Meaning
A Clearing House is an organization that helps banks and financial institutions settle payments and transactions among each other. It acts as a middle point where all banks send and receive payment instructions.
How It Works
Instead of each bank settling payments directly with every other bank, the Clearing House calculates the total amount each bank owes or receives and processes it together.
Example
When you transfer money from one bank to another, the Clearing House ensures both banks settle the transaction accurately and securely.
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