Find out what payment batching means, what next-day funding is, and how you can access your funds as soon as possible to keep your business moving forward.
It has been a long, productive day. Your business collected more payments than you can count. And yet, nothing has changed when you go to check your business account balance. Why not?
It’s because it takes time to process those payments. As we explained in our article about how credit card processing works, a wide array of players are involved with every transaction: the merchant bank, the card association, the payment processor… and the list goes on.
Not only are there a variety of parties involved, but there’s also a chain of processes that take place between these parties.
One part of this huge chain of processes is called “batching”. Learn what it is to know how you can get your payments sooner.
What Batching Is
According to research, the US processes roughly 109 million credit card transactions per day. Not per month—per DAY. That’s an incredible amount of money sent.
However, that money isn’t immediately put into each merchant’s bank account. Instead, all those transactions that took place at a business are processed at a certain time of day. Processing this lump amount of credit card payments is known as batching out.
Let’s take a look at how the credit card batching process works:
- You (the merchant) accept your customers’ card payments throughout the day.
- After all the sales are completed at the end of the day, you initiate the batching out process.
- During this process, your credit card equipment and software send your batch of credit card transactions for the day to the bank for processing.
- When the bank receives the batch, that is when the transactions are actually charged and applied.
- Because a bank charges a fee each time it processes batch transactions, many merchants batch just once a day.
- Once the batch has been completed and the bank has processed the transactions, the process of transferring money from the credit card to your merchant account begins.
So does that mean every business receives payment at the same time? No.
In order to do so, you need to be approved to do so by your credit card processor. As you review your contract terms with them, you’ll need to have something called “next-day funding”. Let’s understand what that is so you can receive it.
Next-Day Funding
As the name suggests, next-day funding means that all of your accepted payments from one business day are available in your bank the next working day.
But just because this type of funding exists doesn’t mean every business is approved to have it. There are a variety of factors that affect whether a business can qualify for next-day funding, such as:
- Company type
- Volume of transactions
- Past processing history
If your business meets these requirements, you may be able to receive next-day funding. We recommend negotiating with your processor to see if there’s any flexibility on their end.
So if you’re approved, does that mean you can automatically expect your funds the next day? Not quite. In order to have your funds the next day, you need to make sure you batch out before the cut-off time. We’ll learn more about that next.
Batching Times for Next-Day Funding
Just like anything else, there are limits involved with batching. People don’t get to batch out whenever they want and still achieve next-day funding. In order to meet demand, there’s deadlines involved that a merchant needs to meet.
This means merchants need to send their batches before a certain time, typically 7:00 P.M. in order for funds to be released on the next working day.
What happens if you don’t meet this batch-out cutoff time? This will delay transaction processing, meaning you’ll have to wait an extra day to receive funds.
So make sure you batch out before the cut-off time that day in order to receive your funds the next day.
You may be thinking at this point, “Batch out before 7. Got it! That’s simple.” However, There’s more involved with achieving next-day funding than having your business qualify and batching out on time.
For example, some payment processors see this as an opportunity to take advantage of unsuspecting merchants. How can you avoid this?
Working With the Right Processor for Next-Day Funding
After reading about next-day funding, you might already be imagining what you could accomplish by receiving payments sooner. However, it’s crucial to note that not all credit card processing networks offer next-day funding.
Keep this in mind as you shop around for a processor. Only select payment processors work with the right partners and are on the right networks to get next-day funding.
If you’ve read our other articles on payment processing by now, you’ve realized not all processors are trustworthy. They try to put fees where they don’t need to be, making easy money on their customers.
One way they do this is by charging for next-day funding. That’s definitely something you want to avoid. Next-day processing should never cost you a cent more from your payment processor.
Summary
Having your funds available the next day can open up doors of opportunity and make your life easier. However, to achieve next-day funding, you need to make sure you qualify first, and batch out before the cut-off time.
You also need to make sure you partner with the right payment processor. Some processors aren’t connected to the right networks or partners, leaving you out of luck when it comes to getting your funds the next day. Others sneakily charge you fees for it, even though it should always be offered free-of-charge.
Progressive Payments Solutions wants your business to have every advantage. We offer a next-day funding program that’s completely free to qualified businesses. We also put together a comprehensive guide to help you learn the five most important steps to choosing a payment processor. Grab a complimentary download and start saving money today.