This Is Why Credit Card Transactions Take so Long to Process
When you swipe your credit or debit card at a store, the transaction is instant. So why is your account statement not keeping up with it? If you’re wondering why purchases take so long to appear on your credit card statement or withdrawn from the bank, it’s because of a long and complicated process behind the scenes.
Once you have left the store with a purchase, payment processing is just beginning. The merchant and card issuer must then sign the transaction. Ted Rossman, an analyst at Creditcards.com , said much of the reason purchases take so long to appear on card statements is due to so-called deferred fraud checks.
“Companies involved in approving or denying a credit card transaction have 10 milliseconds to make this decision at the point of sale,” Rossman said. “Unless they have good reason to suspect fraud, the transaction remains incomplete.”
The transaction is then left pending for one or two business days (and sometimes longer) to give the card issuer time to verify the purchase. If you have ever received a purchase confirmation warning on your credit or debit card for a high value or unusual location, this transaction is still pending. “If a transaction seems a little suspicious but not suspicious enough to reject it entirely, it is beneficial to delay until the transaction is fully processed.”
After assessing the risk of fraud, the process is still pending. Finally, the card network will request the payment from your card issuing bank.
Another challenge in this process is dosing. Let’s say you’re shopping at a store like Target, which accepts thousands of orders every day from just its brick-and-mortar stores. Target is not going to send these transaction details one by one to authorize to receive payment. It will wait until the end of the day to send all transactions at once so that card issuers (Visa, Mastercard, etc.) can sign them. If you go shopping on Saturday, you are unlikely to see the transaction complete until Monday or Tuesday.
How about returning something and getting a refund? The purchase has already been authorized, so why does it sometimes take several days for the money to be returned to your account? Well, according to Theresa Dixon Murray of The Plain Dealer , retailers aren’t as interested in getting your money back as in taking it in the first place. Once they sign the refund (which is probably a daily batch of refunds), it will still take banks two or three days to contact them in reverse order to complete the refund.
This post was originally published in 2016 and was updated on 8/11/2019 to reflect more recent information.