The Merchant’s Guide To Getting Your Funds Fast
Every merchant owner knows that cash flow is essential to a business’ survival. That includes credit and debit sales, which go through your merchant account before they reach your bank account. A lot can happen between that initial swipe or dip of the card and the point at which the funds arrive in your account, which begs the question — how can you get merchant funds fast?
6 Ways to Minimize Processing Times
First up, let’s look at some steps you, as the merchant, can take to protect your account and ensure speedy processing.
1. Avoid Keyed Transactions as Much as Possible
Here’s one specifically for brick-and-mortar shops: Whether a card was keyed in or swiped/dipped can make a big difference on your processing times. When you complete a transaction with a magstripe swipe or EMV chip, it’s treated as Card Present. Keyed transactions are treated as Card Not Present (CNP) because the equipment is not able to tell whether the card is physically present. (E-commerce transactions are treated as CNP as well.) If you’re a retail shop with an unusually high number of keyed transaction, your processor may become suspicious and implement a hold or a reserve fund. This ensures that they’ll have the funds to cover any chargebacks. Keyed transactions may also take an extra few days to process.
To be clear, occasionally keying a card in when it won’t swipe or the chip reader isn’t working is fine. But if you do this on a consistent basis, it’s going to become a red flag. And it’ll cost you more, too, because CNP transactions come with higher rates.
2. Stay Within Your Processing Limits
Mobile processors such as PayPal, Spark Pay, and Intuit GoPayment in particular have been known to set weekly and monthly limits for merchants based on their processing history. Exceeding those limits can sometimes trigger holds or even account terminations, which definitely NOT how you get merchant funds fast.
But even if you have a traditional merchant account, you’ll want to be careful about unusually busy weeks or months. Drastically exceeding your normal processing amount is usually a red flag. Combined with a large number of keyed or high-value transactions, you could very well find your funds tied up in a hold or a brand-spanking-new reserve account.
That’s not to say gradual increases over time will look suspicious. It’s more the one-off spikes that tend to raise the hair on the backs of the underwriters’ necks. You can sometimes work around these concerns by contacting your service provider and let them know that you expect a higher than average volume because of a sale, special event, or new product launch.
3. Get Documentation for High-Value Transactions
Just like unusually higher overall volumes can draw the attention of your merchant account provider, so can unusually large individual transactions. With third-party processors in particular, they’ll 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 for so many days.
However, it’s generally a good idea for any large transaction (over $500) to have a numbered invoice and signature.
4. Minimize Your Chargebacks
This one applies especially to eCommerce sellers because the vast majority of chargebacks are for CNP transactions: Try to keep your chargebacks to a minimum. A high number of them signifies to your processor that customers are unhappy with your service or you have been accepting a high number of fraudulent cards. Neither situation is acceptable.
You can reduce chargebacks by having a clear and well-stated review policy on your website, on the product listing page, and in the receipt. Make sure your processor’s security features are enabled, such as AVS AND CVV. Be wary of shipping items to an address that doesn’t match the billing address, especially large orders.
5. Watch your Batch Times
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. Obviously, it’s more cost effective to submit a large number of transactions at once. However, 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. And, obviously, it also takes longer to get your money because you’ve waited longer to finalize the transaction.
Generally speaking, you can control when you choose to batch each day, whether it’s at 5 p.m. or 10 p.m. However, your processor may have a cut-off time for batching for you to receive next-day or two-day funding. For example, the processor may prefer to receive funds by 6 p.m. to provide next-day funding. If you batch out at 8 p.m, the transactions won’t be processed until the next day at 6 p.m., and so it would take an extra day to receive your money.
The best solution is to talk to your processor and make sure you are clear on any deadlines.
6. Choose a Processor with Fast Funding Times
Not all processors are the same, and that includes their processing times. Two business days has become the industry standard, but some processors can still take longer than that (3-5 days). There may also be some exceptions to the standard funding time for particular types of transactions (keyed, for example).
If you are an established business with a good processing history you might also find yourself eligible for 24-hour/next-day funding. Not all merchant service providers have this, and not all offer it to every merchant. But it never hurts to ask.
A final word of caution: Be sure that you’re clear on what “next-day funding” actual means, as it appears there’s some inconsistency in how the term is used. Where possible, talk more in terms of hours and business days.
6 Processors With Fast Merchant Funding
Now that we’ve talked about what kind of processing times merchant service providers offer, let’s look at some of the merchants who offer very fast access to funds. This includes a mix of third-party processors and traditional merchant accounts.
PayPal is the only processor that gives you free and near-instant access to your merchant funds. Money is available in your PayPal account almost as soon as the transaction is complete. If you have the PayPal debit card you can spend your money anywhere, not just online. Transfers to a bank account can take up to 5 days, but it will depend entirely on your bank.
2. Dharma Merchant Services
Dharma offers 2-day business funding by default, and retail merchants who process card-present transactions may be eligible for next-day funding. Take note of whether Dharma signs you up through TSYS or First Data, because it will affect your cut-off time for batching.
Square, by default, offers next-business-day funding. That means 48 hours to get your funds in most cases (except for weekends). However, if you need your money right away, Square does offer instant and scheduled deposits for 1% of the transfer value (on top of your Square rates). How fast you see your money will still depend on your bank, however, so having a bank that posts transactions quickly matters.
4. Payment Depot
Payment Depot offers 24- to 48-hour funding for its merchants, though it doesn’t make it clear what factors determine how quickly you get your funds. Unlike Dharma, there is no next-day-funding plan for qualified merchants.
Helcim offers 2-business-day payouts for most US merchants, with next-business-day transfers for weekend transactions. You can also opt for next-business-day deposits as standard for an additional $5/month, which is different than many other processors.
Fattmerchant promises next-day funding for merchants on its website, but it doesn’t make it clear that next-day funding is only for qualified merchants. By default, FattMerchant offers 24-hour funding for everyone — in other words, 24 hours after you batch out, you’ll have your funds. With their next-day funding plan, you’ll get your funds the morning after you batch out.
Conclusion: The Secret To Getting Your Money ASAP
There’s no tips or tricks or magic button to push to get your money when you have a merchant account. If you want to get your funds as soon as possible, you need to be a responsible merchant and establish a good processing history. Minimize your risky transactions and make sure you batch out every day by the cut-off time.
Of course, all of that is useless if your processor’s default processing time is 3-5 days. So before you sign a contract, make sure you check on deposit times. Look for a reputable processor that has funding options that work for your needs. And if you have questions, we are always here to help!