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Batch Fees

When reviewing your merchant account statement, you may notice fees and deductions. One that might appear is a batch fee.

What are Batch Fees?

A batch fee is a fee charged for every batch of card transactions that are sent for processing.

Batch fees may also be referred to as batch settlement fees, closeout fees, batch capture or batch header fees.

When Do Batch Fees Get Charged?

Most merchants who process cards use batch processing during their business day. This means that sales are authorized throughout the day and then sent once, usually at the end of the day, to the processor for settlement.

A Two-Step Process

This two-step process often happens behind the scenes and the merchant may not be aware it is even happening. When a customer’s card is swiped, the information is sent to the card issuer and the card is verified for legitimacy and adequate available funds. This is known as authorization.

If there are, an authorization code is issued and the transaction is stored until the batch of transactions is sent to the processor for the second step, settlement.

Batch processing is most commonly used by merchants accepting credit card payments.

This process usually occurs automatically, at preset times or intervals.

If it is not an automatic process, merchants are responsible for sending their transactions to the processor for settlement. Typically processors want transactions settled within 24 hours or they may be subject to higher transaction fees.

The Advantages of Batch Processing

There are several advantages to processing your credit card payments in batches.

• Reduced Fees: Payment processors tend to charge a fee per batch so sending a group of transactions all at once is preferred versus sending single transactions.
• Security: Since you are only transmitting information once per day to your payment processor, there is less exposure for you and your customer’s information over the Internet.
• Reconciling Transactions: If you need to refer back to a transaction, batch processing will divide them into organized groups that are easier to reference if needed.

The alternative to batch processing is processing transactions in real-time. This requires an additional step from the employee and therefore takes additional time throughout the day that could be better spent attending to customers.

The advantage of real-time processing would be that payments are immediately sent for settlement so the merchant will receive settled payments faster.

The delay when using batch processing, however, is not significant. It may be a difference of only a few hours in some cases so the merchant must decide if the additional fees and other drawbacks are worth the marginally faster payments.

How Much are Batch Settlement Fees?

Some processors may not charge a batch fee at all. If they do, they are nominal, usually less than $.50 per batch, but this amount varies by processor.

In credit card payment processing, there is the potential for many fees to appear on your account so understanding what each represents and when they occur is essential for business owners.

Our payment solutions professionals are always happy to discuss the options and features of merchant accounts with you.

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