Clearing

Clearing in the payments industry refers to the process of transmitting, reconciling, and settling financial transactions between banks or financial institutions. It involves verifying the details of each transaction, such as the transaction amount, account information, and authorization, to ensure accuracy and security. 

Clearinghouses act as intermediaries between the parties involved. The main role of clearing is to ensure that funds are transferred accurately from the payer's account to the payee's account, typically within a specified timeframe. 

This process plays a crucial role in payments by facilitating the efficient and secure exchange of funds between different financial entities. This contributes to the smooth operation of financial transactions, and fosters trust and reliability in the financial ecosystem.