How fast are instant, same- or next-day transfers really in payment processing?

In the current fast-moving business climate, many small businesses struggle with cash flow and bills. This makes it all the more important to receive funds from card payments as fast as possible, not after several days like the industry average.

Instant, same-day and next-day payouts exist as either a standard or additional feature among some (not all) merchant service providers. It is, unfortunately, less clear how and when exactly these payouts settle, as there’s some misleading information out there about it.

Let’s look at how funds are made accessible to merchants and compare the different express settlement options in Australia.

Different parts to settlement

From the point of sale to the merchant accessing the funds, there are multiple steps involved in settling card payments. Typically, the timing of these steps looks like this:

1. The customer pays with their card on an EFTPOS machine or online, and the transaction is authorised in seconds
2. The day’s transactions are sent in a daily batch at the end of the same/next business day
3. The acquiring bank (that manages payment processing) makes a series of checks and moves funds to the business bank account in a few business days
4. The business’ bank account then clears funds, i.e. makes them accessible, immediately or within a few days

This entire process takes 1-3 business days on average. The receiving bank account may add some additional time (step 4 above) to clear funds once they arrive at the bank, and this timing is dependent on the bank’s speed and type of payment accepted.

Payment providers can speed things up by essentially crediting the merchant from a reserve of funds, as opposed to waiting for the transfer to complete in the usual way.

Different cards have different clearance times

It’s worth noting that different cards can have different payout times.

Mastercard, Visa and eftpos cards tend to be fastest, whereas international credit cards such as American Express are slower, since they require more checks involving non-domestic banking networks.

For example, next-day or instant deposits usually only apply to Mastercard, Visa and eftpos, as seen in the small print of the payment terms from e.g. Westpac.

Where to receive funds?

If your goal is to receive funds as soon as possible, you might want to consider transfer solutions to an online business account or prepaid debit card instead of a traditional bank account. So far, the only EFTPOS machine in Australia with an online account that comes with a debit card is Zeller.

Traditional merchant service providers tend to settle payments in a business bank account. This often takes days to process, whereas certain newer payment solutions connected with an electronic money (e-money) account, such as PayPal Business, can transfer funds immediately after each transaction.

Instant transfers

Suffice to say, an immediate transfer and clearance of funds from an in-store or online transaction is the fastest way to get paid.

A word of warning, still: “instant transfers” could take anything from seconds or minutes to a couple of hours to complete, so it is in some cases a slightly misleading name for merchants who need the money the second the customer has paid. But these fast-track transfers usually apply to weekends too.

Instant transfers are commonly offered in an online account only, but some payment companies are able to transfer immediately to bank accounts.

Who offers instant transfers in Australia:

• Square – 1.5% fee for instant transfers to eligible bank account
• PayPal – free instant access in online account; instant transfers to bank account for 1% fee (min. $0.25, max. $10)
• Westpac – instant payouts once a day 7 days a week in Westpac account at any time before 9.30pm AEDT

Another way to get paid straight away is via bank transfer. This can be initiated manually by the customer from their banking app, but is somewhat more tedious than card payment methods.

Same-day transfers

When a payment company offers “same-day settlements”, it means that all transactions accepted before a daily cut-off point – usually in the evening – are settled collectively in one batch so you can access the funds late that night or the next morning.

Transactions accepted after the cut-off point are added to the following night’s payout batch.

Same-day transfers may take place all days of the week, including weekends and holidays, or on business days only. They can either go into a bank account or online account, depending on the provider.

Who offers same-day transfers in Australia:

• Zeller – midnightly payouts 7 days a week in the online Zeller Transaction Account (with debit card)
• Westpac – same-day payouts in Westpac account 7 days a week for transactions accepted by 9.30pm AEDT
• PayNuts – access funds by 11pm 7 days a week if transaction was accepted before 8.20pm (fee applicable)
• CommBank – nightly payouts in CommBank account 7 days a week for transactions accepted by 9.30pm AEDT
• Tyro – nightly payouts in Tyro Bank Account 7 days a week (requires leaving a % of daily takings in account each day)
• NAB – payouts in NAB Business account by 11.30pm AEST 7 days a week if transaction was accepted by 9.30pm
• Till Payments – nightly payouts in eligible bank account 7 days a week for transactions accepted by 6pm/8.25pm AEST (fees apply)
• Mint Payments – access funds the same business day (fee applicable)

It may not be a default setting to receive funds this fast, in which case you might need to apply for it through your payment provider.

Next-day transfers

Many payment companies offering EFTPOS, invoicing and online payments boast transfer of funds as soon as the “next day”. In most of the cases we found, however, they mean the next business day, not weekends or national holidays, for payments accepted before the daily cut-off point agreed upon during sign-up.

For example, a domestic Visa card transaction accepted on an EFTPOS terminal before the daily settlement batch is processed on a Friday evening should arrive Monday, 3 days after, whereas the same transaction completed on a Monday arrives Tuesday, the day after.

Who offers next-day transfers in Australia:

• Zeller – next business day in eligible bank account (faster available)
• Square – 1-2 days in eligible bank account (faster available)
• PayNuts – next business day in eligible bank account (faster available)
• Tyro – 1-2 business days in eligible bank account (faster available)
• Till Payments – next business day in eligible bank account (faster available)
• Mint Payments – 1-2 business days in eligible bank account (faster available)
• Smartpay – next business day in eligible bank account

Overview of fast transfer options