What happens in the working day between the transaction and the payout?

After an electronic payment transaction occurs, a series of steps comprising acquiring and settlement unfold. These steps are essential in transferring funds from your consumer’s bank account to the bank account of the merchant or entrepreneur.

The initial phase is the “clearing” stage. This phase involves the exchange of files and financial information among various acquirers and banks/payment institutions for all transactions of that day. Information such as transaction volume, amounts, dates, and specific institutions involved is shared during the night following the day on which the transaction occurred. At this stage, several security checks are performed to validate the financial flows.

Following clearing, the actual transfer of funds  will be done. This “settlement” process ensures that the transaction amounts are paid out to the merchant’s bank account. When a consumer purchases goods or services using a payment card, they have a contract with a bank/ payment institution. Conversely, the merchant has a contract with an acquirer, such as Axepta BNP Paribas, to process these transactions. Ultimately, the bank/payment institution of the consumer sends the funds through the payment card schemes to the acquirer, who then provides the payout to the merchant. This network of interactions of various parties explains why a next-day processing period is the minimum.

Finally, this process incurs several fees, which are being settled in the “reconciliation” stage. First, an acquiring commission per transaction that the merchant pays to the acquirer is deducted. Next to that, the acquirer also bears scheme fees to the payment card networks for utilizing their network, and interchange fees to the bank/ payment institution of the consumer. Consequently, before funds are paid out onto the merchant’s bank account, these fees are calculated and deducted from the payout amount.  

This complex process of transaction clearance, settlement and reconciliation shows that a next-day payout is remarkably quick. While a payout to your bank account may appear straightforward, the underlying process is complex, involving fund transfers and fee calculations across multiple entities.