Even though a customer payment may be authorised, it may take some time before you see that money in your business bank account. Merchant account providers usually a settlement period which takes place in between the customers debit card or credit card payment being authorised and it appearing in your business bank account. It can take anywhere from 24 hours (1 day) to 8 weeks for a card payment to appear in your bank account dependent on the terms of your agreement. If you are an established business however, the average time it takes for a customer payment to clear in your account is 3 days (72 hours).

Why does it take so long for a customer payment to settle in my business bank account?

The settlement period protects your bank against any fraudulent transactions or customer chargebacks. By holding on to your money for a period of time after a payment, your bank is in a better position to investigate any customer claim. Therefore, the greater the risk of your business, the longer the settlement period required by your bank will be.

How do I reduce or improve my settlement period?

It is possible to speak to your merchant account provider and reduce the amount of time it takes for a customer payment to appear (or settle) in your bank account. Generally this is done on a case by case basis and depends on your business model, the type of products or services you sell, how long after your customer completes their transaction they receive your goods and/or services, the payment method or card type used and your companies trading history or financial position.

What About Rolling Reserves?

A rolling reserve a strategy employed by your merchant and its bank to reduce the risk or future customer chargebacks. After your agreed settlement period, your merchant account provider will hold back a percentage of your credit card sales to protect them against any future claims; this is called a rolling reserve and they are usually kept for a maximum of 6 months.