What actually happens between a card tap and the money reaching your bank?

Summary

The approval you see at the register is only the card issuer saying yes; no money has moved yet. After you capture the sale, your acquiring bank collects the funds from the issuer, keeps its fee, and your provider pays the rest into your business account on its own schedule. For Chase and Square, that schedule runs from the same day to a few business days.

Americans made 187.7 billion card payments in 2024

That is the Federal Reserve's count for 2024, at an average of about $61 each. Every one of them followed the same basic path, whether the card was tapped at a counter or typed into a checkout page.

Authorization. Your terminal or checkout sends the transaction to your payment provider, which routes it through the card network to the bank that issued the card. The issuer checks whether the card can be used for this purchase and answers yes or no. Stripe says this usually takes a few seconds.

Capture. You confirm the sale for a final amount, which can be lower than the amount the issuer approved.

Settlement. The issuer's side sends the money to your acquiring bank.

Funding. Your provider deposits what is left after fees into your bank account.

An approval is a hold, and holds expire

An authorization reserves part of the customer's available credit, and that reservation has a clock on it. In Stripe's documentation, a customer-initiated online card authorization lasts 7 days. An in-person Terminal authorization lasts 2 days on Mastercard, American Express, and Discover, and 4 days and 18 hours on Visa. If you do not capture before the window closes, the funds are released and the payment is canceled.

You can capture less than you authorized. Stripe's own example captures $7.50 of a $10.99 authorization, and the unused $3.49 is released automatically.

When the deposit lands

Two large providers publish their schedules:

Chase lists three reasons a deposit can go missing or run late: the settlement cutoff was missed, the deposit was rejected, or there is a hold on the funds. Holds can follow unusual transaction or deposit amounts, or a pending risk or credit review.

Why the deposit is smaller than the sale

The Federal Reserve describes the acquirer's cut as a merchant discount, the difference between the face value of a sale and what the acquirer passes on to you. It includes the interchange fee that the acquirer pays the card issuer, plus the acquirer's and processor's own fees.

For debit cards, the Fed publishes the interchange part. In 2024 the average was $0.23 per transaction on cards from large regulated issuers and $0.51 on cards from exempt ones. Your provider's percentage, its per-transaction charge, and any monthly fee sit on top of that, and those three numbers are what decide how much of each sale reaches your account.

Sources

Related on this site

Written by Kaz (pen name). Figures are copied from providers' published pricing pages on the dates shown. We have not used these products. Corrections: contact form.