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How Long Most Credit Card Transactions Take From Start to Finish

In order to understand the complete cycle of credit card processing, one must first understand all of the stages and the people involved. There is so much more going on behind the swipe of the card or the click of the mouse when making a purchase.

Transactions can take anywhere from immediately up to a week for charges to reach the merchant accounts. There are four main stages to credit card processing, each with its own series of steps: authorization, batching, clearing, and funding. Merchants, acquirers (also known as processors), and banks (or issuers) each have a hand in the transaction process.

The first stage, credit card authorization, is basically a series of requests. During authorization, the cardholders are requesting purchases from the merchant accounts. Then the merchant has to submit that purchase request to the acquirer, who will then further submit the request to the issuer. The issuer is the one who actually signs off on the transaction after confirming there is enough credit available for the purchase. Upon receiving confirmation, the acquirer may then authorize the transaction and the cardholder can receive his or her goods. Authorization is immediate. Either a card will be accepted or it will be denied.

Batching involves both the merchant account and the acquirer. The merchant keeps legitimate purchases in a batch, which then gets sent to the acquirer at the end of the day to receive its payment.

After batching, the clearing process happens. During clearing, the aforementioned batch gets sent through the card’s network asking for the issuer’s payment. Each single transaction has a corresponding issuer that this request gets sent to. First, the issuer subtracts the interchange fee. This is the fee that is paid between banks for accepting a transaction made with a card. Then the issuer transfers the remaining amount. The credit card network then sends that exact amount to the acquirer.

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