Meaning
Merchant settlement cycle is the time taken by banks or payment systems to transfer collected customer payments into a merchant’s bank account.
Examples
- Daily settlement where money is credited every night.
- Weekly settlement cycles for small businesses.
- Instant settlement for selected merchants.
Importance
- Helps merchants manage cash flow.
- Assists in planning business expenses.
- Provides clarity on when funds will be available.
Use Case
E-commerce sellers often depend on settlement cycles to track their earnings and reinvest in inventory.
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