What are the stages of a payment? How does payment processing work?

What are the stages of a payment? How does payment processing work?

What are the stages of a payment? How does payment processing work?


Anyone unfamiliar with how payment processing works might easily assume that when someone makes a payment, either by credit card or e-check, that the money simply moves from the credit card or bank account into the merchant's bank account in a single step. If only all things in life were so simple!

The reality is, payment processing is a complex process involving multiple parties, security checks, and fund transfers. All of which are designed to ensure that the right person gets paid the right amount as quickly and securely as possible.

If you'd like to know more, the following is a basic outline of how payment processing works.

Payment is made

This is the point at which your client makes the payment through your Sunrise invoice, either by credit card or ACH. This process is fairly quick and straightforward.

The checkout is verified

Once the payment is made, our payments processor gets to work verifying the payment. They are checking with the credit card or ACH issuing bank to make sure the funds are available and that all the details provided by the payer line up. For credit cards, this process takes just a few minutes. For e-check, the process can take 1-3 days.

There are security checks taking place here as well, which typically takes just minutes to complete. In some rare cases, if our payments processor needs to investigate further, the process can take longer. This is all done in an effort to protect you from fraud.

If our payments processor cannot reliably find all the information they need to verify the payment, or they feel the payment may be a risk to you, they may fail the payment at this stage. If this happens, no funds are collected from the payer's credit card or bank account and the transaction is ended. 

In most cases, the checkout is successfully verified and the funds are collected from the payer's credit card or bank account.

The funds are stored

At this stage, the funds are deposited into your payments account, where they will await transfer to your bank or credit union.

Because payment processors are issuing tens of thousands of transfers to banks each day, they must send these transfers in batches at set times so the banks can process them reliably.

For US customers, these bank transfers start at 4 pm EST, Sunday through Friday.

For Canadian customers, the transfers start at 3 am EST.

The funds are released

This is when the above-mentioned transfer to your bank account begins. This transfer may contain a single payment, or multiple payments depending on how many payments you receive on a given day prior to the transfer time. Any payments made after the transfer time begins would be included in the next day's transfer.

You may see an email from us at this time, letting you know a withdrawal has begun. The term withdrawal is used by payment processors because the funds are coming out of the above-mentioned payments account, to be sent to your bank account.

A better way to think of withdrawal in this sense is as a transfer or deposit. 

The funds are captured

At this stage, the receiving bank or credit union has indicated to us they have received the funds. This event typically occurs by the next business day after the transfer was started, but some smaller banks or credit unions may take longer.

Note that your bank capturing the funds does not mean the funds are in your bank account yet. If you inquire with your bank at this stage, they likely won't be able to see any incoming funds connected to your account until the next and final stage is complete.

The funds are received

The final stage of the process is the funds actually showing up in your bank account. In most cases, the time between funds captured by the bank or credit union and the funds being added to your bank account is just a few hours, but some smaller banks or credit unions may take longer.

As you can see, there are many stages to processing a payment, with many parties involved in the process. The goal with every payment is to process it as quickly and as safely as possible for you.


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