Technical
Settlement
Definition
Settlement the process of transferring funds from captured transactions to the merchant's bank account. Settlement typically occurs in batches (daily or weekly). Timing varies by acquirer and merchant agreement - next day, T+2, or weekly. Net settlement deducts fees and chargebacks from gross volume. Faster settlement improves cash flow but may come with higher costs.
Related Terms
Capture
The process of finalizing a previously authorized transaction for settlement. Capture confirms the transaction amount and initiates fund transfer. Must occur within the authorization validity period (typically 7-30 days depending on MCC). Some merchants auto-capture immediately; others delay until fulfillment. Pre-auth + delayed capture is common for hotels, car rentals, and advance bookings.
Batch
A collection of transactions submitted together for settlement. Merchants 'close' their batch daily to initiate settlement of that day's captured transactions. Batch timing affects settlement speed. Some gateway/processor combinations auto-batch at set times; others require manual batch closure. Batch reports are essential for reconciliation.
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