Settlement
The process of moving authorized funds from cardholders' accounts to your bank account, typically initiated when you close your daily batch.
Settlement is the financial transfer that moves authorized transaction funds through the card networks and into your merchant bank account. Authorization reserves the funds; settlement actually moves them.
For most card-present merchants, settlement happens once per day when the batch is closed (either manually or automatically). Your acquiring bank receives the batch, calculates interchange and fees, and initiates an ACH transfer to your DDA. Standard funding timelines are 1–2 business days after batch settlement.
Timing matters for interchange: Visa and Mastercard require batches to settle within 24 hours of authorization to qualify for card-present interchange rates. Batching after 24 hours can trigger a downgrade. This is why auto-batch configuration (set to close each evening) is standard practice.
Same-day and next-day funding options are available through most processors for merchants who need faster access to cash flow. These programs often carry a small premium, typically $0.05–$0.10/transaction or a percentage.
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