Most merchants funds will be held for a number of days before disbursing. These are called hold days. Hold days do not include settlement or disbursement data transit times within the banking system, weekends or holidays. After an ACH payment settles on the gateway and is transmitted into the banking/Federal Reserve system, it can still be returned by the receiving bank for a variety of reasons such as insufficient funds. incorrect or non existent bank account number. Hold days mitigate the risk of these returns. If returned payments come in after funds have been disbursed to the merchant, these funds must then be collected back from the merchant’s bank account. Hold days can help mitigate this risk by allowing a short period of time for most returns to come back first, before disbursing funds to the merchant’s bank account. ACH transactions generally take 2 business days to process without any hold days, and one business day for the merchant to see it in their checking account. So, if a merchant has 3 hold days, it will take 5 business days to process and an additional business day for the merchant to see it in their account.
If for example, if a merchant has 3 hold days and they run a transaction on a Friday after cut-off time, it will not settle until the following Monday. It will then generally take about 24 hours for ACHeck21 to receive the funds, then we hold the funds for 3 business days, then send the money the day after the 3rd business days. So, if the transaction was ran Friday after cut-off time, it then settled Monday, held Tuesday, Wednesday, Thursday, then disbursed Friday, causing the merchant to see the funds in their account the following Monday. If this transaction was submitted before cut-off time, the timeline is settlement same day, held Monday, Tuesday, Wednesday, disbursed Thursday, and seen in the merchant's checking account that following Friday.
Any bank holidays that occur along this timeline are not counted as either hold days, settlement or disbursement days for purposes of determining when merchants should expect to see deposits posted to their bank account.
If merchants want to reduce hold days, this may be negotiated based off of several factors; industry of business, time using our service, amount of money held in checking account linked to ACHeck21, or a cash reserve. A cash reserve is a certain amount of money either given to ACHeck21 to hold or collected out of following transactions and held by us to be used in emergency scenarios such as fraud. If a reserve is collected and no such scenario arises, once the merchant ends their services with us, that reserve will be refunded in full to the merchant.
Updated 4 months ago