Settlement & Reconciliation
- Settlement = When card networks/banks actually move money between accounts (T+1 to T+3)
- Funding = When your processor deposits money in YOUR bank account
- Reconciliation = Matching what you sold vs. what you got paid (they won't match exactly due to fees, chargebacks, timing)
- Deposits ≠ sales. Understand the fee waterfall: interchange + assessments + processor markup
Settlement is the step that actually moves your money, and it's the one nobody explains.
Popular in This Section
- Settlement Lifecycle - The 6 phases from capture to funding, including clearing vs settlement
- Reconciliation - Three-way matching, common discrepancies, and automation strategies
- Money Flow & Fees - Who pays whom, interchange breakdown, net vs gross settlement
- Settlement Timing - Batch cutoffs, weekend delays, and faster funding options
Overview
Authorization approves a sale. Capture commits to it. Neither one moves money. Settlement does.
Tap a card for $5 and it doesn't jump to the coffee shop. It gets bundled with thousands of other sales, run through clearing, skimmed at every step, and dropped in the merchant's bank 1-3 days later.
Three reasons that matters:
- Cash flow. A Friday sale might not land until Tuesday.
- Chargebacks. They can show up weeks after settlement and claw back money you'd counted.
- Your books. What you sold and what you got paid won't match. You'll need to know why.
Settlement Topics
Quick Reference: Settlement Timeline
| Scenario | Captured | Batched | Settled | Funded |
|---|---|---|---|---|
| Monday 2pm, 5pm cutoff | Monday | Monday 5pm | Tuesday | Wednesday |
| Monday 6pm, 5pm cutoff | Monday | Tuesday 5pm | Wednesday | Thursday |
| Friday 2pm, 5pm cutoff | Friday | Friday 5pm | Monday | Tuesday |
| Friday 6pm, 5pm cutoff | Friday | Monday 5pm | Tuesday | Wednesday |
Quick Reference: Common Fee Ranges
| Fee Type | Typical Range | Who Receives |
|---|---|---|
| Interchange (debit) | 0.05% + $0.21 to 0.80% + $0.15 | Issuing bank |
| Interchange (credit) | 1.50% + $0.10 to 2.50% + $0.10 | Issuing bank |
| Network assessment | Not published. Assumed 0.14% + $0.02 | Card network |
| Processor markup | 0.15% + $0.06 to 0.50% + $0.25 | Your processor |
| Effective rate (total) | 2.0% to 3.5% | All parties |
That markup range isn't an estimate. It's Helcim's published schedule, verified 2026-08-02. In person it runs +0.40% + 8c at the entry band, down to +0.15% + 6c at $1M-5M a month. Online it's +0.50% + 25c down to +0.15% + 15c. Stax charges 0% markup plus 8c in person, on a monthly subscription set by annual volume. Most other processors bundle the markup into a flat rate and never break it out.
On flat-rate pricing, none of this shows up on your statement. Square, Stripe, Braintree, PayPal and Shopify Payments charge one number and absorb the split. It's simpler to reconcile and impossible to audit. That's the trade.
Next Steps
Just learning settlement?
- Start with Settlement Lifecycle → Understand the 6 phases
- Then Money Flow → See where fees go
- Finally Reconciliation → Match your books
Optimizing cash flow?
- Settlement Timing → Understand cutoffs and delays
- Holds and Reserves → Why funds get held
- Payout Strategy → Faster funding options
See Also
- Authorization and Capture - Transaction flow
- FX and Settlement - International settlement
- Chargebacks - Dispute impact on settlement
- Reading Statements - Fee breakdown
- Interchange - Fee structures