Save Money By Batching Your Terminal

The concept of batching does not apply to Internet merchants as their payment gateway typically takes care of this for them. However, it is possible to have a gateway that does not do this for you. If your gateway is not set up to automatically batch itself out for you, please continue reading below.

Every retail merchant knows that if they wish to get paid for their transaction paid via credit card they must batch out their terminal. Batching your terminal, also known as “settling”, is the process of taking the transactions present in your credit card terminal and sending them to your processing bank. This makes your sales “official”. In other words, when you batch your terminal you are in effect telling your processing bank that you want to get funded for these sales and the customers need to have their credit cards charged. Until you batch your terminal your sales are not final. For example, you may still void a transaction and make it as though it never happened.

All merchants are expected to batch their sales within 24 hours of the sale occurring. So, if your business ran a transaction successfully at noon on Monday, that sale is expected to be batched out by noon on Tuesday. Typically a merchant will ensure all of their transactions are batched out in a timely manner by batching out their terminal at the end of each business day. That way all sales are sure to be batched out in time.

But what happens if you don’t batch out your terminal in time? Any sales that are not not batched out in a timely manner automatically are charged the highest rates Visa and MasterCard offer. This will be the non-qualified rate your processing bank charges (if you don’t know what yours is you can contact them to find out). A non-qualified fee is usually double the rates a merchant typically pays. Not batching your terminal in a timely matter always trumps all other considerations when determining what rate your sales are charged. So, if you swiped a check card through your terminal and obtained a signature but failed to batched that sale out in a timely manner, you will go from paying one of the lowest rates possible to the highest.

Fortunately avoiding the penalties of not batching your terminal out in a timely manner is easy to avoid. A simple remedy is to make batching your terminal a part of the nightly routine for your store’s closing procedure. Any smart business will do a batch report detailing their daily credit card sales. This is the perfect opportunity to batch your terminal out. Additionally, a smart business will also attempt to batch their credit card terminal out every morning before they open. Why? Because a credit card terminal will not batch (or, more precisely, cannot batch) and empty terminal. So, if the night shift forgot to batch the terminal, you have caught their error and saved your business money. If they didn’t forget, you simply only wasted five seconds of your time.

Another solution is to have your terminal programmed for Auto Close. Auto Close allows your terminal to match itself out every day at a preset time without any human intervention. There are two kinds of Auto Close: Terminal-Based and Host-Based.

Terminal-Based Auto Close is when a merchant’s credit card terminal is programmed to automatically batch itself out each night. The terminal acts as if a human being has manually batched the terminal out. It dials out and communicates with the processing bank just like a regular batch. Thus the terminal requires to be plugged in and have access to a telephone line. If these two criteria are met the merchant can use Terminal-Based Auto Close.

Host-Based Auto Close is similar to Terminal-Based Auto Close but the batching is done without the credit card terminal doing anything. The batch is handled by the processing bank’s computers (the Host). Merchant accounts set up with Host-Based Auto Close do not have to manually batch out their terminal or keep their terminal plugged into a telephone line and electricity because their terminal is not part of the batching process.

One thing to note about Auto Close is that it is not available to merchants that adjust their sales for tips. This is because if their terminals are batched before they are able to adjust their sales to add tips they will lose their tips! Merchants who add tips during the transaction are unaffected by this and can have Auto Close.

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