Payment clearing and settlement process flowchart template
Payment clearing and settlement process flowchart for record validation, position calculation, fund movement, merchant funding, mismatch investigation and approved correction posting.
What the payment clearing and settlement process flowchart process is
This process starts with captured transactions rather than an authorization request. A processor assembles records, totals and references; invalid source data is quarantined, while acquirer or clearing rejects return to the stage that can correct them. Format, duplicate and reference checks keep rejected records visible instead of dropping them from a batch.
The issuer validates each presentment or clearing record before the clearing network calculates issuer and acquirer positions. This order matters: the issuer is not being asked to accept a position that does not yet exist. The network creates settlement instructions from accepted clearing results, and a settlement agent or bank performs the separate movement between institutional accounts.
Acquirer operations or finance confirms proceeds, funds the merchant and reconciles funding to clearing records and positions. A mismatch is investigated before any correction is proposed. A required correction or adjustment must be approved and posted through the applicable operations or finance route before reconciliation runs again; a generic merchant adjustment does not jump directly into network position calculation. Record formats, netting methods, settlement accounts and funding schedules should be configured from the actual payment arrangement.
What this flowchart covers
In this template
- Captured-record and batch validation with stage-specific correction routes
- Presentment format, reference and duplicate checks before issuer exchange
- Issuer validation of clearing records before settlement positions are calculated
- Network instructions separated from settlement-agent or bank fund movement
- Merchant-funding mismatch investigation, approval and posting through the applicable operations or finance route before reconciliation
When to use this template
- Teams describe clearing messages and settlement fund movement as one indistinguishable processing event
- Captured records are rejected or adjusted without a visible route back to the processor and acquirer
- Issuer and acquirer positions cannot be traced to accepted presentment records and settlement instructions
- Merchant funding totals differ from clearing reports, fees or settlement proceeds and ownership is unclear
- Payment operations need to connect the card payment process and card transaction lifecycle to finance reconciliation
How it works
Define captured inputs
List required capture fields, stable references, batch totals and duplicate controls. Specify which failures quarantine one record and which prevent an entire submission.
Map clearing messages
Document presentment, acceptance, rejection and adjustment records across processor, acquirer, clearing network and issuer. Preserve reasons and ownership through correction.
Document position calculation
Show that issuer record validation precedes position calculation, then describe how accepted clearing results produce obligations, fees and adjustments.
Separate settlement movement
Identify the instruction, settlement agent or bank, relevant account class and confirmation source. Keep sensitive account details outside the chart.
Reconcile merchant funding
Match merchant funding to captures, clearing records, positions, fees and adjustments using durable references. Investigate unmatched amounts, require approval for any correction, and post it through the responsible operations or finance route before rerunning reconciliation.
Frequently asked questions
What is the payment clearing and settlement process?
It validates captured records, exchanges presentment information, obtains issuer validation of clearing records, calculates participant positions, creates settlement instructions, moves funds through a settlement agent or bank, funds the merchant and reconciles the results.
What is the difference between clearing and settlement?
Clearing exchanges transaction records and calculates obligations between participants. Settlement is the separate discharge of those obligations through institutional fund movement or account entries. Merchant funding can follow on another schedule, so it should remain a third observable state.
How should rejected clearing records be handled?
Retain the original reference and rejection reason, then return the record to the stage that owns the defect. Some issues require corrected presentment; others require an adjustment. The operating procedure should define the permitted route and deadline.
Why can merchant funding differ from settlement totals?
Merchant funding may include fees, reserves, adjustments, returns or currency effects and may cover a different population or schedule from institutional settlement. Use stable references to investigate each difference. If a correction is required, approve and post it through the responsible operations or finance route before recalculating or reconciling the affected records.
Where this process fits
In most operations this process follows Card transaction lifecycle flowchart (initiation to monitoring) and hands off to Payment reconciliation process flowchart (records to settlement).
It is one step in Card payment lifecycle.
Step 1: Card payment process flowchart (purchase response to capture)
Step 2: Payment authorization process flowchart (request to capture)
Step 3: Card transaction lifecycle flowchart (initiation to monitoring)
Card transaction lifecycle flowchart for definitive or unknown authorization outcomes, reference-based status inquiry, capture, clearing, settlement, funding and closure.
Step 4: Payment clearing and settlement process flowchart template You are here
Payment clearing and settlement process flowchart for record validation, position calculation, fund movement, merchant funding, mismatch investigation and approved correction posting.
Step 5: Payment reconciliation process flowchart (records to settlement)
Payment reconciliation process template for complete source capture, transaction and settlement matching, difference classification, controlled correction, rematch and audit evidence.