To understand how specific service providers conduct transaction settlement processing, it is important to understand the two types of service provider host platforms — Terminal Capture and Host Capture.
Terminal Capture or transaction settlement platforms process funds only when specifically instructed to do so. As a result, Terminal Capture hosts require end-of-day settlement of all authorizations, voids, returns, etc. processed throughout the day via a batch process in order to complete the funding process. Batching all the transaction records is the creation and transmission of a settlement file.
Terminal Capture services are convenient for merchants who make adjustments to original transaction amounts prior to capturing them for settlement.
Host Capture platforms conduct automatic, end-of-day settlement processing for all transactions with a CaptureState of ‘ReadyForCapture’ without further action by the merchant. Transactions authorized throughout the day are recorded and stored in a database on the service provider processing host. When a change to the original transaction amount is required after initial authorization (such as a partial authorization reversal), the change must be transmitted to the service provider.
Two primary conveniences of Host Capture platforms include:
- Typically only a transaction ID and relevant metadata need to be stored by the application subsequent to the initial authorization.
- Host Capture reduces the potential for higher interchange rate charges due to a failure to meet industry guidelines associated with prompt transaction settlement.
Note: Generally, a downgrade occurs 24 hours after the initial authorization of a transaction. It is important to note that the ‘aging off’ of a transaction is against Visa and MasterCard mandates. When using the operation flow of Authorize > Capture, best practice is to capture within 24 hours. If a transaction is not captured after 7 days (aging off period), the application should Undo the original Authorize transaction and implement either Tokenization or another process to re-initiate the authorization process.
Batch Release Support Host Capture service providers supporting batch release processing gives merchants a manual method for transaction settlement by triggering the immediate processing of all captured transactions. This results in merchant settlement and funding prior to the cut-off time established by the service provider.
Interchange rates are charged to merchants by the major card brands (Visa, MasterCard, American Express, Diners, and Discover) for processing Credit or PIN Debit transactions. Interchange fees are assessed on a per-transaction basis.
Several factors can impact interchange including timeliness of settlement, completeness of transaction data and industry data requirements such as AVS data for MOTO transactions and CVV data for eCommerce transactions. For additional guidance regarding Terminal Capture, Host Capture, batch release support, or interchange fees, please contact EVO Snap* Customer Support.