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Settlement is when the funds from customer transactions are actually transferred from the cardholder's issuing bank to the business's acquiring bank. Think of it like this: Payment authorization is when the issuer says, ?Yes, those funds are available and approved to be used for this purchase.?

Payment settlement involves collecting the funds for the amount recorded for an order. For example, when using credit cards, the settlement process specifically involves contacting the payment system and collecting the required amount of funds against the credit card.

Payment and settlement system means the financial infrastructure that carries out payment and settlement between banks and other institutions. Since banks are the medium through which payments are made, the payment and settlement system manage the interbank transactions and settles them.

Money movement in online payments occurs through nodal accounts, which means that payment gateways cannot earn interest on the money they hold or move on behalf of their customers. This constraint slows down settlements.

When a credit card payment is made, the banks communicate instantly via the merchant's payment gateway. However, the actual funds are not transferred at the same time. This is where the settlement process comes in. It's an interbank process where obligations are met and funds are ultimately discharged.

It is the process where the money is transferred or routed from the customer's bank to the merchant's bank. The payment gateway settlement is just another way of saying that as soon as the customer initiates and completes the payment, the amount will get credited to the merchant's account right away.

Once a transaction has been approved, settlement is the second and final step. This is when the issuing bank transfers the funds from the cardholder's account to the payment processor, who then transfers the money to the acquiring bank.