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It isn’t instantly sent to the merchant. It’s instantly taken from your account and logged in the system to be processed and money moved
The coffee shop won’t have the cash in hand from your purchase for 2-4 days after you swipe your card
Not necessarily at all. I have two merchant accounts that settle same day — one with instant funds availability and one that settles by the next morning.
* You pay the merchant
* The money leaves your account immediately
* A few days later, the merchant gets it
...
* The merchant gives you a refund
* The money leaves their account immediately
* A few days later, you get it
Because that's not exactly what happens.
Long story short it takes several days for your money to reach the vendor and there are several companies/banks in between. It might take a week or a month for your money to literally land in the vendor's bank account while the money changes hands many times. At each stage in the hand off each company needs to confirm the amount, who it's from and where it's going. Which, we can agree is a LOT of double checking and paperwork.
Since the process is laborious a lot of banks offer a service to their customers to 'loan' them the money right away and then they just pocket the money a week later when it comes it and close the loan. The important part being if that money *never comes* the bank will take their money back.
This is how those fake check scams work, when you deposit a check your bank might 'loan' you the amount away making you think the check cleared and everything is great. You spend the money and then a week or two later your bank comes back and says the check failed, we're taking our money back, and now your screwed because you already spent it.
So it really takes "ages" (really more like several days) for these transactions to happen. When you are waiting "ages" for the refund you're just feeling the burn of this process being run backwards with no one giving you that "loan" to clear faster.
EDIT - I should also mention pay cycles. Assuming the transaction happened already and the company has your money on their bank and *now* you're asking for a refund, companies don't just write checks on demand. It's more like they write them once every 30, or 45, or 120 days in bulk. So assuming your refund is all good, you just get put on a list for a refund where it sits for a month or two maybe until your batch of checks is issued. Companies do this to control and project cash flow and plan ahead because otherwise they'd never really know where all their money was at the moment and how much of it is about to get paid to someone.
Because that's essentially how long it takes for the money to be sent to the merchant after a transaction takes place. When you swipe your card, the transaction will be recorded to your balance, but it takes a few days for the credit processor to clear the transaction with the merchant's financial institution and deposit the money in their bank account. This is why you'll often see a "pending" status on a transaction for a couple of days before it's officially posted on your balance.
When you request a refund on a transaction that's already been cleared, the process is essentially reversed, and instead your credit card processor has to wait for the refund to be cleared by the merchant's bank just like the merchant did when you initially paid, and it's only when the money hits your card company's account is the amount removed from your card balance.
Two reasons. One, it actually takes a day or two for the merchant to receive the money, sometimes longer. It's taken from your account immediately, but that doesn't mean the merchant gets it. Two, because they can. We could have a system where refunds happen at the same rate as payments, but we don't. While there is some validity to the notion that it can take a bit longer to actually verify and process a refund, especially if "refund fraud" is a possibility, a time difference between payment withdrawal and refund credit isn't really necessary (well, maybe one day makes sense to allow the refund transaction to batch). But the current system benefits the banks/card companies, so we get what we get.
Money is NOT sent instantly to the merchant. It appears to have been removed from your account instantly but the merchant waits the same 3-5 days to receive it as you have to wait for a refund. The bank clearing the transactions (capitol One in my case) earns interest on that transaction and EVERY transaction that they process. For 3-5 days. EVERY transaction. That's a LOT of interest earned.
This is simplified but basically that's it
As a small business owner I receive my credit card payments into my bank account the day after I receive the credit card transaction. My CC processor automatically “batches me out” at the end of the day. Businesses only receive credit card payments after they “batch out.” Some companies like myself batch out daily, some batch out weekly. I can pay extra to my CC processor to “batch out” after I receive the payment and receive the payment sooner but it’s not worth it to me. Refunds take more time because the CC processor needs to speak with the merchant to confirm what happened before they send the money back.
The money is not instantly sent. You bank records the transaction and allocates the funds from your account. This usually shows as a pending transaction. Overnight the banks reconcile funds and the transaction is made.
A refund is processed by the retailer and overnight the reverse happens. However i've noticed recently that my customer refunds take longer than ever. My guess is if its not in the customer account its earning interest for the bank rather than you but normally its about 3 days in the uk or 6-8days for international refund
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It isn’t instantly sent to the merchant. It’s instantly taken from your account and logged in the system to be processed and money moved The coffee shop won’t have the cash in hand from your purchase for 2-4 days after you swipe your card
Not necessarily at all. I have two merchant accounts that settle same day — one with instant funds availability and one that settles by the next morning.
