What is a Transaction Settlement?
What is a bank settlement? Even those online businesses that sell many products daily to customers from all over the world often have a poor understanding of how settlement of payment card transactions really work. A bank settlement is a process when the seller receives money for the completed transaction by the buyer. When the customer confirms payment for goods or services, their issuing bank sends the money to the seller's payment processor. The latter transfers the required amount to the seller's bank account, and the transaction is settled. The term "settlement" can also be used to refer to the amount that the acquirer has transferred to the merchant.
Considering merchant payment settlement, it is also worth knowing that there is a difference between making payments with a debit and credit card. In the case of payment with a debit card, the funds are debited directly from the buyer's account. If the consumer pays for the purchase using a credit card, the issuing bank transfers the required amount to the acquirer. The cardholder must then reimburse this amount (possibly with an extra fee) within a certain time. When the acquirer receives the funds, it transfers them to the merchant's settlement account. It is also worth remembering that the acquirer may charge a fee for their services.