Settlement is the final step in the transaction process when funds move from the customer’s bank to the merchant’s bank account, completing the initial purchase.
The transaction lifecycle has the following stages:
- Authorization: During authorization, the merchant checks to make sure the customer’s account is able to make a purchase (the payment card hasn’t been reported lost or stolen and the account has enough funds to cover the transaction).
- Batch: A batch of transactions is collected over a period of time — usually a day — and all settled at once. Not all merchants choose to batch their transactions. Some opt for real-time settlement.
- Settlement: The transaction amount — minus fees — is deposited into the merchant account.
Settlement usually happens one to three business days after a transaction, depending on the processor and bank policies. Delays can occur due to batching schedules, authorization holds, weekends, or risk reviews.
Fast, predictable settlement is essential for managing cash flow and planning operations. Whether you rely on daily settlements to meet payroll or weekly batches to simplify accounting, AltoPay ensures you have clear visibility into your payout timelines. We also help optimize settlement flows for high-volume businesses to reduce reserve holds and keep revenue moving.
For more than a decade, Jessica Velasco has been a thought leader in the payments industry. She aims to provide readers with valuable, easy-to-understand resources.
