Once a transaction has been approved, settlement is the second and final step in the payment process. This occurs when the issuing bank transfers funds from the cardholder's account to the payment processor, who then sends the money to the acquiring bank. The company will then receive the authorized funds in its merchant account. Settlement is an important part of the payment process, as it ensures that the funds are transferred securely and accurately.
It also helps to protect both parties involved in the transaction, as it ensures that the cardholder's funds are transferred to the merchant's account without any issues. The settlement process typically takes a few days to complete, depending on the payment method used. For example, credit card payments may take up to three days to settle, while debit card payments may take up to two days. In some cases, a payment may be settled but not yet cleared.
This means that the funds have been transferred from the cardholder's account to the merchant's account, but they have not yet been released for use. This can happen if there is an issue with the transaction or if there is a delay in processing. It is important for merchants to understand the meaning of payment settled, as it can help them better manage their finances and ensure that they receive their payments on time. By understanding how settlement works, merchants can also ensure that their customers' payments are processed securely and accurately.
Overall, payment settled is an important part of the payment process and helps to ensure that both parties involved in a transaction are protected. By understanding how settlement works, merchants can better manage their finances and ensure that their customers' payments are processed securely and accurately.