A batch is a collection of transactions, usually a single day’s worth. Batch processing refers to closing or settling an entire batch of transactions at one time. The Point-of-Sale terminal or credit card processing software can be set on manual batch close or automatic batch close.
If on manual batch close, you need to batch out at the end of each day. This sends a command to the processor to settle all transactions that have been entered. Once a batch is settled, a report is printed showing the transaction totals in the batch. Before a batch is settled, changes can be made to existing transactions in the batch. For example, you may want to void a transaction, or change the amount of one of the transactions. Changing the amount is common in the restaurant business. In that case, the amount of each transaction is adjusted to include tips before the batch is closed.
In automatic batch close, no manual intervention is required. Instead the terminal or software will automatically close the batch (settle the transactions) at a certain time each day. In some cases the processor will settle the batch at the processor level (host batch close). Most businesses are set up on automatic batch close, unless a tip edit function is useful, in which case manual batch close is typically the better option. Many processors charge a fee each time a batch is closed.