What happens during daily batch settlement?

What happens during daily batch settlement?

• A. Batch settlement processes funds transfer to merchant, typically at end of day, minus fees
• B. Settlement occurs instantly at transaction time
• C. No fees are deducted
• D. Merchants never receive funds

Answer: (A)

Daily batch settlement means all card transactions from the day are collected into one batch and processed together at the end of the day. The processor submits that batch to the card networks, and funds flow from the issuing banks through the networks to the acquiring bank, which then deposits the merchant’s account with the net amount. The net amount is the gross sales minus processing fees, including interchange and the processor’s own markup. This is different from instant settlement at the moment of sale, and it explains why merchants receive funds in batch rather than instantly. Fees are a normal part of the process and are deducted in the settlement, so merchants do get paid, just on a batch schedule rather than immediately.

Daily batch settlement means all card transactions from the day are collected into one batch and processed together at the end of the day. The processor submits that batch to the card networks, and funds flow from the issuing banks through the networks to the acquiring bank, which then deposits the merchant’s account with the net amount. The net amount is the gross sales minus processing fees, including interchange and the processor’s own markup. This is different from instant settlement at the moment of sale, and it explains why merchants receive funds in batch rather than instantly. Fees are a normal part of the process and are deducted in the settlement, so merchants do get paid, just on a batch schedule rather than immediately.