When your bank account says pending what does that mean

Pending transactions are payments that would normally go into or out of your current account within 7 days. They could be a debit card payment or a cheque you’ve paid in.

When you pay in a cheque for example, it’ll show up as a pending transaction. Your account balance will go up to reflect the fact you have more money. However those funds won’t be available until the cheque has cleared. This is one of the reasons your account balance and available balance can differ.

When you use your debit card to pay for something, it’ll show up straightaway in your account as a pending transaction. It’ll reduce your available balance, but not your account balance. This is because the money has been reserved, ready for the company to take, but hasn’t left your account yet.

We’ll stop reserving the money after 7 days, so that the money is available for you to spend. The pending transaction will no longer show in your account and your available balance will go back up.

However, it’s a good idea to keep enough money in your account to cover the payment. That’s because some can take up to 120 days to go through. So, the money could still be taken at a later date.

When a payment is marked as “pending” it means that the payment process still needs to be completed. In most cases, this simply means that you need to wait for this to happen. In some cases, however, the merchant may need to take action.

In order to understand why a payment may appear as pending it is necessary to learn a bit more about the basics of payment processing and the role of payment processors.

The basics of payment processing

Most payments go through some kind of authorisation process before they are presented for payment. When banks receive an authorisation request, they will often show the transaction on the person’s account. Typically, they will mark it as pending payment (or payment pending). This means that they are ringfencing the account holder’s funds on the expectation that they will need to make payment later.

Once the payment request is presented, the bank will release the funds. This is, however, not always the end of the story. Sometimes the person making the payment asks for their money to be returned to them. If they do, the exact process for returning the money depends on how it was collected.

The role of payment processors

Large companies often have their own payment-processing facilities. They simply need to connect to banks for the actual transfer of funds. Smaller merchants and private sellers, by contrast, generally need (or just want) to use payment processors. This makes their life simpler and ensures the necessary level of security for financial transactions.

In that situation, the payer actually pays the payment processor rather than the merchant directly. Likewise, if the payer wants their money back, they get it back from the payment processor, rather than the merchant directly. 

To reduce their exposure to risk, payment processors sometimes wait a short time before passing funds on to merchants. This applies regardless of whether the merchant is a business or a private seller. 

Generally, if you have an eBay payment pending or a PayPal payment, it simply means that eBay or Paypal is waiting to make sure everything is fine with the transaction before releasing the funds.

Pending PayPal payment - the importance of security

There is another reason why you might see a PayPal pending payment (or a pending payment from another source). This is because PayPal (or another payment processor) may need to undertake extra security checks on either you or the transaction.

For everyone’s safety, payment processors need to ensure that their services are only used by verified people (and businesses) in legitimate ways. Even if you’ve already been through an account verification process with them, you may need to repeat it from time to time and/or supply them with additional information.

Managing pending payments

Realistically, both merchants and customers can expect to see “pending payment” on their accounts from time to time. 

Managing pending payment as a merchant

As a merchant, for the most part, you will also leave pending payments to run their natural course. For cash flow purposes, you may find it helpful to familiarise yourself with your payment processor’s guidelines on how long it takes to process transactions. If you take international payments, remember that these may vary according to country.

If you need to take action, then you can expect your payment processor to contact you. Usually, this will be by email. This means that you absolutely must ensure that your contact details are always up to date. 

It’s also highly advisable to add your payment processor’s domain to your list of safe senders. This will minimise the risk of an important email being sent to spam.

Managing pending payment as a customer

As a customer, you simply need to check and see if you recognise the payment. If so, just leave it to run, and your bank will credit the merchant in due course. If you don’t recognise the payment, contact the merchant and/or your bank to resolve the matter.

Pending card payments

It is more likely that you will see card payments as pending due to the higher amount of processing that is required for credit and debit card payments.

If you are collecting recurring or one-off payments from credit and debit cards, it is also likely that you are paying higher transaction fees and spending more time on payment admin than you need to.

Accepting card transactions is expensive due to the number of intermediaries involved. Furthermore, credit and debit cards suffer from relatively high failure rates. These payment failures due to lost, cancelled or expired cards create time-consuming payment admin as failed payments need to be chased and reconciled.

Case study - 97% success rate

Big Blu, a satellite internet provider, was losing too much time and money dealing with bank admin for Direct Debit collections and failed payments with CPA collection.

Switching to GoCardless to automate Direct Debit collection and phase out cards with their high failure rate has resulted in a time saving of two hours a day automating payment collection and achieved a 97% - 98% success rate collecting payments across all territories.

“Between 99% and 100% of our payments go through GoCardless today, which has saved us a huge amount of time and money. Our monthly accounts used to take three weeks to put together – now it’s about five days and the team can get an up-to-date picture of financial performance at any given time.” - Craig Allen, Head of Billing & Credit Control

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Automate payment collection with Direct Debit via GoCardless. It's more affordable, more secure and more reliable than accepting credit and debit card payments.

We Can Help

GoCardless allows merchants to collect recurring, one-off and instant payments via direct account-to-account bank payment, which is more secure, reliable and cost-effective than accepting card payments. Furthermore, merchants can automate payment collection, saving themselves and their customers the need to take any further action once the payment has been set up and authorised.

GoCardless also provides merchants with a merchant dashboard from where they can easily see the status of payments, set up new ones or cancel old payments. 

Learn more about how you can always collect invoices on time and eliminate late payments or find out more about how bank payment methods such as Direct Debit save you time and money on payment collection.

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