Settlement Timing
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Before understanding settlement timing, understand:
- Settlement Lifecycle the phases from capture to funding
- Authorization & Capture batch cutoffs and capture timing
- Bank Transfers & ACH ACH timing differences
Understanding exactly when your money arrives prevents cash flow surprises.
Standard Timelines by Payment Type
| Payment Type | Clearing | Settlement | Funding |
|---|---|---|---|
| Visa/Mastercard Credit | Overnight | T+1 to T+2 | T+2 to T+3 |
| Debit (PIN and signature) | Overnight | T+1 | T+1 to T+2 |
| American Express | Overnight | T+2 to T+3 | T+3 or later |
| Discover | Overnight | T+1 to T+2 | T+2 to T+3 |
| ACH/Bank Transfer | T+1 batch | T+1 to T+2 | T+1 to T+3 |
| Wire Transfer | Same day | Same day | Same day |
T = Transaction date. All times are business days.
Batch Cutoffs
Your processor has a daily cutoff time: the deadline for transactions to be included in that day's batch. This is one of the most misunderstood aspects of settlement timing.
Processing Day Cutoffs
| Processor Type | Typical Cutoff | Notes |
|---|---|---|
| Traditional (TSYS, Fiserv) | 9-11pm Eastern | Fixed, rarely flexible |
| Modern PSP (Stripe, Square) | Varies by region | Often configurable |
| Bank-based | 5-7pm local time | Aligned with banking day |
Always check your specific processor's documentation. Missing the cutoff by even a minute pushes funding back a full business day.
How Cutoff Affects Your Funding
| Scenario | Your Sale | Cutoff | Your Batch | Settlement | Deposit |
|---|---|---|---|---|---|
| Before cutoff | Mon 4pm | 5pm | Monday | Tuesday | Wednesday |
| After cutoff | Mon 6pm | 5pm | Tuesday | Wednesday | Thursday |
| Friday late | Fri 8pm | 5pm (Mon) | Monday | Tuesday | Wednesday |
| Weekend | Sat 2pm | 5pm (Mon) | Monday | Tuesday | Wednesday |
Key insight: Friday afternoon sales after cutoff won't settle until Tuesday (Monday batch), funded Wednesday. That's 5 days from sale to deposit.
Setting Optimal Batch Time
| Business Type | Recommended Batch Time |
|---|---|
| Retail (closes 9pm) | 10pm (right after close) |
| Restaurant (closes 11pm) | Midnight or 1am |
| E-commerce (24/7) | Align with processor cutoff |
| B2B (business hours) | End of business day |
Auto-batch vs manual batch:
- Auto-batch: Set it and forget it. Consistent timing.
- Manual batch: Flexibility, but human error risk.
Recommendation: Use auto-batch unless you have specific operational reasons for manual control.
Weekend and Holiday Impact
Interbank settlement and funding generally don't move on weekends or bank holidays. This creates pile-ups:
- Friday transactions batch Friday night, settle Monday, fund Tuesday or Wednesday
- Saturday and Sunday transactions batch Monday night, settle Tuesday, fund Wednesday
- Holiday weekend (3 days off): Transactions might not fund until Thursday
For a business doing $10,000/day in credit card sales, a holiday weekend means $30,000+ delayed in funding.
Bank Holiday Impact
| Holiday | What Happens |
|---|---|
| Federal Reserve holiday | No interbank settlement |
| Banking holiday | Deposits delayed |
| Network holiday | Clearing delayed |
Fed holidays (US): New Year's Day, MLK Day, Presidents Day, Memorial Day, Juneteenth, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, Christmas.
Each holiday adds a day to your funding timeline.
Same-Day and Instant Funding
Many processors now offer accelerated funding options:
| Funding Type | Timing | Typical Cost |
|---|---|---|
| Standard | T+2 to T+3 | Included in normal fees |
| Next-day | T+1 | Often included, or small fee |
| Same-day | Same business day | 0.5-1% additional |
| Instant | Minutes | 1-1.5% additional |
Same-Day Requirements
- Batch before an early cutoff (often 10am-11am)
- Be in good standing with the processor
- Have a verified bank account with recent deposit history
- Meet minimum transaction amounts
When Instant Funding Makes Sense
Good candidates:
- High-velocity businesses with tight cash flow
- Businesses with net-30 or net-60 supplier terms
- Event-based businesses (concerts, festivals)
- Businesses in cash-flow crunch
When it doesn't make sense:
- The 1% fee on a $100,000 day is $1,000. Is getting your money 2 days earlier worth that?
Push ACH Reconciliation
If you're using push payments (ACH credit, same-day ACH, real-time payments) for payouts, reconciliation is more complex than card settlement.
Why Push ACH is Different
| Card Settlement | Push ACH |
|---|---|
| Processor handles funds flow | You initiate outbound payments |
| Fees deducted automatically | Fees may be separate |
| One deposit = one batch | Each payout is separate |
| Chargebacks handled by processor | Returns come back to you |
Return Window Reality
| Return Type | Timeframe | Common Codes |
|---|---|---|
| Administrative (R01-R04) | 2 business days | NSF, closed account, invalid account |
| Unauthorized (R05, R07, R10) | 2-60 business days | Consumer disputes |
| Late returns (R31-R33) | Up to 60 days | Dishonored by recipient |
See ACH Return Codes for the complete list.
Push ACH Best Practices
- Track every payout uniquely. Assign internal ID that maps to ACH trace number.
- Build return matching logic. When returns arrive, match to original payout using trace number.
- Hold reserve against returns. For high-risk payouts, hold funds 3-5 business days before marking "complete."
- Reconcile daily. Match payouts initiated vs. debited, returns received vs. original payouts.
- Flag stale unreconciled items. Any payout older than 5 days without confirmation needs investigation.
ACH reconciliation is harder than card reconciliation. Budget 2-3x the operational effort if you're moving from card-only to including ACH payouts.
Next Steps
- Reconciliation - Match your books to deposits
- Holds and Reserves - Why funds get held
- Payout Strategy - Optimize your funding
See Also
- Bank Transfers - ACH timing details
- Real-Time Payments - RTP and FedNow
- Time Frames - Response deadlines