We can consider complaints about banks making mistakes when they process payments. This includes wrongly delaying or failing to make a payment, repeating payments, or giving the wrong information about payments. We don’t have the power to set rules about how banks process payments.
Steps
Electronic payments to accounts at the same bank happen straight away. Those to accounts at most other banks will happen on the same day, and the exact time of the day will depend on the bank. Payments between banks consist of the following steps:
- A customer instructs his or her bank (the sending bank) to make a payment.
- The sending bank checks the customer has enough money in the account for the payment.
- The sending bank prepares an electronic file, along with other transactions, for the bank whose customer is receiving the payment. This collection of individual transactions is called a "batch".
- The sending bank forwards the batch to the Reserve Bank, which transfers the value of the batch between the sending and receiving banks’ accounts at the Reserve Bank. This is called "settlement".
- Once settlement is complete, the Reserve Bank forwards the batch to the receiving bank. This is called "interchange".
- The receiving bank credits the payment to its customer’s account.
Timing
Most banks now process payments to accounts at other banks every day (as of May 2023), including weekends and public holidays. Banks batch and process payments frequently each day. This gives customers fast access to deposits made into their accounts and means banks are likely to take the money for scheduled or future-dated electronic payments earlier in the day. Make sure you have funds available if a future payment falls on a weekend or public holiday.
If such payments aren’t successful the first time because there isn’t enough money in an account, a bank may try again later in the day. This could incur a fee, so be sure to check you have enough money available. Also check that your bank does try a second time. Some don’t.
High value transactions and foreign exchange payments to and from other countries are processed on business days only.
If you set up a payment late in the day, the bank will generally send your payment the next day. Banks stop sending payments at a certain time each night so they can update your account and transaction information. Cut-off times depend on the payment type and can vary bank to bank. Check with your bank.
Once you set up and confirm a payment, your bank will take the money from your account and put it into a batch to await processing. This immediately reduces the available balance in your account. If your account pays interest, you will usually continue to earn interest until the batch is sent to the receiving bank for processing to the recipient’s account. The amount of interest may depend on the timing of processing.
FAQs
Payment processing refers to the handling and facilitating of financial transactions between a customer and a business. It involves the authorization, authentication, and settlement of payments for goods or services.
Why is my payment not processing? ›
The most common reasons for your payment to fail are either filters your bank applies to certain transactions made online, or amount limitations applied to your card. If your payment is being rejected, please reach out to your bank to get additional information.
What does processing your payment mean? ›
Payment processing is the series of actions that occur when digital payment transactions are initiated by a business. This includes everything from processing a card and opening secure gateways to communicating with issuing banks and consumer accounts.
How do you explain a processing fee? ›
To put it simply, a processing fee is a pre-set amount that a business pays every time a customer uses a credit or debit card to pay for their goods or services. The processing fee can be split into two parts: the interchange. The fees charged by the Issuer to the Acquirer. fee and the assessment fee.
How do you handle payment processing? ›
The payment processing system can be broken down into a few steps: Initiation. The customer begins the process by selecting a payment method (credit card, debit card, mobile wallet) and providing the necessary payment information (like their debit/credit card number, name, expiration date, etc.). Authentication.
What is the job description of processing payments? ›
In this role, you will:
Process payments promptly and accurately using established procedures. Manage customer accounts, including updating payment information and resolving payment-related inquiries and disputes. Ensure compliance with payment policies, procedures, and regulatory requirements.
Why does it say processing payment? ›
Processed does not necessarily mean paid. If the bank says a transaction has been processed, that can mean that it has been authorized and authenticated but not yet settled - meaning, the seller may not see the funds in their account yet.
Why is payment processing taking so long? ›
This happens due to outdated infrastructure, banking restrictions or closures. Many banks tend to process payments in 48-72hr backdated batches. Therefore, debited funds show as pending, despite clearing with a merchant or recipient. Always try to schedule any payments during weekdays or bank opening hours.
How long can a payment be processing? ›
Usually, a pending charge will show on your account until the transaction is processed and the funds are transferred to the merchant. This could typically take up to three days but may stretch longer depending on the merchant and the type of transaction.
What happens if payment is processing? ›
Payment processing is a series of actions that securely transfer fund between a payer and a payee during digital payment transactions. These actions involve secure payment gateways, banks, and consumer accounts to facilitate the exchange of funds for goods and services.
Payment processing services get authorization and receive payments from credit card issuers on behalf of customers. Card transactions include online or in-person credit card or debit card transactions. The credit cardholders make credit card payments after later receiving their monthly statements.
What are the three steps in all payments processes? ›
To understand the approach to take for increasing conversions, we can split the payment experience into three key pillars: Checkout and initiation, authentication and fraud management, and authorization and remittance.
Why do I need to pay processing fee? ›
Factors that Affect Payment Processing Fees
The purpose of the interchange fee is to help the issuing bank cover handling costs and the risk of approving the sale, as well as any fraudulent transactions that may occur. The interchange fees are set by each network, and they vary depending on the issuer.
What is a normal processing fee? ›
The average credit card processing fee, which will be taken out of a merchant's sales revenue, is in the range of about 1.5 percent to 3.5 percent. Merchants can negotiate their card processing fees and they are not set in stone.
Who should pay the processing fee? ›
You must pay processing fees for your transactions whenever you use a credit card. There are different fees, especially since the merchant must pay these to the payment processors to process and accept payments via cards.
What is a payment processor in simple terms? ›
A payment processor is a company that facilitates communication between the bank that issued a customer's debit or credit card and the seller's bank. The processor's job is to verify and authorize payment.
How do you explain payment method? ›
A payment method refers to the various options available for customers to make payments when purchasing a product or service. Whether in a physical or online store, payment methods cover a range of choices. Commonly accepted payment methods include cash, credit cards, debit cards, gift cards, and mobile payments.
What is the meaning of payment process? ›
Payment processing is the sequence of actions that securely transfer funds between a payer and a payee. Typically, it involves the authorization, verification, and settlement of transactions through electronic payment systems.
What are the basic aspects of payment processing? ›
Payment processing is a series of actions that securely transfer fund between a payer and a payee during digital payment transactions. These actions involve secure payment gateways, banks, and consumer accounts to facilitate the exchange of funds for goods and services.
