So, what is “batching out” —and why should you care?
Basically, a “batch” is all of the transactions — credit and debit — that you have processed since the closing of your terminal the previous day. When you “batch out,” you are transmitting these transactions to your processing company. You do not get paid until your transactions batch out.
Funds are then debited from the cardholders’ accounts and settled into your account — usually within 24-36 hours. Prior to batching out, only an “authorization hold” is placed on these funds, sequestering them for eventual use in paying you.
What Happens When You Don’t Batch Out?
Unfortunately, bad things can happen when you don’t batch out promptly (preferably within 24-48 hours). Specifically, you run the risk of higher processing fees — and the potential for a customer service meltdown. Here’s how it happens:
Outside the 24-48 hour window, customers may forget about making a particular purchase and initiate a chargeback or dispute.
A delay in batching out can also cause grief for your customers. After a few days, the authorization hold is removed from the cardholder’s account, making the funds available for use again. An unwary customer can then be hit with overdraft or over-the-limit fees when he/she spends these funds — and, at the same time, the originally authorized payment goes through and hits the customer’s account. Because of this added risk, the transactions in batches that are not closed within 24-48 hours may be “downgraded” by Visa®, MasterCard®, Discover® and other card brands. These higher rates are then passed along to you.
The Case of the 9-Month-Old Pizza Charge
In an extreme case of bad batching, two California pizza shops generated some seriously bad publicity when it took nine months to batch out their POS system. Reportedly, a software glitch with the bank that processes their payments caused the payments to hang in limbo.
Thousands of credit and debit card transactions were delayed, some as long as nine months. In fact, customers who paid with credit or debit cards between January and September never got charged. The bank finally sent all of the charges through in September. In many cases, customers were billed nine months after their meal! 
Batching Out Best Practices
Daily batching ensures that your transactions are processed as quickly as possible. If you have next day funding, for example, and batch out before a designated time, you can see more dollars in your account, improving your company’s cash flow. Ideally, you should batch out at least once a day, and have your transactions settled as promptly as possible.
Set a time. Establish batching out as a regular part of your daily closing (or opening) procedures. Use this time to review all the day’s sales to ensure they were authorized and signed by the cardholder (when appropriate).
Automate it. Most terminals and software products can be set (or are already set) to batch out automatically at a specific time of day.
If you have any questions about batching out, please call PNC Merchant Services customer service at 1-800-742-5030. While you’re at it, be sure to get information on next day funding through PNC.
Visa is a registered trademark of Visa International Service Association and used under license.
MasterCard and EuroPay are registered trademarks of MasterCard International, Inc.
Discover is a registered trademark of DFS Services, LLC.
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