How Long Does it Take for a Credit Card Payment to go Through?

As a retailer, you likely take a number of credit and debit card payments every day—but have you ever wondered how long it takes to process a transaction from the time you take the payment until the funds are deposited in your business bank account? 

In this blog, we’ll answer:

• How long it takes to process transactions
• How payment processing works
• How merchants can track their transaction processing status

Let’s dive in!

How long does it take for a payment to process?

Generally, it two business days for payments processed with Lightspeed Payments to be deposited into your bank account. 

This means if you process a payment on Friday, you’ll receive the funds on Tuesday. Payments taken on weekends and bank holidays are sent along with the batch of payments collected on the next weekday—you’ll receive funds from Saturday, Sunday and Monday at the same time.

Other payment processors typically take between two to three days to process funds. With both Lightspeed Payments and third-party payment processors, these times are not set in stone—unusually large settlements may take longer to process, for example.

When are the transaction fees?

Fees are automatically deducted from payments before they’re deposited into your account, so you don’t have to worry about paying them yourself every single time you process a transaction. 

The exact amount deducted from your funds will depend on the fee structure you have with your payment processor. When you’re in the process of finding a payment processing provider, look out for hidden transaction fees. 

If you’re working with an interchange plus fee structure, each transaction will have a different fee applied to it thanks to variables in card type, issuing bank, entry type and more—you have no way of knowing the final amount that will be deposited into your account.

If you’re working with a tiered fee structure, you’ll have a set percentage and transaction fee for each transaction tier. Typically, qualified transactions will have a favorable rate, while mid-qualified and non-qualified transactions will cost you a lot more. Unfortunately, you get no say over how your transactions are classified, and the majority of your transactions are likely to be processed with the less favorable rates.

If you’re working with a flat fee structure, you’ll have one fee for card-present (CP) transactions and one fee for card-not-present (CNP) transactions, no matter the card type. You can calculate the expected amount you’ll be paying on each transaction by applying the flat rate for that transaction type. 

How does payment processing work?

Payment processing happens in stages. The first stages, authorization and authentication, happen in-store when a customer buys something from you—these stages verify the payment. The steps involved in verification usually only take a few seconds in total.

1. A customer taps, inserts or swipes their debit or credit card at your point of sale. The information needed to verify the transaction is sent to your processor.

2. Your processor authorizes the payment with the card’s network, such as Visa or Interac.

3. After the payment has been authorized, it needs to be authenticated. The card’s network sends the information needed to confirm the card’s validity to the customer’s issuing bank.

4. The bank verifies that the card is being used legitimately and has access to the funds or credit card limit required to complete the sale, then either approves or declines the transaction. This is the end of the sale in your store.

Every transaction you make at your payment terminals is gathered together into a batch to be sent for processing. That batch is sent off to be processed in the third stage, settlement—this is the part that typically takes two days.

5. At a set time every weekday, your daily batch of authorized and authenticated payments are sent to your payment processor for settlement.

6. Your payment processor takes care of forwarding transactions in the batches to the appropriate card networks, who then request the funds from the issuing banks.

7. The funds are sent to you and your customers have the transaction added to their credit card bill or automatically debited from their account.

What’s the difference between payment verification and payment processing?

Payment verification involves the authentication and authorization stages and happens immediately. Authorization and authentication ensure the funds are available to be deposited in your account by placing a hold on them. Until the funds have been transferred to you through the settlement process, the money is effectively in limbo between you and the customer.

Payment processing involves the settlement stage and takes time to process. This moves the funds owed to you into your account as the payments are cleared. The money has been taken out of limbo and paid to you.

How do you track a transaction’s processing status

If a payment is taking longer than two days to process, you may want to check in on its status. You also want to track the breakdown of card types in your batches, particularly if you find you’re paying for expensive interchange plus fees. How can you get visibility on your transactions?

Unfortunately, there is no way to easily track the status or breakdown of a batch of payments through your acquiring bank or your customer’s issuing bank. However, your payment processor may provide you with reports to check this data. While not all of the reports from all processors are easy to read, some–such as Lightspeed–have developed clear tools for Lightspeed Payments users to access with the click of a button.

If you’re using Lightspeed Payments, you can easily track the status of your settlements with the settlement report. 

Whenever you make a sale through your payment terminal, that transaction will be added to the report for easy reference. These transactions are batched together into settlements. Settlements marked as paid have been processed and had their funds forwarded to your bank from Lightspeed Payments. 

Clicking a date in the report will take you to the settlement summary. The settlement summary will show you transactions groped by card types, such as American Express or Discover. You can also clearly see the fees you’re paying on the summary. The captured sales column adds up the transactions you’ve made throughout the day, and the settled column adds up the actual funds that have been processed and paid to you, minus any fees. If you’d like to see all the transactions in a given settlement, check the captured transactions table.

You can also run the integrated payments report to get a quick overview of individual transactions you’ve taken through Lightspeed Payments. This report will display a transaction’s date, card type, sale ID, amount and verification status. 

Process transactions securely with Lightspeed Payments

A 2018 TSYS study found that debit and credit cards are the overwhelming preferred payment method across all age ranges, with cash consistently rated as the least preferred. By not opting to process debit and credit card transactions, retailers risk losing sales from cash-averse customers.  

Rather than take that risk, merchants should start accepting card transactions to maximize their sales. 

Rather than work with third-party payment processors and their notoriously complex contract agreements, consider using Lightspeed Payments, payment processing that’s integrated directly with your retail POS system. We take the hassle out of taking payments, even when your customer wants to use their American Express card. Get built-in PCI compliance and stop worrying about third-party accounts—we’ll take care of that for you.