This Is Why Your Credit Card Transactions Take So Long to Clear

When you swipe a credit or debit card at the store, you’re done with the transaction instantly. So why can’t your account statement keep up? If you’ve wondered why it takes so long for purchases to show up on your credit card statement or withdraw from a bank, it’s because of a long, complicated process behind the scenes.

Once you’ve left a store with your purchase in hand, processing your payment is just getting started. Next, the merchant and the card issuer have to sign off on the transaction. Ted Rossman, analyst at Creditcards.com, said a big part of why it takes so long for purchases to appear on your card statement is because of what’s described as a delayed fraud check.

Advertisement

“The companies involved in approving or denying a credit card transaction have 10 milliseconds to make that decision at the point of sale,” Rossman said. “Unless they have a major reason to suspect fraud, the transaction goes through to pending.”

Then, the transaction hangs out as pending for a business day or two (or sometimes longer) to give the card issuer time to check the purchase. If you’ve ever gotten an alert to verify a purchase on your credit or debit card for a large amount or unusual location, that transaction is still in the pending phase. “If the transaction appears a little suspicious but not suspicious enough to outright decline, having a delay before fully processing the transaction is beneficial.”

One the risk of fraud has been assessed, the process isn’t finished. Finally, the card network will request the payment from your the bank that issued your card.

Another wrinkle in this process is called batching. Say you shop at a store like Target, which rings up thousands of orders every day in its physical stores alone. Target isn’t going to send those transaction details in one by one for authorization to get paid. It’s going to wait until the end of the day to send in all the transactions at once, so the card issuers (Visa, Mastercard, etc.) can sign off on them. If you go on a shopping spree on the Saturday, you’re not likely to see that transaction clear until Monday or Tuesday.

Advertisement

What about when you return something and get a refund? The purchase was already authorized, so why does it sometimes take several days for you to see the money return to your account? Well, retailers aren’t as motivated to give your money back as they are to take it in the first place, according to Theresa Dixon Murray of The Plain Dealer. Once they sign off on the refund (which is likely a daily batched set of refunds), it still takes two or three days for the banks to communicate in reverse to complete the refund.

This post was originally published in 2016 and was updated on 11/8/2019 to reflect more current information.

Advertisement