Payments glossary · Operations
Settlement
Settlement is the stage at which money for completed transactions is transferred to the merchant's bank account, net of fees, refunds and chargebacks. For card payments it follows authorisation, capture and clearing, usually one to a few business days after the sale.
How Settlement works
For cards, the merchant or its PSP captures authorised transactions and the acquirer submits them to the card scheme for clearing. The scheme calculates what issuers and acquirers owe each other and moves the funds; the acquirer then pays the merchant according to its contract. Scheme rules limit how long a merchant may wait between authorisation and submitting a transaction: Visa allows 10 calendar days for most cardholder-initiated online payments and five for most in-store ones.
The settlement period a merchant sees, often written as T+1 or T+2 where T is the transaction or capture date, is a commercial term rather than a fixed rule. It depends on the provider, the merchant's risk profile, the currency and bank holidays, and new or higher-risk merchants may be paid on a longer delay or have part of each payout held as a reserve. Payouts are usually netted, with fees, refunds and chargebacks deducted first, so reconciling settlement reports against sales is an important back-office task.
Other payment methods settle differently. Instant bank transfers can reach the payee within seconds, direct debits are collected in batches on business days and remain open to refund claims afterwards, and cash-based methods settle only after the customer pays at a store or bank. When comparing providers, check payout frequency, settlement currencies, payout fees and any minimum payout amount.