ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Ans. “Settlement” means the settlement of payment instructions received and these include settlement of securities, foreign exchange or derivatives or other transactions. Settlement can take place either on a net basis or on a gross basis. Both netting and gross settlement system are defined under the Act.

Detailed explanation-2: -Once a transaction has been approved, settlement is the second and final step. This is when the issuing bank transfers the funds from the cardholder’s account to the payment processor, who then transfers the money to the acquiring bank.

Detailed explanation-3: -Payment settlement involves collecting the funds for the amount recorded for an order. For example, when using credit cards, the settlement process specifically involves contacting the payment system and collecting the required amount of funds against the credit card.

Detailed explanation-4: -Payment and settlement system is the entirety (integrity) of payment instruments, of common rules, procedures and supportive technical and program facilities for implementation of clearing, transfer of funds and execution of final settlement, which is used to provide a payment to a beneficiary.