Settlement Explained
Settlements refer to the process of transferring funds from card payments directly into a merchant’s business account. Let’s break down what this entails.
What is a Payment Settlement?
A settlement is the concluding phase of the payment process, where the acquiring bank retrieves funds from the cardholder’s issuing bank through the payment gateway. These funds are then deposited into the merchant’s business account, after deducting relevant processing fees.
How does the Settlement process work?
To fully comprehend settlements, it’s essential to understand their role within the payment process, which involves the following steps:
-
Initiation: The process begins when a customer makes an online purchase, initiating a payment request.
-
Authentication: Monek encrypts the payment information and conducts fraud checks before proceeding. This data is then shared with acquiring systems and sent to card schemes for further risk analysis.
-
Authorisation: The acquirer securely passes the information to the issuing bank to:
- Verify the cardholder’s details.
- Ensure there are sufficient funds.
- Confirm that the card is legitimate and has not been compromised or stolen.
If everything checks out, the issuing bank authorizes the payment, and the customer is notified that the purchase was successful. However, the funds are not yet transferred from the customer’s account to the merchant’s bank.
-
Clearing: The transaction undergoes a reverse verification process with the relevant card schemes and issuing bank to clear the funds.
-
Settlement: This step is divided into two stages:
Card schemes (e.g., Visa and Mastercard) debit the customer’s issuing bank account and credits Monek the funds, also deducting interchange and network fees immediately or at an agreed later date, depending on the settlement type. Monek then settles by transferring the funds to the merchant’s bank account. By understanding these steps, you can gain a clearer picture of the intricate and vital process of payment settlements, ensuring secure and efficient financial transactions.
FAQs
When will funds be deposited into my account?
Your earnings will be deposited into your account one business day after they have been settled (submitted to the acquiring bank).
Settlements are processed daily at the end of your 24-hour banking window, typically by 2 PM.
Card payments received from Monday to Thursday are processed on the same day and sent to your issuing bank the next day.
Payments are not processed during weekends, so transactions made on Friday, Saturday, and Sunday are issued on the following Monday.
When will I receive my weekend earnings?
Funds are not deposited into your account over the weekend.
Payments received on Friday, Saturday, and Sunday will be deposited into your account on the following Monday.
Do I need to run an end of day report to receive my earnings?
Running an End of Day report on your terminal is not required to receive your earnings via Next Day Settlement. Your terminal will automatically batch your earnings for settlement at the end of the daily banking window.
What’s the difference between Gross and Net settlements?
The difference between gross and net settlements is based on your agreement with Monek. Deductions may include gateway fees, acquiring fees, card scheme fees, or interchange fees, among others.
- Gross Settlements: Transactions are settled without immediate deductions. Deductions are taken from the merchant’s bank account at a later date, as per the agreement with Monek.
- Net Settlements: Deductions are made immediately upon settlement of funds.
How can Monek Help?
As a PCI DSS compliant payment service provider and acquirer with over 7 years of experience in the payments industry, we are dedicated to helping businesses offer a seamless and secure payment experience for their customers. Our comprehensive payment platform can streamline your card payment process with global acquiring, alternative payment methods, customizable card issuing, and in-house risk and fraud management solutions.