrect address, expiration date, or other information, it can cause the payment to be delayed.
- Merchant Account Setup: Often, added security measures are applied to new merchant accounts, which can slow down the process.
- Payment Volume: If there is a high transaction load, it may require a longer clearance process.
Payment Size: Individual payments can be delayed if they are especially big. Often, credit card companies perform extra verification on large payments.
Credit Card Processing Timeline
To give you a general idea about how long each step in the process takes, check out the following credit card processing timeline.
| Step | What Is It? | Duration |
| Authorization | This is when the bank verifies that there are available funds. If there is enough money available, the transaction is approved. | Within seconds |
| Batch Submission | The merchant submits a batch of the day’s transactions for settlement. | This typically occurs at the end of the business day, but it depends on when the business settles the batch. |
| Clearing | Clearing is when the card networks route the day’s payments between banks. | One to two business days |
| Settlement | In this stage, the funds transfer from the card issuer to the acquirer. | One to three business days |
| Deposit | This is when the funds finally appear in the merchant’s account. | Two to five business days |
How To Speed Up Credit Card Processing Timelines
By figuring out how to achieve fast credit card processing, you can enjoy quicker access to your funds. While the issuer and acquirer will still need to go through the standard steps, the following tips can help you speed up your payment processing as much as possible.
Double-Check the Payment Information
Whether you’re processing a mobile payment or a Mail Order/Telephone Order (MOTO) payment, double-check the information you’re using. It’s a lot easier to verify the customer’s information while they’re still on the phone, and inaccurate data can slow down the payment process.
Plan Ahead for Holidays
Do credit card payments process on weekends and holidays? Unfortunately, payments only process on business days.
To make sure you receive payments in a timely way, check your calendar. Whenever possible, try to process payments before the holiday or weekend so that they finish the process sooner.
Automate Your Payments
Automated payments are much faster to process. In addition to reducing your admin’s labor hours, automating your payments also means you don’t have to chase customers for their bill payments each month. For the best results, talk to a payment processor, like PayCompass, about how to schedule payments for specific days each month and how to complete automated payment agreements with your customers.
Link Your Bank Account Correctly
When you’re just getting started with a payment processor, payments may initially take longer. To avoid delays, make sure you’ve correctly linked your bank account to the payment processor’s system. Additionally, check your information to make sure it is entered correctly.
Settle at the Right Time
To get your credit cards processed as quickly as possible, pay attention to settlement cut-off times. Most credit card processors require batches to close by 5:00 p.m. for the funds to process on the next business day.
How PayCompass Can Help You Process Credit Cards Fast
At PayCompass, we offer a streamlined payment gateway, so you can enjoy fast credit card processing. We’ve optimized our systems to ensure the fastest approvals and authorizations possible. Thanks to our automated verification tools, you can prevent declined transactions from happening due to inaccurate information. At the same time, our PCI DSS compliance and encryption ensure all of your payments are processed safely.
With our high-tech POS systems, payment gateway, integrated software, and other features, we’re able to decrease the lag time between when your transaction is approved and settled. We also support next-day settlement and automatic payments, so you can improve your company’s cash flow.
Final Thoughts
Some credit card processing delays are inevitable because of security checks and batch settlement times. However, there are effective steps you can take to ensure fast credit card processing at your company. Double-checking information, planning ahead for holidays, and correctly linking your merchant account can speed up your overall processing timeline.
At PayCompass, we’ve helped 6,250 businesses achieve faster credit card processing timelines. To learn more about how we can optimize your system, reach out to our team of payment processing experts today.
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