Credit Card Processing Batch

Throughout the course of a business day, all credit card authorizations are stored within a data file in the merchant’s processing equipment. This data file is called a batch.

All credit card processing terminals, PC software, or virtual terminal/gateways, will store a merchant's credit card authorizations in a batch. It is a common misconception that a customer’s credit card is charged at the time of purchase, but this is not the case.

When a customer’s credit card is run at the time of purchase, the issuing bank is called upon by the merchant’s acquiring bank to verify that the credit card being used for payment is valid, and that it has a sufficient balance to pay for the transaction. Not until the merchant "closes their batch", will the transactions for that day be sent to the acquiring bank so that the settlement process (transfer of funds) may begin.

A merchant may close their batch at any time throughout the day. However, most merchant service providers will charge a batch fee in order to process a batch. In order to avoid being charged multiple batch fees, it is best to limit the amount of times you close your batch throughout the business day.

Many merchant service providers offer something called auto-batch-close. This is a feature that will automatically close a merchant’s batch at a certain time every day. Auto-batch-close will only process a batch if there are transactions to send to the acquiring bank. Empty batches are not sent and the merchant will not be charged a batch fee.