Demystify credit card processing for businesses. Learn timeframes, prevent chargebacks, and optimize transactions with Swipesum's expert help.
If you’re a business owner, you’re concerned with two main things: ensuring you provide your customers with a great experience with products and services they want and the bottom line. And though you’d love to only worry about the former, you know that you’ve got to keep an eye on the latter even more closely.
So, you’re probably curious how long you have to process a credit card transaction. Moreover, your customer is definitely curious since it’s their card getting charged. Here, we’ll take a look at how long you (the merchant) have to process a credit card transaction, why it can vary, and some ways you can possibly speed things up.
Credit Card Processing
Before we dive in, a quick primer on credit card processing. Your customer comes into your store, browses, and decides to buy three widgets. They swipe their card at your point-of-sale terminal. Your payment gateway contacts their bank and says, “Hey there, Steve is trying to buy three widgets for $100 - this cool?” and their bank will either say, “Yep, go for it” or “No way.”
Assuming the transaction goes through, you’ll get an authorization message, and Steve will take his widgets home with him.
To boil it down, your merchant account - the one you set up to handle your payments - and the customer’s bank account will reconcile the transaction, and money will exchange hands. Let’s get specific for a second; you can break this process into two parts; at the shop and behind the scenes
At the Shop
The steps below occur in a matter of seconds, generally before the customer removes their card from your POS.
Behind the Scenes
These items occur in the moments after the transaction is approved and as long as days after the initial transaction took place.
So how long?
Well, the “At the Store’ items take place almost immediately, while the Behind the Scenes items generally take anywhere from a few hours to a day or two. There are a few factors that can make things take a bit longer:
Generally speaking, credit card issuers don’t have a time limit for charging a customer’s credit card. The issuing banks, however, will often impose a limit on merchants for charging. These limits can range anywhere from three to 30 days.
Other time limits
There are some other key time limits that merchants need to be aware of, like when you need to batch your charges (often by the next day) and when you can expect money in your account (anywhere from 3-7 business days). One of these limits that merchants would rather not deal with is the time limit dealing with chargebacks. Most credit cards offer the customer’s the opportunity to process a chargeback if they did not receive a product or service or it is substantially different than what they expected. The time limit can vary depending on the credit card. With Mastercard, for example, merchants have 45 days at each stage of the chargeback process to respond. This means that when a customer processes a chargeback, a business has 45 days to present evidence that the charge is valid. American Express only allows 20 days and customers have 120 days in which they can file a chargeback.
Chargebacks are expensive to defend against both in time and fees - its best to avoid them all together by processing your transactions quickly.
Is there a law?
Not really. Best practice says that you should process your transactions quickly. Waiting increases the risk of a chargeback or returned merchandise. Further, it’s your own money you’re leaving on the table - the longer you wait to process transactions, the longer you’re waiting to get paid.
Don’t be! Credit card processing, chargebacks and time limits can be difficult to manage. After all, there are a whole host of rules and regulations that you need to keep track of and all you want to do is run your business. That’s why Swipesum is here to help. Our suite of tools and experts can help ensure your business is set up for success from the first card swipe to your hard earned profits hitting your bank accounts. If you want help understanding the time limits involved with your customers, need a better grasp on your statements or just want someone to bounce some ideas off of, we’re here to help.