Credit Card Transactions

Everything You Need To Know About Batches And Settlements In Credit Card Transactions

Days are gone when we used to have physical currency in the pockets while going to the market. Nowadays, people are giving more preference to online transactions and as a matter of fact, it is less complicated and more flexible. Yes, it allows the customers to pay in whatever way they want to pay. Moreover, online transactions have become very reliable with the introduction of credit card chargebacks. If we talk about the merchant’s perspective, accepting card payments have become easier. Yes, we have physical payment terminals but, if we see the online payment system, customers can make bill payments from anywhere they want. So, in terms of flexibility and security, nothing can beat online credit card transactions.

Well, customers feel that it is easier to make credit card transactions than making e-transfer. In fact, there is a big team that makes it possible. Actually, processing credit card transactions is not as easy as it looks. Before getting into batches and settlements, one must know the process of credit card transactions. We have elaborated the process below to give you a brief idea.

  • Customers initiate the transaction by swiping the card or putting the required credit card details on the payment page. After that, the merchant processor shares the information with the credit card network.
  • The credit card network passes the information to the credit card issuer or credit card issuing bank.
  • Now, depending upon the balance that the cardholder has, the credit card issuing bank either approves or rejects the transaction and passes the same to the credit card network.
  • The credit card network shares the information with the merchant processor and thus, the entire credit card transaction is completed.
Batches And Settlements In Credit Card Transactions

If you have been running an online business, you are probably acquainted with batches and settlements. But, there are many businessmen who have recently taken their businesses online and for them, it is very important to understand what these things are. Considering the present situation where maintain physical distance has become very important, many small business owners are shifting to the online business. We at International Payment Solution are very pleased to see the effort that these small business owners are showing to provide satisfactory outcomes to their customers. Therefore, here, we are going to tell you what batches and settlements are. So, have a look at the following points.

Well, a credit card transaction is a real-time process. When a transaction is approved by the credit card issuing bank, the money is instantly deducted from the customer’s bank account. But, crediting the money in the merchant’s bank account is not a real-time process and here, batches and settlements play a very important role. These are inextricably related to your day to day transactions. Batches consist of all the transaction amount that you receive from the customers. But, the entire amount will be deposited into your bank account when you settle the specific batch. The settlement can be done either by the merchant or the payment processor.

What Is A Batch?

When a credit card transaction gets approval from the credit card issuing bank, the amount is added to the merchant’s batch. The amount will be credited to the merchant’s account after the settlement of the batch. Well, a batch is not settled, it is called an open batch. In case of an open batch, the merchant can check the whole transaction details and it allows the merchant to void or reverse transactions if it is needed. In addition to this, you must know that voiding a credit card transaction is less costly than refunding the entire transaction amount.

The settlement of a batch is generally done within 24 hours. Mostly it is automatically done by the merchant service provider. But, if we talk about the restaurant and retail businesses, they do it manually at the end of each business day. If any batch is left open for too long, the merchant processor closes the batch and settles the amount.

Here is an example of a batch

Transaction
Card Network
Amount
1
MasterCard
$80
2
Visa
$120
3
American Express
$100
4
Visa
$50
Batch Total
$350
What Is A Settlement?

Credit card transactions have become very popular nowadays. When a batch is closed, the merchant processor solutions receive the processed amount from the card-issuing bank. After that, the merchant service provider transfers the entire processed amount to the bank account of the merchant by e-transfer. However, the settlement process depends upon the merchant processor. Some settle the amount within 1 or 2 days. On the other side, some processors take 7 to 10 days to make the settlement.

Become A Merchant Of IPS?

By now, you have probably understood everything that you need to know about batches and settlement. Now, if you want to get the best outcomes, we will recommend you to go with International Payment Solutions that is one of the best merchant services providers. They offer advanced payment solutions that you can use to take your business to the next level.

Summary
Everything You Need To Know About Batches And Settlements In Credit Card Transactions
Article Name
Everything You Need To Know About Batches And Settlements In Credit Card Transactions
Description
Customers feel that it is easier to make credit card transactions than making e-transfer. In terms of flexibility nothing can beat credit card transactions.
Author
Publisher Name
International Payment Solutions
Publisher Logo

With an MBA Dual Specialization in Finance and Marketing, this is Debanjan Mukherjee from India. I have got more than 7 years of experience in the field of content development and have extensive working experience in top corporate houses like Pwc and Zacks Investment Research. My skill set includes SEO Writing, Content Writing, Blog Writing, Web Content & Research Articles. I believe in taking things to the next level.