In Credit Card Processing, Next Day Funding

Next Day Funding vs. Instant Funding—What’s the Difference?

Square recently announced its new Instant Funding feature, which says that it will be able to instantly credit merchants with funds following a credit card transaction. This is an intriguing concept because faster funding for your credit card transactions, especially for small businesses, sounds great. The fastest funding possible allows businesses to reinvest money into growing operations.
However, is instant funding even possible? Understanding how funding works and what that means for your business will enable you to choose the best merchant account services that help meet your goals without paying for things you don’t need.

How Merchant Account Funding Works

Banks control the flow of money in and out of your checking account and always operate with an abundance of caution when giving you access to your money. As a standard operating procedure, this means that banks will place holds on your funds immediately until they can be absolutely certain that the transaction is legitimate and the money is available to place in your account.
The banking system is set up to hold transactions during the day and total up the deposits and withdrawals at the end of the day. After this, the bank will only give out funds for the positive difference between daily deposits and withdrawals. This means that any credit that is received throughout the day is not necessarily transferred into your account at once. Instead, the total is calculated at the end of the day. Once this process is complete, the bank then transfers funds into your merchant account, and money is made available for the next business day.

What Does All of this Mean for Your Business?

The bank holds the funds and may or may not even post that deposit as a pended transaction to your account until the evening—if at all. It’s completely up to the bank how they post the transaction, including whether or not they do it during the day.

In essence, companies offering instant funding are actually using a different name for next day funding*. This is simply because transactions completed and processed today will be available for the next business day. Since banks rightfully control the processes and speed of posting transactions and transferring funds into merchant accounts, instant and next day services are one and the same.

A next day funding* merchant account means that your credit card merchant service transactions are processed today and available the next business day. This results in the exact same effect as an so-called instant funding transaction. So, how do you ensure that you are getting the best deal on the fastest merchant account services?

Do your research ahead of time. Rather than committing to the first company that promises the fastest processing and funds availability, learn more about the services that are being offered and what they mean for your bottom line.

What are the processing fees and startup costs? Does your fee increase over time or is it guaranteed for the life of your account? It is also important to look into what is really meant when the company discusses the speed of its processing and money deposits. Are you trying to be sold on a service that costs more but accomplishes the same goal?

Work closely with the team at Leap Payments on merchant services with next day funding*. Your customized solution includes a lifetime rate lock so you continue to pay the same percentage, no matter what happens in the future. Our team of professionals is here to help you find the merchant account that will best suit your business needs.

*Next day funding is not guaranteed for all merchant accounts. Available only for qualifying merchants. To see if you qualify, call (800) 993-6300 now and speak to an account specialist.


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