Didyou know

Merchants are not supposed to submit a settlement request until the goods change hands or are shipped. For eCommerce merchants this may sometimes require them to re-authorize a transaction when there are back-orders or other shipping delays.

As mentioned earlier authorizations can expire on their own, and in these cases the transaction will need to be re-authorized prior to settlement. Also, the settlement amount must be equal or close to the authorization amount in most verticals. In the restaurant business and other select verticals there is more variation allowed between the authorization and settlement amounts to allow for tipping or other factors that may affect the final settlement amount.

 

Subscribe to our newsletter

 

The Money Flow:Settlement

Settlement – Request for physical payment of funds from the consumer’s credit card.


So the card is good, and the consumer has money, so how do you ask for your money? You do this by processing a settlement request. A settlement is where money actually changes hands. You request a settlement through your acquiring bank who pulls it from the issuing bank.

You typically cannot submit a settlement request for payment until you have shipped the goods or services to the consumer. So for orders that have split shipments, delayed shipments or backorders are in play, you have to wait to settle until you have shipped each of the goods.

Generally speaking if you deliver your goods or services electronically, such as software downloads, subscriptions or content viewing you can immediately request a settlement when you request the authorization.

If you have physical products then you have to wait until the product is shipped to the consumer. In some cases, if your inventory is back-ordered or you are awaiting the products yourself, the authorization may expire before you can process the settlement. In these cases you will have to re-authorize the transactions prior to processing a settlement.

AdditionalResources

  • introduction to ecommerce credit card payments.

    Covers the credit card process flow defining each of the "payment players"; reviews payment concepts such as authorizations, settlements, reversals, chargebacks and the credit card association's high risk programs.

  • Fundamentals for Selecting ecommerce payment options

    The Fundamentals of eCommerce Payment Options online training course provides an introduction to the world of eCommerce payments. The course provides an overview of the main eCommerce payment options that exist today, why businesses use alternative payments, how eCommerce payment options are grouped, as well as providing examples, mind share, market share, and the major players.

  • EMV, chip & Pin is going around the u.s.

    Will the U.S. ever adopt EMV, or are banks and businesses holding out for the next wave of payment technology?

  • Introduction to Credit Card Chargebacks.

    Covers the basic information about chargebacks everyone on a risk team needs to know from the manual review staff to the risk manager. Topics covered include basic definitions of chargebacks and other key terminology to the details of the representment process and evidence needed to dispute a chargeback. 

  • Introduction to Ecommerce Fraud Fundamentals.

    Provides participants foundation level knowledge about the theories, best practices and terminology surrounding electronic payment fraud. Presented in a standard format covering the history of eCommerce Fraud, consumer fraud, merchant fraud, fraudster motivation, fraud trends, identity verification and phishing.

  • Ecommerce Fraud Moving from Tools to Solutions.

    This session covers what constitutes a fraud solution and categorizes the many types of third party fraud tools. The course outlines the common terminology of fraud solutions and describes the capabilities needed to implement a fraud solution. 

Other STages of theMoney Flow

 

Credit Card Payments

  • Credit Card Payments How important is it to take credit cards if you are doing business online; what can you expect from accepting credit cards online?
  • Understanding the Players In this section we will discuss each of the major players in terms of what their role is, which other players they associate with or represent and how they make money.
  • Credit Card Money Flow Learn how money is exchanged between the players within a credit card transaction.
  • Chargebacks and Fraud Liability
    In the card-not-present world the merchant is typically the one paying for the fraud. They already paid and lost the goods, all of the overhead costs they spent on the order, and they will still have to pay a charge-back fee.
  • Credit Card Payments 101 Get answers to common questions about deciding to take credit card payments online.
  • Are you overpaying for credit card processing? Don't be fooled by a really low rate, there is more to your "total cost" for credit card processing than just the rate. Dig under the covers, and negotiate on all the fees.

    The Fraud Practice