If you’ve ever logged in to view your online credit card statement, you’ve likely noticed two separate totals that — when combined — are subtracted from your available credit. These totals are labeled as your “current balance” and “pending transactions.”
You might wonder upon seeing this, “What does pending transaction mean?” and “Why are they separated from my current balance if they both factor into my available credit?”
Pending transactions are authorized credit card charges that have not been batched. Businesses batch at different frequencies and times, ranging from the same day to over 48 hours after the transaction is processed. Businesses that extend their batches past this period can suffer from Interchange downgrades, noted as EIRFs on their statements, that increase their transaction rates. More on that later.
So why are pending transactions noted on your credit card statements? They help you keep tabs on your outstanding account withdrawals and available funds. That said, these transactions are subject to change.
What are some reasons for a transaction to sit in the pending stage or be altered?
There are a few reasons why credit card pending transactions might not reflect final amounts.
One scenario is tips. Businesses in the service industry, such as restaurants and taxis, commonly receive tips from their customers. Tips are usually added onto the bill after a credit card is swiped. This means that the cashier must manually edit the transaction to reflect the tip amount after it’s initially processed. In this case, the pre-tip amount is noted in your pending transactions and adjusted when settled.
Holds also sometimes sit in the credit card pending transactions queue. Say an auto shop is performing a service on a car but isn’t sure what the final bill will be, in this scenario the shop might authorize a card for an initial amount. Upon completing the service, it will update the total and batch the transaction.
Similarly, pre-paying for gas often results in pending transactions that are subject to change. You might go into a gas station’s minimart and authorize $100 worth of gas but only end up needing $28.50 to fill your tank. The $100 that is authorized will show up on your pending transactions, but $28.50 will be reflected on your current balance upon being batched.
Batching out in a timely manner is crucial for businesses to maintain low Interchange costs, but it is also a time-consuming process. It often entails printing a long batch report on receipt paper and lining up each batch to the day’s deposits.
When the batch and deposit amounts don’t match up, it can be near impossible to figure out what transpired. A chargeback, an EIRF or a hidden markup could be to blame. Even worse, that printed batch receipt is the only evidence businesses have for record-keeping purposes, and they cannot be reprinted. At least, that’s the case with old-fashioned terminals.
With PayJunction’s Virtual Terminal, businesses can retain traditional batch information (such as daily transaction volume, average purchase amount and refunds) with added functionality. The Virtual Terminal allows business owners to automate their batches to settle at a set time or manually settle them to include tips or other adjustments. Transactions can be put on hold as well.
Because the Virtual Terminal stores batch reports for the lifetime of the account, PayJunction customers gain additional business insights including the following:
Promptly settling batches makes record-keeping more straightforward for both the customer and business.
Does your business struggle to line up batch totals to bank deposits? Have you ever noticed pending transactions sitting in your queue for over a week? Let us know about your experiences in the comments section below.