Settlement

Settlement refers to the process through which a merchant has the money earned from customer transactions moved into the business's bank account. In most cases, the merchant sends a group or ”batch” of transaction authorization codes to their payment processor. The processor sorts the transactions and submits them to the appropriate issuer. After the transactions are verified, the funds are sent through the payment processor and to the merchant via electronic funds transfer (EFT).

For most modern merchants, settlement is scheduled to happen automatically at a set time each day. Unsettled batches are said to be “open” and are only closed once settlement occurs. At that point, the transactions have been posted to the correct cardholder’s account and the merchant has full access to the funds. Settlement time frames will vary by processor, but on average takes 1-5 days.