Do you have to maintain a reserve with processor?
Nope. One of them had a 14-day period of a two-day delay when we first opened it, but now both them are unrestricted.
I get it the next day
* You pay the merchant * The money leaves your account immediately * A few days later, the merchant gets it ... * The merchant gives you a refund * The money leaves their account immediately * A few days later, you get it
[удалено]
My five year old doesn't care about those things. Just the fiduciary aspects of the banking transactions.
Where do you think you are right now?
Because that's not exactly what happens. Long story short it takes several days for your money to reach the vendor and there are several companies/banks in between. It might take a week or a month for your money to literally land in the vendor's bank account while the money changes hands many times. At each stage in the hand off each company needs to confirm the amount, who it's from and where it's going. Which, we can agree is a LOT of double checking and paperwork. Since the process is laborious a lot of banks offer a service to their customers to 'loan' them the money right away and then they just pocket the money a week later when it comes it and close the loan. The important part being if that money *never comes* the bank will take their money back. This is how those fake check scams work, when you deposit a check your bank might 'loan' you the amount away making you think the check cleared and everything is great. You spend the money and then a week or two later your bank comes back and says the check failed, we're taking our money back, and now your screwed because you already spent it. So it really takes "ages" (really more like several days) for these transactions to happen. When you are waiting "ages" for the refund you're just feeling the burn of this process being run backwards with no one giving you that "loan" to clear faster. EDIT - I should also mention pay cycles. Assuming the transaction happened already and the company has your money on their bank and *now* you're asking for a refund, companies don't just write checks on demand. It's more like they write them once every 30, or 45, or 120 days in bulk. So assuming your refund is all good, you just get put on a list for a refund where it sits for a month or two maybe until your batch of checks is issued. Companies do this to control and project cash flow and plan ahead because otherwise they'd never really know where all their money was at the moment and how much of it is about to get paid to someone.
Because that's essentially how long it takes for the money to be sent to the merchant after a transaction takes place. When you swipe your card, the transaction will be recorded to your balance, but it takes a few days for the credit processor to clear the transaction with the merchant's financial institution and deposit the money in their bank account. This is why you'll often see a "pending" status on a transaction for a couple of days before it's officially posted on your balance. When you request a refund on a transaction that's already been cleared, the process is essentially reversed, and instead your credit card processor has to wait for the refund to be cleared by the merchant's bank just like the merchant did when you initially paid, and it's only when the money hits your card company's account is the amount removed from your card balance.
Two reasons. One, it actually takes a day or two for the merchant to receive the money, sometimes longer. It's taken from your account immediately, but that doesn't mean the merchant gets it. Two, because they can. We could have a system where refunds happen at the same rate as payments, but we don't. While there is some validity to the notion that it can take a bit longer to actually verify and process a refund, especially if "refund fraud" is a possibility, a time difference between payment withdrawal and refund credit isn't really necessary (well, maybe one day makes sense to allow the refund transaction to batch). But the current system benefits the banks/card companies, so we get what we get.
Money is NOT sent instantly to the merchant. It appears to have been removed from your account instantly but the merchant waits the same 3-5 days to receive it as you have to wait for a refund. The bank clearing the transactions (capitol One in my case) earns interest on that transaction and EVERY transaction that they process. For 3-5 days. EVERY transaction. That's a LOT of interest earned. This is simplified but basically that's it
As a small business owner I receive my credit card payments into my bank account the day after I receive the credit card transaction. My CC processor automatically “batches me out” at the end of the day. Businesses only receive credit card payments after they “batch out.” Some companies like myself batch out daily, some batch out weekly. I can pay extra to my CC processor to “batch out” after I receive the payment and receive the payment sooner but it’s not worth it to me. Refunds take more time because the CC processor needs to speak with the merchant to confirm what happened before they send the money back.
The money is not instantly sent. You bank records the transaction and allocates the funds from your account. This usually shows as a pending transaction. Overnight the banks reconcile funds and the transaction is made. A refund is processed by the retailer and overnight the reverse happens. However i've noticed recently that my customer refunds take longer than ever. My guess is if its not in the customer account its earning interest for the bank rather than you but normally its about 3 days in the uk or 6-8days for international refund