What Are the Functions of Settlement in the Payment Ecosystem?

[Suba]

In the financial world, settlement is defined as the final settlement in a payment transaction. Therefore, this settlement function also ensures that funds from the payer/sender have been transferred to another account legally and completely.

Generally, the settlement process begins when money is sent, whether via bank transfer, debit/credit card, e-wallet, etc., and includes authorization and verification of fund balances, clearing, and final settlement.
The following are some of the functions of settlement in the payment ecosystem:
1. Certainty and Finality
2. Minimizing Risk
3. Financial System Integrity.

 

[Augusta]

From the word settlement it is to finalized payment to s person which brings finalization of a business transaction

 

[kit_hung]

Settlement is like closing a financial deal. Make sure everyone gets their money without drama. When you transfer money, the system must check the balance, clear the transaction, and then confirm that everything is legal and clean. This is what makes the financial game trustworthy.

The benefits are huge. You reduce the risk of losing money, you protect the financial system, and you get the assurance that the transaction has not been blocked. Without settlement, things would be a mess. It is like the referee of a money game—there is no game without him.