If you have a business, especially an online one, you would certainly need a merchant account where you can accept credit card payments. When a business starts to get a lot of payments, these can be processed in batches already.
So, how does a batch processing work?
After a card is swiped and is already authorized, the card details are stored by batch. And where do they store your details? Card details are securely stored in credit card terminals, electronic payment gateways and processing softwares.
As a merchant, you can chose to close the batch anytime. Subsequently, they will be sent to your credit card processor. It will then be forwarded to the particular issuing banks. These banks are going to release the payment to the credit card processor. After that, the processor will deposit them to the merchant's bank. Remember, banks will charge you every time you close a batch. So, if you want to avoid multiple fees, you must settle all your transactions all at once.
Batch Processing Pros and Cons
Batch credit card processing is preferred by most big companies as they handle high volumes of transactions.
One of most common reasons why business owners opt to use this kind of processing is convenience. After confirmation and authorization, payments are certainly accepted, but merchants do not have to process them one by one which is time consuming. Also, batch processing is more secured compared to real time processing.
If you are thinking about this type of processing for your business, it is important that you learn about the fees. The good thing about this is that you will be charged per batch. Not like real time processing where you are charged per transaction. On the other hand, other banks are going to let you pay for some additional fees for batch processing. So, ask first before you sign any agreement to avoid any misunderstanding with the service provider you choose.
Now, the downside of batch processing is when some transactions fail to go through. Things will get a little difficult as you need to track which transaction failed and you have to contact the customer in order to find another way to pay you. In addition, this kind of problem cannot be tracked down on the same day the problem occurred. Usually, the merchant will be able to track it down the next day.
Also, banks normally give commissions to merchants for every authorized payment. On the other hand, if the merchant does not send all the authorized payments in one day, problems may occur. But, usually, there is a validity period for the payments. This validity is normally 1 to 5 days. If the payment stays unauthorized after the given period, the money will be sent back to the customer and the merchant might have to pay some fees.
One more important thing to remember when choosing a credit card processor is their customer service. Make sure that they are reliable and they are available anytime you need them to assist you with any inquiry or issue you have.
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