Funds Settlement Requests
The process through which merchants request for the funds they have collected over time in the different currency accounts is defined as a settlement process.
Process Description
The settlement process involves the transfer of funds between different parties, including the merchant, the acquiring bank, and the issuing bank.
As the gateway collects funds on behalf of the merchant throughout the day, the payment gateway accumulates funds on the float account at the processor's end. These funds are held for a day, weeks or months before they are settled to GovNet depending on a few factors such as rolling reserve rate, settlement days and rolling reserve days. These therefore determine the amount of funds available and the actual balance for GovNet gateway from which GovNet can settle its merchants.
So different processors behave differently, especially card providers where funds can be held for about 180 days before they are avail to GovNet for settlement, therefore also GovNet will have to adopt the same exact thing that the processors are having. This therefore means GovNet will only be able to settle its merchants once funds that are held by its processor have also been released or availed for settlement.
In scenarios like GovNet, the finance team will communicate currencies that they are able to settle merchants in such as USD, or USDT, so merchants at all times will be required to request for settlement from their end.
The merchant will request a settlement from their dashboard by selecting the currency bank account to settle to and proceed to enter the amount as well.
So at that point, the system will check to ensure that the available balance in the selected currency is sufficient to cover the settlement amount and fees. Once this is true, then the request will be logged as Pending waiting approval from the accounts section.
When the request is approved by the finance team, the request amount plus settlement fees is deducted from the merchant currency account.
Then financial reports are automatically generated showing the expected balances across both the backend application and merchant dashboard.
Process Flow Diagram
Below is the diagrammatic representation of the funds settlement flow process for GovNet and the different steps involved;-
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