Which step follows the authorization stage in transaction processing?

In the context of transaction processing, the authorization stage is crucial as it involves verifying that the customer has sufficient funds or credit available for the transaction. Following this stage, the next logical step is batching. This process involves collecting multiple authorized transactions to process them together as one single batch, often at the end of a business day or a specified period.

Batching is significant because it optimizes the transaction processing system by reducing the number of individual transactions that need to be processed, thereby increasing efficiency and lowering costs associated with transaction fees. This grouping of transactions ensures that they are settled and cleared together, streamlining accounting and reconciliation processes for businesses.

Once the batching process is completed, the transactions will proceed to the clearing and settling stages, where the funds are actually transferred between the customer’s bank and the merchant’s bank. Thus, batching serves as a key transitional step before any further action, like clearing or funding, can take place after authorization.