How Long Does it Take for a Merchant to Receive Funds?

Credit card processing is an essential element of today’s retail world, especially when a business is running an e-commerce website. In order to process credit card payments effectively, merchant accounts are used to complete this process. The time that it takes for a merchant who accepts a credit card as payment until the time the funds are deposited into the merchant’s bank account can vary depending on the type of merchant account the business owner uses. Typically, a payment can take anywhere from 24 hours up to three days to process the payment. The reason for this time is because the transaction process goes through a number of steps to get from one bank account to another.

To better understand credit card processing, it is important to know all the steps that take place from the point of sale to the final deposit into the merchant accounts. Once a credit card is used at the point of sale in any business, the payment is then authorized through the acquiring bank. The acquiring bank is the bank where the merchant has an account. The acquiring bank will then issue an authorization request to the card issuing bank. Once authorization is confirmed, the approval code is sent back to the point of sale. For most transactions, this happens within seconds so the payment can be taken for goods and services.

After an approved payment, a similar process happens once again, although instead of requesting authorization through the merchant’s bank to the card issuing bank, the authorization code and draft of sales are sent first the acquiring bank, then to the card issuing bank. Many merchants will provide daily or weekly batches of sales instead of completing one transaction at a time.

Once the card issuing bank receives the authorization code, the card issuing bank will subtract an interchange fee from the total owed. It is then sent back to the acquiring bank where the money is then deposited into the merchant’s account, minus a previously agreed upon discount percentage that is a requirement of having that type of account. While it may seem like a complicated process, it can be very efficient for collecting numerous credit card payments for any business, big or small.

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