Your guide to payment processing times in the USA

Payment processing times simply means how long it takes for money to move from one person's account to another after payment is requested. The time this takes can differ based on how the money is sent. For example, when using the Automated Clearing House (ACH), a system for transferring money electronically in the USA, it typically takes 3-5 business days.

Small businesses have more options than ever when it comes to payment methods, each with its own pros and cons. In addition to customer convenience and processing fees, comparing payment processing times is important. This guide breaks down typical processing times to help you anticipate cash flow.

Understanding payment processing times

Numerous factors go into payment processing times, starting with the method of payment used. Credit card payments go through multiple steps, like authorization and clearance. Domestic bank transfers may only pass from one account to another using the Automated Clearing House (ACH) system, while international payments must route through several third-party accounts. All these factors help determine the time it takes to settle funds into your merchant account.

What are card payment processing times?

When a customer makes a credit card payment, this transaction involves several steps that impact the processing time. Card details are entered at the point of sale and submitted to the merchant’s payment processor. The customer’s own card payment network verifies that the customer has sufficient funds and runs applicable safety checks to prevent fraud. Once approved, the bank provider sets the amount on hold. The merchant payment processor batches these transactions and sends payment requests to the customer’s bank for processing.

Credit card payment processing times can take 24 hours to 3 days when the funds pass from the customer’s bank to the card payment network and onto your merchant payment processor. Same-day settlement services also help expedite the process within the same day, though these involve higher fees.  

What are EFT payment processing times?

Many customers prefer to pay with their own bank accounts. Electronic fund transfers, or EFTs, describe any payment method that moves funds electronically between bank accounts. This includes ACH payments, wire transfers, electronic checks, and direct deposits. EFT payment processing times vary considerably by the specific method chosen.

1. ACH payment processing time

A typical ACH payment processing time is three working days. This starts with a payment request file sent to the customer’s bank, which directly debits the customer’s account accordingly. Funds can take between 1 to 3 business days to be sent to your business bank account. However, timings can vary depending on bank cut-off times for sending and receiving ACH files. Payments can also be delayed by holidays, weekends, or incorrect bank details.

Nacha now offers same-day payments for an additional fee, though not all US banks participate in the scheme just yet.

2. Wire transfer payment processing time

Another type of EFT is a wire transfer, which uses an interbank network to move funds between accounts. Domestic wire transfer payment processing times are 24 hours, on average. International wire transfers take longer to process, usually between one and five business days. As with other methods, this depends on several factors. 

The time of day and time zone will impact when payment is received, as will the location and exchange rate complexity. Some countries can take as long as three weeks for international wire transfers to process payment.

3. Echeck payment processing time

Paper checks used to take days – if not weeks – to process due to the need to pass paper files back and forth between banks. Today’s checks are all scanned into an electronic system for faster processing. Echeck payment processing times are on par with other EFT methods, usually taking between 24 and 48 hours to be cleared.

How to benefit from faster payment processing times

Many businesses now accept ACH transfer apps like Venmo and Zelle for faster payment processing times. Peer-to-peer apps transfer funds between bank accounts in a matter of minutes. One thing to keep in mind is that while the transfer is nearly instantaneous, it still must go through formal ACH processing.

Key takeaways

Payment processing times between payer and recipient accounts are a crucial consideration for businesses managing cash flow. 

• Payment processing times vary by payment method. Credit cards take 1 to 3 days, ACH 1-3 business days, wire transfers 1 day domestic and 1-5 days international. 

• Faster options like Peer-to-Peer apps and same-day settlement are emerging but come with higher fees.

• The benefits of faster processing include improved cash flow, a more convenient customer experience, and easier accounting. 

• GoCardless offers automated ACH debit collection, tackling technical details and integrating multiple software partners to streamline payment processes, helping your business to collect payments on due dates and avoid hefty card fees.

The payment method significantly influences processing times, whether a credit card, ACH, or wire transfer. Processing times can be extended by batching, grouping transactions together, and specific bank policies. 

Furthermore, non-working days like weekends, holidays, and different time zones can also affect the payment processing duration. Lastly, for international transfers, complexities related to exchange rates may also impact processing times.

In summary, payment processing times vary considerably based on the payment method, with ACH being a popular option despite the 1-3 day timeline. New services are emerging to speed up funds availability but may have higher costs.

Case study — reduced payment processing times

Capital on Tap, a fintech firm offering simplified access to funding for over 200,000 small businesses, implemented pull ACH payments via GoCardless while expanding into the U.S. market, resulting in significant savings in both time and money.

The company recognized the cost and inefficiency of card payments from their experience in the UK and sought to create a direct bank payments experience for their U.S. customers. Damian Brychcy, the Chief Operating Officer, noted,

GoCardless's global reach allowed Capital on Tap to easily replicate their UK payment systems in the U.S., simplifying the expansion process. Damian remarked, 

This easy replication of the payment system significantly contributed to the company's rapid growth, escalating from zero to 85,000 payments in just 18 months.

Leveraging GoCardless, Capital on Tap now processes over $8 million per month without the typical burden of managing customer payments. As per the U.S. Managing Director, Zoe Newman, GoCardless handles this hefty volume of transactions in the background, resulting in a streamlined and automated customer process. She noted, 

By opting for pull ACH and direct debit over card payments, Capital on Tap has processed $3 billion, accounting for about 90-95% of the total payments they've handled. Damian affirmed the substantial savings, stating, 

Moreover, customers appreciate the convenience of Capital on Tap's credit card service and payment collection process, finding it to enhance the stability and flexibility of their cash flow. The service offers clients extended payment terms, allowing them to manage their financial obligations better.

Capital on Tap is confident about the continued growth and adoption of pull ACH payments in the U.S., attributing this to GoCardless' commitment to simplifying payments for small businesses. As Damian puts it, 

The use of pull ACH payments is ushering businesses like Capital on Tap into the 21st century of banking.

We can help

GoCardless makes payment processing simple with automated ACH debit collection. Business owners can set up and take payments directly from customer bank accounts on the due date. You can plan for processing timelines to ensure a steady cash flow. Enjoy a stress-free setup. 

GoCardless tackles all the technical details on your behalf, notifying customers when payment is due and submitting payment requests to the customer banks. It also integrates with over 350 software partners to streamline payment and accounting processes. Find out how GoCardless can help you with one-off or recurring payments.

Frequently Asked Questions — FAQs

How long does processing a payment take?

In the US, payment processing times vary by method. Credit and debit card transactions are often processed instantly, but funds can take a few days to clear. ACH or Direct Debit transactions typically take 1-3 business days, while wire transfers are usually processed the same day. These timelines can impact weekends, holidays, and specific bank policies.

What is the processing time for a debit card?

In the US, debit card transactions are usually processed instantly, but it can take 1-3 business days for the funds to clear and officially be transferred to the recipient's account. These timelines can impact weekends, holidays, and specific bank policies.

How long do banks process payments?

Bank payment processing times in the US depend on the payment method. Card transactions usually process instantly but may take 1-3 business days for funds to clear. ACH or Direct Debit payments typically process within 1-3 business days. Wire transfers are often processed on the same day. These timelines can be influenced by weekends, holidays, and individual bank policies.

Why does it take 3 days to process a payment?

The 3-day processing time typically associated with certain types of payments, such as ACH or Direct Debit transactions in the US, is due to the batching system used. The ACH network gathers daily transactions, batches them together, and then processes them in a scheduled window. This system, combined with verification and security checks banks perform, can lead to a 1-3 business day processing time. Additionally, weekends and federal holidays can extend this timeline as banks don't process payments on these days.