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Settlements

Merchant settlement is the process where businesses receive funds from a payment aggregator (PA) for transactions conducted through the PA's payment gateway. This step is an essential component of the electronic payment cycle, marking the final stage where the accumulated transaction funds are transferred from the aggregator to the merchant's account. It encapsulates the completion of the payment process from customer purchase to merchant reimbursement.

How Settlements Work?​

Settlement Workflow Overview:​

  1. Customer Transactions: This initial stage involves customers making purchases, where transactions are processed through the payment gateway.
  2. Money Captured from Customers: At this point, the payment aggregator captures the transaction amount from the customer's payment method.
  3. Money Received from Acquiring Banks: The captured funds are then collected from the acquiring banks, consolidating the amounts from various transactions.
  4. Deduction of Fees: Before the final settlement, the aggregator deducts applicable fees for the transaction processing.
  5. Merchant Settlement: The net amount, after fee deductions, is then settled to the merchant, completing the payment cycle from customer to business.
  6. Bank Payout Reports: Plural receives detailed payout reports from the bank, providing a breakdown of the transactions and settled amounts.

Reconciliation:​

The final step involves reconciliation, where Plural verifies and matches the bank payout reports with their transaction records to ensure accuracy and consistency in completed settlements.

Types of Settlements:​

  • T+1 Settlements: This is a standard settlement type where "T" represents the transaction day. The "+1" indicates that the settlement to the merchant occurs one business day after the transaction. This model provides a predictable and routine flow of funds.

  • Early Batch Settlements: In this model, transactions are batched and settled earlier than the standard T+1 timeline. This type of settlement is beneficial for merchants requiring faster access to funds, improving their cash flow management.

  • Same Day Settlements: As the name suggests, same day settlements involve processing and transferring funds to the merchant on the same day as the transaction. This type of settlement offers the quickest turnaround, ideal for businesses that prioritize immediate liquidity.

Consolidated MPR​

Merchant payout reports are essential documents detailing all transactions between a business and its customers, including specific details like transaction amounts, dates, and any fees or refunds. These reports are crucial for financial reconciliation, allowing merchants to verify and align their sales records with the transaction data provided. By regularly reviewing these reports, businesses can ensure accuracy in their financial records, maintain transparency in operations, and manage their cash flow effectively.