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What You Need to Know About Deposits

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Miranda Russell | July 1, 2020

“If you've signed up for a merchant account, then you've probably looked into the deposit options offered by your payment processor.”
4 min read
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    Last Updated on July 21, 2023 by Labib Ahmad

    Everything you need to know about deposits

    If you've signed up for a merchant account, then you've probably looked into the deposit options offered by your payment processor.

    The funds your business receives from credit and debit card sales aren't instantly transferred to your business's bank account, it's important to know exactly when they're deposited, and when you will have access to them.

    Different payment processors will take different approaches to their deposit schedules and guidelines, so it's worth asking your payment processor about their specific policies around bank deposits, so your business's cash flow is not affected beyond what you can manage.

    What type of deposit schedules do payment processors offer?

    The most common deposit schedules offered by payment processors are same-day deposits, 2-3 business day deposits, or 7 business day deposits. You may need to wait even longer if you're partnered with a high-risk provider, so that's definitely something to consider if your business falls into a high-risk category.

    If you require access to your funds immediately, you may be able to pay an additional fee to have access to same-day deposits. Some businesses might emphasize the need to get their funds quickly and may choose to prioritize going with a payment processor who offers same-day deposits over other payment processors, even if they pay a premium for the faster deposit schedule.

    If you've just signed up for a merchant account, or if your business is brand new, your payment processor might have you on a longer deposit schedule while you build up some history with them. Temporarily having longer deposit schedules helps mitigate the risk the payment processor is taking by allowing you to process transactions, in case there is a high number of refunds or chargebacks that occur. Once you have been processing for a few months and have proven that you have a legitimate business that is able to cover any refunds or transaction disputes that occur, then your business may be eligible for a faster deposit schedule.

    How do you receive your deposit?

    Once your transactions are ready to be deposited, they will be sent to the specific bank account you provided to your payment processor. Depending on your payment processor, and how you have set up your merchant account with them, your deposit may be a net settlement, meaning the deposit was sent after the payment processing fees have been removed from the total.

    Here is an example of a Net Settlement: Total Batch AmountProcessing Fee (2.9%)Bank Deposit Amount$1,000.00-$29.00$971.00

    Conversely, you could receive the full amount you processed from your transactions and have your processing fees collected as a debit from your account at a later date. This is called a gross settlement and it means the deposit you receive will be for the total amount you processed and you will need to pay the processing fees at a later date. If you are receiving gross settlements, it's important to plan for when the processing fees will be withdrawn from your account to avoid any NSF fees or disruption to your deposit schedule.

    Here is an example of a Gross Settlement: Total Batch AmountProcessing Fee (2.9%)Bank Deposit Amount$1,000.00-$29.00$1,000.00

    If your payment processor gives you the option between the two types of deposits, or if you're deciding between different providers at the outset, it is up to you to decide billing structure will work better for your business and for your bookkeeping requirements.

    Why would a deposit be delayed?

    Just like if your credit card company freezes your card if they notice suspicious or irregular activity, processors will also freeze deposits if they suspect anything out of the ordinary. If you notice that you didn't receive a deposit that you were expecting, it is most likely because your payment processor is holding your funds for any number of reasons including:

    • The payment processor needs to verify the transaction before releasing the funds.
    • The transaction was flagged for the suspicion of fraud, either because the card was used several times in a row, or the cardholder information doesn't match the information on the card.
    • Because your business's chargeback ratio has recently increased, and the payment processor wants to ensure there are funds available to cover any potential influx of chargebacks.
    • To mitigate the payment processor's exposure to risk for the transactions your business is processing.
    • If you've exceeded your processing volume or have processed a higher volume of transactions than usual, this might trigger the payment processor to hold some of the funds until they can confirm why the transactions are higher than usual.

    If you notice that you're missing a deposit or that a deposit has been delayed, a quick phone call to your payment processor can usually resolve the issue or at least provide insight into the reason behind the hold.

    Helcim provides merchants with net settlements within two business days. Merchants in both countries are able to receive their processed funds into the bank account of their choice, so there is no need to switch banks or open a new account to receive their funds.

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