How Does Batch Processing Work (Infographic)

Batch processing is the second and final step in processing a payment card transaction (the first step is authorization). Think of it as the settlement stage of credit card processing.

Many people (merchants and cardholders alike) think that a customer’s credit or debit card is charged at the time a purchase is made. In actuality, during the authorization process the bank that issued the card verifies that it is valid and puts a hold on the line of credit or account funds to cover the transaction amount. The credit card terminals, processing software and electronic payment gateways store the merchant’s credit card authorizations in a data file until they are ready for settlement, usually at the end of the business day. This file is called the batch.

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When it’s time for settlement — also known as closing the batch — the merchant transmits the batch to their credit card processor which forwards them to the appropriate issuing banks via the credit card networks. The banks release the funds to the processor, who deposits them into the merchant’s bank account, usually within 48 hours of the transaction.

In theory, a merchant can close their batch at any time during the day, or even after each individual transaction. But since credit card processors charge a fee each time the batch is closed, it’s most cost effective to settle once a day and avoid multiple fees for the same service.

For the convenience of their clients, many credit card processors provide an auto-batch close service that automatically settles a merchant’s transactions at the same time every day. If there are no transactions pending in the batch, it is not closed and no batch fee is charged.

At Merchant Express®, we endeavor to settle transactions and deposit funds into a merchant’s bank account within 48 hours. This means you have a minimal wait for the proceeds from your credit card sales.

Talk to a Merchant Express consultant today about all the merchant accounts, products and services that we have to offer. They can also help you choose the credit card processing solutions that can really pay off for your business.