How long does it take for a merchant to receive funds?

The funding period is entirely dependent on the acquiring bank that approves your company for a merchant account. We disclose this information to you upfront and it is included in the processing contract you sign. Many of our U.S.-based solutions offer next day or 2-day delayed funding. For high risk offshore merchant accounts, the standard funding period is weekly, 1-2 weeks in arrears.

In many cases, the time of day your transaction takes place affects the amount of time required to receive funds. This is because banks process payments in batches. So, if the cutoff time for a batch run at the bank is 4:00 PM, a sale you process at 3:00 PM will be paid a day earlier than one you process at 4:05 PM on the same day.

Another factor to consider is weekends and holidays. Most banking systems are closed on weekends and during a number of holidays. This is especially important to keep in mind for cashflow planning if your company does the majority of its business on weekends. 

In some ways, fund transfer delays benefit the merchant. For instance, a 24-48 hour gap gives the merchant time to identify and stop fraudulent transactions or solidify transactions that may have been shaky and could have resulted in a chargeback down the line. This is one reason why high risk businesses usually have a longer wait period before funds are transferred.

Note also that fees are deducted before funds are transferred to your bank account. These fees are primarily transaction fees and interchange fees — both of which are discussed in detail elsewhere in our FAQ section. You’ll want to make sure you are aware of all the fees associated with your merchant account. Reputable merchant account providers are transparent in explaining fees, and many times these fees are negotiable. Nevertheless, incidental fees are assessed by merchant account providers for card-not-present transactions, customer service, cancellations, monthly and/or annual service, chargebacks and scores of other things. While these fees individually may not appear significant, they can pile up rapidly and can have a noticeable, negative effect on cashflow and your bottom line.

This and all the other information above are important facts to understand because they have an impact on the cashflow of your business. If you know you will have a 24-48 hour delay in receiving funds (or possibly longer, especially if you are in a high risk business), you’ll be in a much better position to manage your cash and make sure you have enough cash on hand to keep your accounts payable current. Cashflow with credit card processing must be carefully managed for businesses that are seasonal, have frequent or occasional high-ticket amounts, or are in a high risk category and have been required by the issuing bank to maintain a cash reserve as part of the terms for their merchant accounts.

If you have questions or concerns about receiving funds from credit card transactions or are looking for payment solutions to shorten the wait period, contact us for a review of your situation. We may be able to offer suggestions to improve your position.

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