What Is Batch Settlement?
Batch settlement is the process of grouping a merchant's authorized card transactions and submitting them together for payment. Cut-off times and how a batch closes vary by processor and setup.
Direct Answer
Batch settlement is the process of grouping a merchant's authorized card transactions and submitting them together for payment. Cut-off times and how a batch closes vary by processor and setup.
Direct Answer
Batch settlement is the step where a merchant's authorized card transactions are grouped into a batch and submitted to the processor so the money can be moved toward the merchant's bank account. Authorization only confirms that a card can be charged; settlement is what actually starts the transfer of funds.
How It Works
Throughout the day, each approved sale is held as an authorized transaction. When the batch closes, those transactions are sent together to the processor, which routes them to the card networks and issuing banks. Funds are then paid out to the merchant according to the processor's funding schedule. Some systems close batches automatically at a set time each day, while others require the merchant to close the batch manually.
Key Points
- Authorization and settlement are separate steps.
- A batch can close automatically or manually, depending on the terminal, POS, or gateway setup.
- Cut-off times vary by processor. A sale made after the cut-off typically goes into the next batch.
- Funding time after a batch closes varies by processor, bank, and account setup.
What Merchants Should Know
If deposits look late, check when your batch actually closed before assuming a funding delay. A batch that was never closed, or closed after the cut-off, is a common reason a deposit shows up a day later than expected. Ask your processor what the daily cut-off is and whether your system closes batches automatically.
