Settlement

Previously, we saw that John swiped his credit card and he got a receipt. This means that his credit card was charged $4.00. However, it does not mean that immediately after the transaction, the bank handling Starbucks' account received $4.00. Starbucks does not get John’s money immediately.

In order to get the money, Starbucks has to submit all the transactions done during the day for “settlement” in a batch process. Typically, these batch processes are executed at night. During this settlement process, all transactions done during the day are “settled”. It is during this nightly batch procedure that the $4.00 is credited to the Starbucks account and $4.00 is charged to John’s credit card.

Until “settlement” occurs, John’s credit card charge is in the “captured” state. “Captured” means that the money was authorized from John’s account and it is ready for settlement. During settlement, money is sent to the correct recipient.