A guide to batch payment processing

Today’s businesses send and receive high volumes of payments throughout the day. While it’s possible to process each one individually as it’s received, batch payment processing offers an efficient alternative. Batch payments can also be sent out to multiple vendors at the same time, either automatically or manually.  In this guide, we’ll explore the batch payment meaning and give a few examples of how the process works. 

What is batch payment processing?

When you pay multiple recipients through a single bank account transaction, this is called a batch payment or bulk transfer. The full list of recipients appears as a single debit on your bank statement, saving time and potentially money. You can use a variety of different payment methods to send batch payments to vendors. These include:

• Credit and debit cards

• PayPal

• ACH bank transfers

• Wire transfers

To make a batch payment, you’ll need a list of every account or payee as well as the amount to be paid. This list of transactions is batched together and paid out from a single debit account.

Businesses will often use AP automation software equipped with APIs, file importers and file exchange gateways to help facilitate batch transfers. The software then reconciles these payments into all associated accounts.

How does credit card payment batch processing work?

A secondary meaning of batch processing specifically relates to credit card transactions. With credit card batch payment processing, the merchant authorizes credit card transactions throughout the day. At a designated time or at day’s end, they’ll run all these transactions through the credit card processor at once. This streamlines the process and potentially cuts down on processing fees.

Once the authorization codes are sent to the processor, these are passed on to the customers’ banks for approval. At this stage, the funds can then be sent to the merchant’s bank for payment and settlement.

What is the difference between real-time and batch payments?

The alternative to processing payments in bulk or batches is to process them individually. This is called real-time payment processing. Each invoice needs to be approved and a payment authorized by your controller, CFO or CEO. By contrast, an AP automation platform consolidates these invoices and payments together for bulk approval.

With credit card transactions, payments can also be authorized and processed in real-time. If you opt for credit card payment batch processing instead, authorization requests are sent through all at once, usually at closing time.

When to use manual vs. automated batch payment processing

There are two categories of batch payment processing: manual and automatic.

1. Manual payment processing allows for an irregular schedule based on the day’s supply and demand. It requires hands-on effort from your AP department as invoices are grouped together to be approved at certain intervals. The business must then create journal entries to mark each invoice as paid, reconciling them in any associated accounts.

2. Automatic payment processing sets the batch files to be processed together at the same time each day. Using automated AP or invoicing software, the business can automatically issue and pay invoices at predetermined intervals. The system is responsible for cross-checking, verifying, and reconciling payments.

It’s clear that using automated bulk payment processing software offers numerous benefits. To begin with, it’s far easier to reconcile bank accounts. Rather than dealing with a long list of individual transactions on a bank statement, batch payments group these together into a consolidated transaction. Automating the process also reduces the number of steps needed for approval and processing, freeing up employee time. Vendors are more likely to get paid on time with reduced risk of human error.

GoCardless integrates with hundreds of partners, including top accounting, invoicing, and AP software. Set up and collect multiple recurring payments directly from customer bank accounts to reduce awkward conversations over late payment. You’ll retain greater visibility over incoming payments, both individually and in bulk batches, all for an improved workflow.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off orrecurring payments.