Batch Credit Card Processing
What Is Batch Credit Card Processing?
All batch credit card processing is the practice of a merchant processing its authorized credit card transactions for the day after the close of the business day, or at not entirely settled by the credit card processor. Credit card batch processing is the merchant's second step toward getting compensated for its clients' credit card transactions. During batch processing, the merchant sends the authorization codes for each credit card transaction to its payment processor, and the processor orders the transactions by the bank that issued every client's credit card. Every one of those banks then, at that point, remits the payments to the merchant in a step called settlement.
How Batch Credit Card Processing Works
The merchant's initial move towards getting compensated for a client's credit card purchase is the authorization step. Authorization happens at the time of purchase when the client's credit card data and transaction amount gets shipped off the card issuer to check that the card is authentic, has not been reported as taken, and has enough [available credit](/accessible credit) to make the purchase. After the close of business, the merchant transmits the day's worth of credit card transactions to the bank.
Why Batch Credit Card Processing Is Implemented
At the point when credit cards are handled, the bank deducts a fee for its job simultaneously, ensuring the merchant gets compensated for the transactions in that batch, and allows every client's credit to card issuer realize that the merchant has been paid so the issuer can post the transaction to the cardholder's account. A similar interaction applies when a merchant issues a consumer a refund for a previous credit card transaction. It might require a few days for the merchant to receive the funds for a batch, and it might require similar amount of investment for the transactions to post to consumers' accounts.
A merchant can set up batch credit card processing to happen consequently simultaneously every day. Credit card batching should be possible more frequently than one time per day, however there is a fee for each batching request, so merchants will generally deal with batches once every day to limit their fees. Due to the fees that credit card processors charge, sending the entirety of the day's transactions in a single batch kills the individual charges that would be applied assuming every transaction was sent separately.
There are tradeoffs in utilizing batch credit card processing. This is part of a two-step process, with the authorization happening at the time of the transaction and the clearing message for the transaction not sent until the batch is communicated. With real-time processing, the data to clear the transaction, including the last payment amount, is sent in one message.
Features
- While authorization will occur on a client's credit card at the time of purchase, it isn't until processing that the transactions get charged to the bank.
- Batch credit card processing happens when a merchant processes the whole day's worth of credit card transactions at the close of the business day, or at one more indicated time.
- Since banks regularly charge a fee for each batch of credit cards handled, numerous businesses decide to just batch credit card processing once every day to reduce costs.
