What is Settlement? Definition and Meaning - Ikajo Glossary

Glossary

Settlement

What is a settlement?

Settlement used to define the concluding step in getting the payment for some services, the receiver or the financial institution obtains the payment, after this procedure the money is available for the trader. This word describes the actual process of conducting a payment to someone.

It is also used to talk about a payment which was made for buying or selling. The word is applied in commerce and signifies the series of actions when the safety changes hands. Generally, it happens after a couple of days after the deal was made. Once the settlement is successful, all parties of the trade are free from their obligations.

At the same time, the settlement is another word to say that the transaction is complete. The notion of ‘settlement’ appears in the last stages of transaction processing.

So, the merchants send the per-day approved authorizations to the acquiring bank to settle with the help of the payment processor. The acquiring bank submits these batch settlements to the credit card issuer. Commonly, the Issuer performs the settlement payment on the next day (after the acquiring bank request). Then the acquiring bank deposits the amount of money on the merchant’s account.

Example of the term’s usage:

Settlement infrastructures have developed, so we need more facts about the complexities of the payment procedures.

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