Small retailers and vendors let consumers use their credit cards for quick and secure payment. However, many shoppers don’t know how long a merchant can charge their credit card. Some of them are unaware of the chargeback limit of this payment option.
Based on the credit card companies’ rules, merchants have no minimum or maximum time limit to charge the customers’ credit cards. Once the transaction is approved, they have 30 days to charge the credit card. The period might range from 24-72 hours, depending on the bank where you have an account.
Some banks demand to charge the consumers’ credit card after 72 hours. Thus, contacting the bank authorities will be beneficial to know the exact time limit. When you purchase an item, you might think the trader will charge your credit card immediately, but this isn’t true.
Let’s learn when a merchant charges the buyers’ credit card and how the credit card processing works:
How Much Time Most Merchants Take to Charge a Credit Card Payment?
Most merchants process credit card transactions at the end of the day. However, no hard and fast rules are associated with retail or e-commerce stores regarding credit card processing. Thus, determining how long a merchant will delay charging your credit card will take a lot of work.
You booked a hotel with the credit card, but the transaction didn’t display on the account. This might raise the question of when the charge will appear on the transaction history after the initial purchase.
Most hotels and restaurants batch out the customers’ payments before closing them. Thus, you won’t immediately see the charge on your credit card account after the payment. However, they might sometimes decide not to batch out the card transaction at the end of the day. So, you must wait 3-4 business days to check if your credit card transaction is successful.
Why do some merchants take more than 24 hours to process credit card purchases? The main reason for time variance is that transactions involve different steps. It can take over 3 days to transfer the money to the merchant’s account from the shopper’s account if he needs to give the correct details.
Steps Involved in a Credit Card Payment to Merchants
The credit card transaction goes through the same steps, irrespective of the payment location. Did you buy the new iPad from Apple’s online store, and the company is taking more than 72 hours to process the payment? The merchant might be going through the following steps to complete the transaction:
1. Authorisation
The first credit card processing step is authorisation. Once you find the product you want to buy using the credit card, go to the point of sale section. Insert the payment card into the machine and enter the 4-digit identification number. The retail store will send your credit card details to the merchant for processing the payment.
Then, the credit card authorisation process will start. Credit card issuers use an approval method to ensure the cardholder has sufficient balance to cover the transaction cost. During this process, the merchant checks if your credit card is on hold or has security alerts.
If your credit card card has sufficient funds, the payment network will request the issuer to send some details. Generally, it asks for information like the shopper’s registered address and card security PIN.
These details are used to check if the credit card owner has made the payment; no third party is involved. Your credit card issuer will approve the transaction amount after thoroughly checking the customer’s bank account. You will then receive an order confirmation message from the merchant.
2. Credit Card Payment Approval
Your merchant’s payment processor will check and collect the daily or weekly transactions. The credit card transactions will be then sent to the registered issuer or company like Mastercard for approval. The credit card issuer will approve the payment request after verifying all the details.
3. Card’s Payment Processing
The credit card payment process takes at least 24-48 hours. The merchant sends the transaction and interchange fee to the credit card company or bank within this time. Your credit card’s network will transfer the payment and send the merchant payment processor a network fee bill.
The interchange and payment network fee bull is then sent to the merchant’s bank account. Credit card payment delays might occur during this transaction. Merchants cancel online transactions if the card is blocked for some reason.
Who is Involved in the Credit Card Payment Processing?
Several parties are involved in the credit card payment processing. Thus, you must know this information before using your card to pay the merchant. Here, we have summarised the roles of the different parties involved in payment processing:
1. Credit Card Issuer
Many people confuse credit card companies with banks, but they are different. Some popular credit card issuers are Visa, American Express, Discover and Mastercard. They work differently from a financial institution when it comes to payment processing. Credit card companies are responsible for improving the payment networks.
2. Cardholder & Merchant
The cardholder and the vendor play a pivotal role in the payment processing. “Cardholder” is the credit card owner, which he uses for online or in-store purchases. “Merchant” is the individual or entrepreneur who accepts the credit card holder’s payment.
3. Acquiring Bank
This financial institution processes the credit card payment and authorises it on the trader’s behalf. When a shopper sends the payment card details, the acquiring bank initiates the request to approve the payment. These banks are widely referred to as “acquirers or merchant acquirers”.
4. Issuing Bank
How is an acquiring bank different from an issuing bank? The acquiring bank is the vendor’s bank, and the issuing bank is the customer’s bank. They are the crest card company’s part and issue consumer payment cards. Every credit card holder must repay the monthly bills on time to use them for online purchases.
5. Payment Processor or Network
It is a payment system that merchants use to receive credit or debit card transactions. Different merchants use different payment processors to handle credit card processing and purchases. The merchant’s payment gateway is an intermediary between the credit card issuer and the bank.
When Does a Credit Card Authorisation Expire?
Most shoppers forget about credit card transactions if they don’t appear on the bank statement within a week or more. However, you don’t have to fret over it when using a credit card from leading companies like Mastercard.
Check the fine print contract if you don’t see the transaction amount on the credit card statement. You will find the penalty fees or why the credit card issuer has blocked your card. For most credit cards, the authorisation expires after 30 days. However, it might also be valid for only 7 days for some payment cards.
How Can the Credit Card Holders Check the Monthly Statement?
You must check the monthly statement if the credit card payment takes over 3-4 days. It will help you to determine the transaction status. Monitoring your credit card statement is easy and can be done without external help.
Credit card companies usually send the statement to your linked email address monthly. They follow a specific billing date to share these credit card details.
What if you forgot your registered email password? Log in to your bank’s net banking portal to check the monthly credit card statements.
