Where’s My Money? Why Funding Can Take So Long and How Merchants Can Gain Access to Their Funds Faster

There are few things more satisfying than checking your numbers after a strong day of sales. But what is far less satisfying is having to wait days – often half a week or more – to enjoy the fruits of those sales due to annoyingly long hold periods imposed by your merchant services provider. That’s especially true if you don’t understand why it’s happening. The good news is, with a little bit of knowledge and the right business practices, the standard hold period – the delay between making a sale and actually getting your money – can be reduced or even eliminated. 

Why Do Some Merchant Services Companies Hold Your Money?

The standard hold most merchant account providers place on funds is all about mitigating risk. A credit card purchase is very different than a cash purchase in two major ways: the risk of potential fraud, and the fact that the transaction is credit based in the first place. First of all, the nature of credit transactions means that when your payment processing partner deposits funds in your account, they haven’t received those funds, and, in essence, your deposit is also credit, at least until the end customer pays off their credit card bill. Second, a fraudulent transaction, either on the merchant or customer end, has the potential to burn a merchant account provider badly and leave them holding the bill. The standard holds they place on funds – and the longer holds they may place in extreme cases – are designed to try to minimize those risks by ensuring there is always enough money in the reserve to cover as much loss as possible in the case of fraud or non-payment. 

How Long Are Funds Usually Held?

There is no standardization for the length of holds, and each processor can hold at their discretion, but it isn’t uncommon for merchants to see their funds held for two to three business days. That might not sound like a lot, but it can be devastating when times are tight or unexpected trouble arises, especially for businesses that do heavy weekend sales. For instance, if your standard hold period is three business days, a sale that comes in on a Friday night after the funding deadline won’t hit your account until the following Thursday. That might not be a big deal for companies doing the standard nine-to-five, but for a bar generating almost all of its revenue on the weekend, it’s an enormous financial burden.

What Can Merchants Do to Get Their Payouts Faster?

The first and most important step in getting your money faster is to find a payment processing partner, like BAMS, that offers next-day funding. Next-day funding eliminates the hold period altogether, ensuring that the money from any transaction that comes in before the funding deadline will be sitting in your bank account the morning of the next business day. That funding deadline is another important factor to consider, as not all next-day funding is created equal. If a merchant account is offering next-day funding with a 5 PM cutoff time, but your business does most of its revenue at night, then, in effect, you’re actually facing a one-day hold. That makes it important to look for both next-day funding and the latest possible cutoff time. 

Once you’ve signed on with a payment processor offering next-day funding, it’s extremely important that you maintain unimpeachable business practices, as any issues that increase the risk you represent could jeopardize your access. Risk is still a big consideration for processors offering next-day funding, they just choose to accept it based on the history and reputation of your business – so make sure to keep that reputation intact. 

At BAMS, we understand that having to wait on your funds represents a risk for you, and that’s why we offer our qualifying merchants next-day funding with a 9 PM cutoff time – one of the most generous in the industry. Funds that meet the cutoff are available in your account by 7 AM the next business day, as little as ten hours later. Transactions that come in after the deadline will be available by 7 AM the following business day, meaning as a BAMS merchant with next-day funding, your money will always be at most a day away. 

If you’re ready to find out more about switching to BAMS to take advantage of our merchant-friendly next-day funding terms, along with a host of additional value-added services and the guaranteed lowest pricing in the industry, submit a custom quote request today!