Settlement

Settlement is a crucial process in the payment processing ecosystem, involving the transfer of funds between parties engaged in a financial transaction. Specifically, in the context of payment processing, settlement refers to the procedure through which funds are transferred from the acquiring bank to the merchant’s bank account. This process ensures that merchants receive payment for goods or services sold to customers who use payment cards, such as credit or debit cards.

The settlement process encompasses several key steps:

The settlement process is vital for maintaining the liquidity and cash flow of businesses, enabling them to receive timely payments for their sales. It also plays a critical role in the overall efficiency and reliability of the payment processing system, ensuring that funds are accurately and securely transferred between parties.

In summary, settlement is the process of transferring funds from the acquiring bank to the merchant’s bank account, encompassing a series of steps that ensure the accurate and secure transfer of payment for transactions made with payment cards.