Clearing & Settlement

The behind-the-scenes process that moves money between banks after a card transaction is approved.

If authorization is a handshake, clearing & settlement is the money actually changing hands. After your purchase is approved, the merchant still hasn’t been paid. Clearing is the accounting step—banks confirm the transaction details, double-check everything, and prepare for movement. Settlement is when funds flow: the issuing bank sends money to the acquiring bank (usually through Fedwire, CHIPS, or other networks), who then deposits it into the merchant’s account—minus everyone’s cut. This process typically takes 1–3 business days and is where the payments industry quietly makes billions in volume-based fees.