The money actually moves
Settlement turns approved transactions into money in the operator's bank account.
Authorisation reserves an amount. Capture confirms it. Settlement moves it. In between, the networks net out positions between acquirer and issuer, fees are deducted, currencies are converted where they differ, and a payout lands on a cycle.
The elements involved.
- Authorisation → capture → settlement
- Three distinct stages: reserve, confirm, move.
- Clearing
- The networks net positions between acquirer and issuing banks before funds move.
- Settlement cycle and timing
- Funds arrive on a cycle (commonly T+1 / T+2), governed by batch cut-offs, weekends and banking holidays.
- Gross vs net settlement
- Whether fees are deducted before payout (net) or billed separately (gross). It changes what lands.
- Fees
- Interchange (issuer), scheme fees (network), acquirer markup — together the merchant service charge.
- Settlement currency and FX
- Conversion and rate apply when transaction, settlement and account currencies differ.
- Settlement files and reports
- The structured records describing each payout and its transactions — the raw material for reconciliation.
- Funding structure
- One payout, or split funding across multiple properties, entities or merchant IDs.
Why it matters
Settlement is where cash-flow predictability and fee transparency live. Without a clear view of cycle timing and deductions, a property knows what it sold but not what it will receive or when — which makes forecasting and fee control guesswork.
Key terms.
- Capture
- confirming an authorised amount for collection.
- Clearing
- netting between acquirer and issuer.
- Settlement cycle (T+n)
- days between transaction and funds arriving.
- Interchange
- the issuer's share of fees.
- MDR / MSC
- the total merchant fee.
- Payout
- the deposit of net funds to the bank account.