Financial Transactions Different Types and Categories

Different types of financial transactions occur on a particular day or period. Institutions record such transactions differently, including batch processing. 

Some transactions are recorded in real-time because recording and payment systems are integrated. For example, in a transaction where a bank customer sends the funds online to one of their family members’ bank accounts, such an online transfer will be recorded on a real-time basis as an individual transaction.

Types and Categories of Financial Transactions

Different types of transactions are incurred or executed by financial institutions or customers. When we talk about banking transactions, the following are some of the broader transactions recorded in the banking systems:

ATM and Debit Card Transactions: When cash is withdrawn from the bank’s ATM, then the cash withdrawal transaction is recorded in the customer’s account as a debit transaction on a real-time basis. Branch Transactions: These transactions include payments and withdrawals. Branches pay for overheads and other miscellaneous payments through bank accounts. Check Clearing Transactions: A customer may deposit a check in their bank, which is first lodged for clearing and then credited to the relevant customer’s account after completing the necessary clearing process.Fund Transfers: This includes transferring funds from one account to another. This transaction may be between two individuals, an individual and a company, or between two companies or entities. Funds may be transferred outside the country to another bank’s account, or the funds may be received from another country as a home remittance.  Online Bill Payments: Residents make payments through their personal accounts to settle their monthly or periodic bills.

The following are some details about the batch and real-time transactions.

Batch transactions are processed in a consolidated group form at the end of the day. For batch transaction processing, transactions must be combined in the relevant batch for accurate recording. Batch transactions need to be posted in the following order: 

Credits are posted to the account first. Credits include deposits, reversals, and adjustments of transactions from previous business days that have not been posted in real-time. Interest is credited at the end of the batch. Debits are posted to the account second. Debit transactions include cash withdrawals, checks, online payments, and debit card transactions. Debit card transactions are posted chronologically or when records indicate the transaction is made. Still, checks are usually posted by dollar amount in ascending order within the group noted for that type of debit item. Fees are posted to your account last. Most fees post on the same day they are incurred. Certain fees, including overdraft fees, are posted on the business day after an overdraft occurs on an account. Fees are posted in order from lowest to highest dollar amount.

​​Real-time transactions are instantly processed as they are incurred. At a bank, these include the following:

Transfers between accounts and payments of loans made through an online banking channel, orCertain reversal transactions related to prior credit or debit posted to the customer’s account.

Final Thoughts

Financial transactions refer to the exchange of monetary value between two or more parties. These transactions can involve the transfer of money, securities, or other assets, and can occur between individuals, businesses, or even governments. Financial transactions can be conducted in a variety of ways, including through cash, checks, credit cards, wire transfers, and electronic payments. Financial transactions are an essential part of the modern economy, facilitating the exchange of goods and services and providing the means for individuals and businesses to manage their finances.

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