Settlement

Authorization and settlement are different events. Authorization reserves funds on the cardholder’s account in about a second; settlement is the slower back-office process that moves real money. Between the two sit batching, clearing, and funding. The gap between a sale and usable cash is one of the most operationally important numbers in a merchant’s life.

How it works

At the end of each day, the merchant’s processor batches captured transactions and submits them for clearing. The card networks calculate what each issuer owes each acquirer, issuers transfer funds minus interchange, and the acquirer funds the merchant’s bank account minus its own fees. Typical funding is one to two business days after batch; next-day funding is common with early cutoff times, and some programs offer same-day funding at a premium. For a merchant batching $10,000 on Monday under interchange-plus pricing, roughly $9,750 might land Wednesday morning, with the month’s fees either netted daily or debited in a lump at month end depending on the program.

Under the PayFac model there is an extra hop: the facilitator receives settled funds into a master account (often a for-benefit-of account at the sponsor bank) and disburses to sub-merchants per its own funding schedule. Reserves complicate timing further: a rolling reserve holds back a percentage of volume for a fixed window against future chargebacks.

Why it matters

Funding speed, cutoff times, weekend handling, and how fees are netted determine a merchant’s cash flow more than a few basis points of rate ever will. Ask any provider for its funding schedule in writing, including how reserves and holds are triggered and released.

QorPay manages settlement and sub-merchant funding on QorCommerce, with funding activity reported per merchant account through QorCommerce Reporting.