The process where the transfer of funds between the merchant and the issuing bank is completed post-transaction.
When you pay with a card, your transaction takes a winding route to completion. The final leg of that journey is settlement - the transfer of funds that ties up the payment process. Let’s unpack what happens during settlement and why this financial arc is key.
Settlement is the final stage of card transactions when funds actually change hands between banks. This involves:
Settlement finalizes transactions that were previously authorized and approved. It usually occurs 1-2 days after purchase.
Settlement's core functions include:
Without settlement properly closing transactions, commerce would halt with broken financial flows.
Settlement speeds depend on:
Mastering the intricacies of settlement helps merchants better account for liquidity.
Settlement marks the finish line for card transactions, enabling vital account activities. While invisible to customers, properly executing settlement keeps commerce flowing smoothly.