Next-Day Funding Merchant Services

With next-day funding, merchants receive the funds from their credit card transactions within the next business day.

Typically, you’ll have to process your daily batch before a designated time for the funds to be available for the next business day. You’ll also want to check with your payment service to see how it handles Friday and Saturday transactions; in many cases, next-day means “next business day.”

Same-day funding for credit card processing allows a merchant to access the funds from their recent credit card transactions on the same day they send their batch.

Like next-day funding, you’ll have to process your batch before a designated time to get your funds on schedule. Generally, the cutoff time will be early in the day rather than at the end. Because of this, same-day funding can be useful to businesses that are open overnight.

Same-day funding is more likely to have maximum limits on advanced amounts than next-day funding.

Faster still are instant deposits, which make your money available immediately after a transaction. If it sounds like there’s a catch to this, you’re right.

Most services offering instant deposits do so as part of their broader payment infrastructure. For example, Square offers instant deposits with its Square Checking service. It can do this because there’s no need to transmit the payment information to a third party. Square is both your processor and your bank. This works similarly with digital wallet transfers on a service such as PayPal or similar peer-to-peer transactions.

Payment processors withhold funds from merchants or freeze accounts (and sometimes even terminate accounts) when suspicious activity is detected. Here are some things that may trigger a hold:

• Unusually large transactions
• Sales of an unfamiliar product
• An unusually high number of fraudulent transactions
• A high volume of chargebacks
• Being categorized as high-risk
• Using your merchant account for purposes other than processing credit cards

In other words, something is going on with your account that triggered a red flag. Unfortunately, this can happen even when you’ve done nothing wrong. Third-party processors, in particular, are known to be unforgiving about suspicious behavior.

You do have options if you have a large transaction held in limbo. First, contact your processor and see what you can do to work it out. If you seriously need cash fast, you can get an emergency small business loan (a working capital loan or bridge loan, specifically). This can help keep the lights on, ensure your employees are paid on time, pay your suppliers, etc. until your cash flow can smooth out again.

Keyed-in transactions imply that a human being other than the card’s owner is seeing and handling credit card information. As you might expect, this is a security risk.

If your retail shop has an unusually high number of keyed transactions, your processor may become suspicious and implement a hold or a reserve fund. Keyed transactions may take an extra few days to process. They are usually more expensive to process, so you should avoid them for your bottom line anyway.

Mobile processors have been known to set weekly and monthly limits for merchants based on their processing histories. You can sometimes work around these concerns by contacting your service provider and letting them know that you expect a higher-than-average volume because of a sale, special event, or new product launch.

Just like unusually high overall volumes can draw the attention of your merchant account provider, so can unusually large individual transactions. Third-party processors, in particular, will usually ask for an invoice, signature, and other documentation and hold the funds until you provide the documentation or the chargeback window has closed. Some merchant accounts may also specify that for transactions above a certain value, a percentage will be subject to a hold.

Try to prevent chargebacks or keep them to a minimum. A high number of them signifies to your processor that customers are unhappy with your service or you have accepted a lot of fraudulent cards. Neither situation is acceptable.

Unless you’re with a third-party processor, such as Square or PayPal, you can expect to pay a batch processing fee every time you submit a transaction for processing. It’s an industry-standard security process to batch out at least once in a 24-hour period. Waiting longer than that often comes with higher processing rates because of an added security risk.

Lastly, keeping a steady cash flow will help you get funded faster, so you’ll need to know how to do a cash flow analysis. Some processors want to see your bank statements when a transaction is held to ensure you have the money to cover any possible chargebacks.