Settlement in a nutshell
Despite the fact that the customer has left with their products, and their credit card payment has been authorized, the money hasn’t quite reached the merchant’s bank account yet. This second stage, settling the money, involves some back and forth.
After having left the customer’s bank account, funds are sent to the merchant account where the transaction enters a ‘pending’ period. This happens immediately after the payment has been authorized.
To settle transactions, the credit card processor sends batches of authorized payments to the card scheme that confirms the debit with the card issuing bank. Both the card network and payment processor also communicate with the acquirer in order to move the money from the acquirer’s merchant account to the business’ bank account.
And that’s essentially it – credit card processing in its simplest form.