Settlement
Settlement is the transfer of cleared transaction funds from the card network or payment rail into the merchant’s bank account, net of fees, chargebacks, and any reserve withheld. Settlement cycles for high-risk merchants typically run T+3 to T+30, compared to T+1 or T+2 for standard-risk accounts.
A jump from a T+2 to a T+14 settlement cycle on 300,000 EUR of monthly volume ties up roughly 140,000 EUR of cash flow at any moment, which is often the real cost operators miss when comparing acquirer offers on headline rate alone. Negotiating settlement speed matters as much as the percentage fee.
A rolling reserve is a percentage of each settlement an acquirer withholds for a set period, typically 90-180 days, to cover potential future chargebacks or refunds before releasing it back to the merchant.
An acquirer is the bank or financial institution that processes card payments on a merchant’s behalf, settling funds from the card networks into the merchant’s account.
Correspondent banking is the arrangement where one bank holds accounts for and executes payments on behalf of another bank, usually to reach currencies or jurisdictions the first bank cannot access directly.
A Payment Service Provider aggregates payment processing for merchants, typically holding the direct acquirer relationship itself and onboarding merchants under its own risk appetite, rather than each merchant applying to an acquirer directly.