The Interchange Process

If you have a small business merchant account with Leap Payments, it is important to understand the interchange process: the authorization and settlement of card transactions through card associations. Leap Payments offers an easy-to-understand guide outlining the steps of the interchange process which consists of authorization, batching, clearing and settlement and funding.

Whenever a customer pays for goods or services with a credit card, the merchant submits the information to the acquirer — the financial organization that provides merchant account processing.  The acquirer is responsible for verifying with the card issuer that the credit card number and transaction amount are legitimate. If the information is authorized, the acquirer will process the transaction.

Once the transaction is authorized, the information is then documented in a batch. Usually, around the end of the day, the merchant will transfer the batch to the acquirer in order to get paid.

After the batch has been transferred to the acquirer, the acquirer will send the specific credit card payment processing information in the batch through the card association. The card association is responsible for debiting the card issuers for money and crediting the acquirer.

The final step is the funding. When the acquirer gets paid, the merchant receives the funds. The total payment is equal to the transaction amount minus the fee that the merchant pays the acquirer for processing the credit card payment.

Typically, the entire process — from the time a customer uses the credit card processing equipment to the when the merchant receives the funds — takes three days. When they go through Leap Payments, however, merchants can get paid faster when they choose next day funding*. Next-day funding* allows merchants to accept a credit card payment and receive the funds within 12 hours of the transaction.

*Next day funding is not guaranteed for all merchant accounts. Available only for qualifying merchants. To see if you qualify, call (800) 993-6300 now and speak to an account specialist.