Unsettled Transactions

Unsettled transactions refer to those transactions that have been authorized but not yet finalized or captured for settlement. In the context of payment processing, like with systems provided by Signio, this stage is crucial as it precedes the actual transfer of funds from the customer's to the merchant's account.

When a transaction is initiated, it first goes through an authorization phase where the payment details are verified and the funds required for the purchase are held by the customer's bank. However, these funds are not immediately transferred to the merchant. The transaction remains in an "unsettled" state until it is captured.

Capture involves the process of confirming that the transaction is complete — for example, the goods have been shipped or the service has been provided — and instructing the bank to transfer the funds. Signio, like many payment processors, automates this process by capturing and settling these transactions typically on a daily basis.

Here are some transaction types that are typically flagged for automatic capture by Signio:

It’s important to note that until transactions are captured and settled, no actual money changes hands, even though the customer’s available balance might reflect the decrease because of the hold placed during authorization. Understanding the distinction between unsettled and settled transactions is vital for managing cash flow and reconciliation in any business that processes electronic payments.