Capture, Settlement & Batch

Authorize & Capture: Process Solution

The authorize capture process for charging credit cards is a method that provides both automation and flexibility for the merchant. It is rapidly become adopted by merchants who provide products or services where the price can fluctuate during time of use or there is a delay between order and fulfillment. This is popular among, online merchants, gas stations, travel as well as bars and nightclubs.

 

Authorization Capture Definition from Authorize.net

“A credit card transaction request to authorize and capture, or settle, funds for a purchase. The payment gateway submits the request to the card issuing bank for authorization and upon approval, will automatically submit the transaction for settlement.”

 

Authorization & Capture Definition from PayPal

“Authorization & Capture, or Auth/Capture, allows you to authorize the availability of funds for a transaction but delay the capture of funds until a later time. This is often useful for merchants who have a delayed order fulfillment process. Authorize & Capture also enables merchants to modify the original authorization amount due to order changes occurring after the initial order is placed, such as taxes, shipping or gratuity.”

Depending on the business environment and configuration of hardware/software, even if an authorize/capture process is used, a settlement or batch of the transaction may still be required.

– To learn about authorizations learn about Authorizations

– To learn about settlement and batch continue reading below

 

Settlement & Batch: Clearing Transactions

In a basic sense regardless of how a transaction is authorized it must be settled in order for the funds to physically move from one bank account to another. This is typically done in a batch, which can affect cash flow or how quickly funds are deposited in the merchant’s bank account.

 

Settlement from Authorize.net:

“For credit card transactions, settlement occurs at the completion of transaction processing between the involved financial institutions and processing entities, and funds for the credit card transaction have been successfully deposited into the merchant’s bank account.”

 

Batch from Authorize.net:

“A group of transactions that have been gathered over a certain period of time and are submitted together to the appropriate processing networks for clearing and settlement.”

 

Potential Batch Processes

• All transactions for a given business day are kept in a queue and batched manually at closing time for that particular business.
• Transactions are kept in queue but batched automatically at set time such as 11pm or another time when equipment is not in use.
• Transactions are batched at fiscal close of business 3pm PAC (money transfer deadline for financial institutions) regardless of when physical business closes.
• Transactions are batched in real time.

Each batch process impacts cash flow and fees associated with batching differently. Which process is correct, will vary from business to business and processor to processor. If you are unsure which process is correct for your business please contact us at 866-382-2819.