Getting paid is crucial, irrespective of business size. After all, delayed payment equals no cash flow equals business failure.
Accepting card payments is better for cash flow than many other payment methods. But there’s always room for improvement.
The problem is that card processing hasn’t really changed much since the 1970s. Nor has the thinking around settlement. If you accept cards, you generally get an authorisation in real-time. But settlement of those funds can take anywhere between 1 and 3 days. Why?
At the end of the day, all the authorisation messages are batched up and sent to the card schemes.
Visa, Mastercard et al divide these between the banks of the various cardholders.
These banks (the issuers) debit their cardholders and credit the schemes, who in turn credit the acquirers.
Only then do these acquirers typically pass the funds to their customers.
This is the money-go-round that no-one really sees. How quickly it goes around depends on where the customers (or their cards) are from.
If the card is issued locally, then funds are normally settled T+1 (transaction plus one day). But if the card comes from further afield – Australia, Dubai or the US for example – then settlement could be T+3.
Why should it take several days to get the money? Why is that the retailer’s problem?
Re-defining T+1 to T+1 hour
It’s not. And this is something that CashFlows is changing.
We can settle funds to your merchant account within an hour of you accepting payment. This helps improve cash flow and free up working capital to buy stock, pay staff or invest.
We’re re-defining T+1 to mean transaction plus one hour, not one day. This is available to existing merchants and partners now.
To find out more about continuous settlement from CashFlows, get in touch with us today.