In today’s article, we have prepared a short guide on batch payment processing. What is the batch payment, how it’s processed, and why it could be one of the reasons to make merchants happy – keep reading to find out the answers!
Batch payment explained
This term refers to a set of payments directed to a number of beneficiaries from the same bank account. Batch payment technology can be used by any organisation that is interested in making payments to a variety of recipients in a single transaction (bulk payment). However, it is mostly used by mail-order companies or organisations with large volumes of payments.
Processing of a batch payment
When it comes to processing a batch payment, the first thing to consider is the processing of the transactions themselves. There are three essential stages in this procedure:
- authorisation (the procedure whereby credit or debit cards are checked for admissibility);
- processing (at this stage, the authorisation hold takes action to transfer the cardholder’s funds into the merchant account);
- settlement (finally, when funds are received in the merchant account, the transaction is considered to be settled).
Actually, what distinguishes real-time transactions and batch payments from each other are the authorisation and processing procedures. Unlike real-time transactions, with batch payments, these two stages occur independently. The merchant submits a group or batch of authorisation requests that are processed concurrently. Batch payments are usually cleared at the end of the day or a shift, like in restaurants, for example.
During batch clearing, a file is created for each transaction. These files can be saved using one of three methods: through software specifically for batch credit card processing, the card terminal itself, or a payment gateway suitable for batch payments. The file containing a certain number of identification codes is then forwarded to an acquirer.
Usually, a batch transaction takes around 48 hours from sending a file to the payment being approved.
There are two formats for batch clearing:
- automatic (where a merchant can set up multiple batch files so they are processed simultaneously);
- manual (which allows files to be processed manually).
Can I reduce processing costs using batching?
It’s no surprise that batch processing costs vary from one company to another. Below, we have outlined some of the factors that can affect the fees:
- the exact amount of money;
- the required format of the batch clearing payment gateway;
- the required currencies.
But are there ways to reduce processing fees using this payment method? Lower processing costs are one of the major benefits of batching, as a single transaction consolidates multiple recipients as opposed to real-time processing which entails separate transactions for each individual recipient. However, another issue to keep in mind is the longer time required to execute the transaction compared to the actual processing.
Regardless, the final decision on whether or not to choose batch clearing for your company is totally up to you. The best option we would recommend is to consult with your processing services provider.
We have tried to put together for you all the important details regarding batch payment processing. Keep this information in mind when you’re considering using batch payments for your e-commerce business. If you have any questions, don’t hesitate to contact us!