Batch Credit Card Processing
When it comes to credit card processing, a merchant should have something called a merchant account. The merchant account is type of an account opened by the merchant in order to receive credit card payments from various other banks. In that sense, this account works as a bank trust. When it comes to settlements there are two ways of doing so. One is the real-time settling and other is the batch credit card processing. In the first category, settling is done as an when a credit card transaction takes place. If the vendor has too many credit card payments received, the banks may process those in one batch. That is what called batch credit card processing. When a transaction takes place, the vendor charges the credit card of the customer and if the credit card is valid, then an approval is received by the vendor. When the transaction happens, the vendor receives a transaction code, which will be forwarded to the credit card issuer bank for the payment.
At the close of the business each day, the vendor sends the credit card transaction details to the acquiring bank as a batch (batch credit card processing). Then the acquiring bank send the transaction details to the credit card interchange and the relevant customer credit card accounts are then updated with relevant transaction details. The credit card issuer bank then pays the vendors merchant account. Once the vendor’s bank (acquiring bank) receives the payments, they pay the vendor the amount of the transactions less the processing fee. Although batch credit card processing can be easier for a vendor, there is times that could be problematic.
When credit card transactions takes place, the payment stays valid only for a few days period. This time period could be as less as five days. If the vendor is not capable of settling the transactions done within a few days, the vendor may even loose the payment. This is one of the biggest disadvantages of batch credit card processing. Sometimes, for some banks, the batch credit card processing fee could be quite high. This is done by the banks for the vendors who send them high number of transactions each day. In addition to that, the vendor may have to pay a high fee for the batch processing machine but will never own it.
For some acquiring banks, you do not have to use fancy batch processing machine for batch credit card processing. You can create an Excel sheet according to the given guidelines by the bank and upload it to the bank’s website.
