How Long Does A Merchant Have To Charge A Credit Card? (Steps In Processing Card Payment And People Involved)

Merchant Have To Charge A Credit Card

Credit card processing is part of us in today’s retail world, more so when a business is running an e-commerce website. But, many shoppers wonder how long a merchant has to charge their credit card after submitting a transaction.

Unfortunately, there is no maximum time limit for how long a merchant can charge your credit card. Some will batch out transactions at the end of the day. While others after 72 hours or more, especially for international transactions. Authorization does expire based on the terms and conditions of each credit card.

The time the funds are deposited in their bank account varies depending on the bank the merchant uses. Nonetheless, it may take anywhere between 24 hours up to 3 days to complete the process.

But do not freak when you get a delayed deduction!

Here we show you why the process can take longer and the procedure followed in credit card processing.

Read on! 

Time It Takes For Merchant To Charge A Credit Card?

Many shoppers feel there should be a limit for the merchant on how long they can delay credit card transactions. Suddenly, a charge popping up on your credit card is more alarming, especially after the initial purchase. Now you wonder, after that long period is passed, they have remembered to charge! Yet you’ve far forgotten that transaction.

However, when you use a credit card to purchase goods, the charge transactions seem to complete instantly. But that’s not always the case. 

Most payments aren’t processed right away and may take some time to finalize the payment. There are several steps going on behind the scenes with a particular card payment, each with different parties involved.

Yes, there are no maximum time limits or hard and fast rules placed upon transactions via credit cards. But, there are few general guidelines that merchants adhere to. Several merchants place their batch payments at the end of the day. You may think it’s a good habit for their workers, although it has more to do with surcharges than convenience.

The merchants get hits with a surcharge by their credit card processing company if 24 hours lapse without them batching out. If 72 hours pass and they choose not to batch their machines, likely, they will be hit with another second surcharge.  

Surcharges are good incentives to inspire merchants to close and transmit their sales on time.

The main reason for such time variance is the transaction process that goes through different steps to get from one bank account to another. We will discuss more on each step to understand what goes on behind the scenes when you make the payment. The steps will also bring an understanding of why merchants delays charging our credit cards.

The Main Steps In Processing Card Payment

Whether you make payment in a physical shop location or online, the transaction goes through these main steps in processing card payment. It starts with;

Step 1: Authorization

You will present the cards at the point of sale, then insert them into the card payment machine and input the pin. At this point, your details are sent to the merchant for a payment processor.

Now your card payment network will act as the gatekeeper, making sure that you have enough money. You are also ensuring that the card doesn’t have blocks or any security alerts present. 

After it has been approved, the card payment network requests more information from your bank providers. Generally, it includes the customer registered address and the card security code.

This information is used in the authentication step, which generally checks this information against anti-fraud programmers such as AVS (Address Verification Services). Your bank provider approves and sets the transaction amount on hold after the final check-in of the customer’s bank account. Here is where now you receive the order of confirmation or a receipt.

Step 2: Payment Approval

Here, your merchant payment processor will collect all the transactions daily or weekly, depending on the provider, in batches. The transactions are sent to each card network, such as MasterCard, visa, or other for approval. Each network will then forward every approved payment request to a specific customer bank provider.

Step 3: Processing Of Payment

So, how long will it take to make a money transfer between banks! The payment processing stage typically takes 24- 48 hours, though it may sometimes take three days. It’s the period where your bank provider sends the request payment amount plus the interchange fee chargeback to the card payment network.

The card payment network will pass along this payment straight away, billing the merchant payment processor for the payment network fee and the initial interchange fee. The cost is then passed from the merchant payment processor to its bank account. This is the stage the processing fee is deducted from the final total.

Payment delays are not merchants’ plans because some instances occur where money is delayed due to security alerts or an accidentally blocked card. This also makes merchants worried about their cash flow

However, merchants can consider adding same-day settlements to their accounts to reduce processing time, also known as faster payment. Rather than waiting for three days, funds can reach the nominated bank the same day, i.e. before 7 pm. Thus, providing the end-of-day bank report/batch performed on the card machine before 3 pm.

Parties Involved In Your Card Payment Process

Merchants:  they are the party who sells goods or services and receive payment for them.

Merchants’ payment service providers:  these providers work closely with the merchants to give card payment machines. They also process payments into the merchant’s bank account.

Customer: basically, they are the party who buys goods or services using a card.

Customer Bank Providers: This is the specific account to which the customer card is linked, plus where it will draw the money from, either a credit or debit card

Customer Card Payment Network: This is the customer card scheme; in the USA it includes, American Express, MasterCard, Visa card, Union pay, plus others.

Does Your Credit Card Authorization Expire?

Many people forget most of their transactions if they don’t see them pop up on the credit card statements. We all agree; it’s pretty easy to forget about a charge if you have been waiting for weeks to come across your statements.

But you may not have to worry about it anymore after a while. Authorization for charges can expire on the terms and conditions of your credit card. If you notice that the merchant didn’t charge your credit card as expected, go through the credit card fine print for more information.

For several cards, authorization is valid for less than thirty days only. However, you may have a credit card company that is more particular. In such cases, consent is valid for only seven days.

Credit Card Chargebacks

If for some reason, merchants refrain from batching out their sales for too long, they run the risk of facing chargebacks or contested charges. When a customer sees an order on the bank statement, they can request their bank for returns. It can also occur when customer banks detect a problem with transactions.

They frequently occur when customers cannot obtain their refund directly from the merchants but instead takes their money back through the back providers.

In such scenarios, the merchants have the right to defend themselves, although few will do so. This is because it will take much of their time and money to try and contest a chargeback. For transactions labeled fraudulent with your bank, some merchants want to avoid them at all costs. 

The best thing is to batch out their sales daily so that you can expect and be aware of the charge. This is good on both sides, thus avoiding the confusion and chargebacks.

Monitoring The Credit Card Statement

If the payment takes more than two days to process, you may want to check and monitor its status. However, there is no way to monitor your status easily or break down the batch payment via the acquiring back or your issuing bank. Even if the payment processor provides you with the reports and checks on such data, they aren’t easy to read. 

The only way out is to watch your statement closely since there are no limits and parameters merchants have to charge your credit card.

Final Word

Indeed, it may feel good to have gotten something for free. But again, you wouldn’t appreciate a surprise charge in your account months or years down the line after the purchase. Unfortunately, there is no maximum time limit for how long a merchant can charge your credit card. The best thing is to watch your statement closely and be aware of your purchases.

Last Updated on August 19, 2021 by Musa D

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