Сеттлмент
Settlement
Settlement is the calculation between participants in a payment or gambling chain: transferring money for transactions and settling obligations net of fees within an agreed timeframe.
What is Сеттлмент (Settlement)?
In fintech and payments, settlement is the actual transfer of funds from an acquirer or payment service provider to a merchant for accepted transactions. The amount is paid out after deducting MDR, refunds, chargebacks and reserves, and the money reaches the account within an agreed period.
## How it works
The cycle goes like this: the customer pays, the transaction is authorized, clearing runs through the banking network, and then the acquirer generates a report and pays out the net amount. The period between the transaction and receipt of funds (T+0, T+1, T+2, etc.) is set by the contract. The longer it is, the bigger the cash flow gap for the merchant.
## In gambling and betting
In online casinos, the term more often refers to settlements with partners and providers: for example, recalculating RevShare based on GGR for the reporting month, and reconciling bets and payouts with game providers. In betting, bet settlement means recording event results and crediting winnings or losses on each bet, taking into account cancellations, voids and partial wins in accumulators.
## What it affects
Settlement determines a business's liquidity: delays and withholdings directly hit working capital. For high-risk merchants, the provider often holds back part of the funds as a rolling reserve, so the amount actually received is lower than the stated amount.
## Common mistakes
The main mistake is calculating revenue on a gross basis and ignoring fees, refunds and deferred reserves. The second is not reconciling the settlement report against your own transaction database: discrepancies in conversion currency and dates are usually found only after the payout.
FAQ
How is settlement different from clearing?
Clearing is the exchange of transaction data and calculation of mutual obligations between banks. Settlement is the final transfer of money based on clearing results, meaning the moment when funds actually move between accounts.
What do T+1 or T+2 mean in settlement?
It is the payout timing after the transaction: T is the day of the transaction, and the number is the count of business days before the transfer. The exact timing depends on the contract with the acquirer or provider and the merchant's risk level.
Why is the settlement amount lower than sales?
It includes fees, refunds, chargebacks and reserve holdbacks. That is why the net amount should always be checked against the report for each transaction, not against total revenue.