If you’ve worked in a restaurant, you’ve used batch payment processing. Batch payments are usually processed at the end of the day. Instead of processing each transaction as it comes in, with batch payments, the merchant sends a group or batch of authorization requests to be processed all at once. With batch payments, the authorization and processing happen separately. In a real-time credit card transaction, the authorization and processing happen simultaneously. Batching transactions is also known as dual message processing, batch processing, and batch clearing. There are two ways to process credit card transactions real-time processing and batching.
Once the money reaches the merchant’s account, the transaction is settled–this is also known as closing the transaction. Settlement has occurred when the payment processor has the bank transfer the money from one account to another. At this time, the authorization hold is processed in order to move the customer’s money into the merchant account. At this stage, the transaction has not gone through, but the money has already been spoken for. As long as the card doesn’t appear to be stolen and holds enough money for the transaction to go through (and the card hasn’t been maxed out) the card will then have a hold placed for the transaction amount. The POS essentially asks if the issuer thinks the card is stolen, if the card is legitimate, and if there’s enough money for this transaction. The POS will then send a message to the credit card issuer (Mastercard, Visa, etc.) with the credit card information and transaction amount. If you’re using batch payment processing, the customer will pay with their credit card in exchange for the merchant services. AuthorizationĪuthorization is the first step of the credit card payment process. Though the steps may differ depending on the payment processing option used, you can more easily understand the process by breaking it into three steps authorization, processing, and settlement. In order to understand batch payments, you first need to understand how credit card payments are processed. How Credit Card Transaction Payments are Processed
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In this article, we’re going to focus on batch payments and how to process payment clusters. They have different fees and provide the merchant with different capabilities. If you’re unsure which payment processing option is right for your business, first make sure you understand how credit card transactions are processed. The two main types of credit card transaction processing are real-time processing and batch payment processing.
This may seem like a simple decision, but the method merchants use to process credit card payments can have many implications for the day-to-day operations of the business. Once approved, the funds are sent to the merchant’s bank for payment, which is called settlement.Įvery merchant must choose how to go about processing credit card transactions.
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