This is the process of sending the merchant’s daily accumulated transactions for processing, reconciling with the authorizations and settlement. This process should be done after the close of business every day. In the case of a card present merchant, settlement is usually triggered either manually or automatically by the POS system or terminal. The transactions are “batched” and sent off for settlement. The batch is sent to the acquirer and the acquirer sends the batch to the appropriate credit card association. The card association receives the settlement request and credits the acquirer and also sends a debit to the cardholders issuer bank or financial institution.
The purchased goods or services must be delivered or performed before settlement can occur. In the case of mail order/telephone order transactions, the goods must at least be shipped before settlement can occur.« Back to Glossary Index