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.


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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.


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Other STages of theMoney Flow


Credit Card Payments

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