Authorization, Capture and Settlement: What Each Means for a Merchant
Authorization, capture, clearing, settlement and payout explained for merchants. Learn which records confirm each stage and how to trace a missing bank deposit.
Authorization approves a card-payment request. Capture submits the approved amount for collection. Clearing exchanges the transaction details; network settlement moves funds between participating financial institutions. A merchant payout is the separate transfer into your business bank account. An approval message alone does not confirm that the money has reached that account. Visa’s acceptance documentation describes authorization and capture as separate operations; Mastercard’s network explanation distinguishes clearing from settlement.
Use this guide when a card sale is approved but you still need to trace the money. The next record to check depends on the stage the payment has reached. Status names and deadlines vary by provider and setup, so check the definitions in your own reports.
Where a card payment stands
Payment request
The merchant's order is linked to a payment request; an order alone does not confirm collection.
Authorization result
The provider records the issuer's response. Approval reserves an amount under the applicable arrangement; it does not prove merchant bank receipt.
Capture event
The merchant or its configured system submits completion and checks the provider's result.
Clearing
Issuer and acquirer exchange financial transaction details through the network.
Network settlement
The network facilitates funds exchange between issuers and acquirers. This is a different record from a merchant bank credit.
Merchant payout and bank evidence
Separately, check the provider's payout arrangement and reconcile the payout reference to the receiving bank's record. This is not a universal step after network settlement.
Conceptual flow for a card payment with separate capture. This diagram gives no timing guarantees. Merchant payout and bank receipt appear separately because funding arrangements vary; network settlement does not establish a universal payout sequence. Check any expired authorization, failed capture or missing bank credit with your provider.
How the steps connect
- Payment request → Authorization result: Check the response, including decline or approval.
- Authorization result → Capture event: For separate capture, act within the applicable authorization window and verify the result.
- Capture event → Clearing: A separate-capture card flow proceeds to financial processing; confirm the provider's records.
- Clearing → Network settlement: Network processing exchanges details and settles issuer/acquirer positions.
Follow the payment request, issuer response, capture result, clearing and network settlement in the diagram. Check the payout and bank credit separately. If an authorization expires or capture fails, check the provider’s recorded state. If the bank credit is missing, use the payout reference to investigate.
Authorization: the payment request is approved
In the Visa flow described above, the card issuer approves or declines the request and sends its decision back through the network. An authorization reference tells you whether the request was approved. You still need the capture result to confirm collection, and the payout and bank records to trace the deposit.
Some arrangements separate authorization from capture and reserve an amount for later collection. Stripe supports this for eligible payment methods. In its manual-capture card flow, an authorization can expire before capture; the reserved funds are then released and the payment is canceled. Check the deadline on the actual transaction. Stripe’s authorization and capture guide
If you use delayed capture, decide who submits it and what triggers that action: a cashier finishing a sale, a manager accepting an order, or an integration confirming fulfillment. Check what an “Approve order” button does in your shop software. Updating an order and submitting capture are separate actions; ask which payment record confirms collection.
Capture: confirm the amount was collected
Capture tells the payment system to collect the approved amount. Visa’s Capture API initiates clearing and settlement for an earlier authorization. In Stripe’s manual-capture flow, the status requires_capture means a separate capture request is still needed. Your provider may use different status names. Visa · Stripe
Check the confirmed capture result, amount and payment reference. A staff member clicking a button proves they attempted the action; the provider’s record tells you the result. If it is unclear, open the existing transaction before trying to collect again. Give support that reference and the recorded response.
Keep your order number alongside the provider’s payment identifier. Stripe recommends associating a PaymentIntent with the cart or customer session and supports metadata for application-specific information. Those links help you find the payment when your shop knows an order number but the provider uses a different identifier. Stripe’s Payment Intents documentation
Clearing and network settlement: two different jobs
Clearing exchanges financial transaction details between the acquiring and issuing sides. Network settlement exchanges funds on behalf of those participants. Mastercard describes calculating each issuer’s and acquirer’s net position during settlement. That network accounting is different from checking whether a deposit has reached your business bank account. Mastercard’s explanation
The issuer is the customer’s card-issuing institution; the acquirer is on the merchant side of card acceptance. Your processor or payment platform may combine information into its own reports. Ask which report identifies the captured sale, explains its processing state and connects it to funding. Visa Acceptance’s financial-institution definitions
If a dashboard labels a payment “settled,” check what the label means there. Does it describe a processing state, funds available in the platform, or a transfer to your bank? Keep that definition beside the report your staff use.
Merchant payout: follow the transfer to your bank
Stripe distinguishes funds becoming available in its balance from a payout being sent to a bank account. Changing the payout schedule controls when payouts are sent; it does not change how long pending funds take to become available. The receiving bank can also take additional time to make funds available. Check your own provider’s terms for the arrangement you use. Stripe’s payout documentation
Compare the payout’s amount, destination and reference with your bank activity. Keep the provider’s expected arrival date separate from the date the bank actually records the deposit. If the transfer is unresolved, save both records for the investigation.
A deposit may contain multiple payments, so looking for a bank entry equal to one receipt may not resolve the question. Stripe’s payout reconciliation report provides summary and itemized views for automatic payouts, including the associated transactions. Use the report that applies to your payout arrangement. Stripe’s reconciliation documentation
A $120 sale: what the shop can confirm
Consider a $120 lamp purchase for pickup, with separate authorization and capture. Work through the payment in this order: approval, capture, financial processing, payout and bank reconciliation. Keep the order reference R-104 and payment reference P-104 together. The calculation uses a $120 charge and leaves taxes, fees, adjustments and timing out of scope.
If order R-104 receives an approved authorization linked to payment P-104, approval is the first confirmed state. At pickup, the employee submits capture for $120. Check the provider’s response against P-104 to confirm that capture completed.
If a financial-processing report and payout association appear for P-104 but no bank entry matches, bank receipt remains unresolved. Check the transfer status and ask which reference the bank should use to trace it.
If the employee instead finds an uncaptured authorization, they should first check whether it is still valid and what the provider permits. If the customer cancels before collection, they should check the cancellation workflow. Stripe distinguishes canceling an uncaptured payment from refunding a successful one. Stripe’s cancellation and refund documentation
| Stage | Observed state | Record owner | Next check | Evidence |
|---|---|---|---|---|
| Authorization result | P-104: $120 approved; capture not yet confirmed | Provider holds the payment response; merchant holds R-104 | Check capture mode and applicable expiry | approval record linked to R-104 |
| Capture event | P-104: full $120 capture confirmed | Merchant submits completion; provider records the result | Find the financial-processing records | confirmed capture record |
| Clearing | Example financial report associates P-104 with processing | Provider/acquirer report; network exchanges financial details | Check what the report's status actually means | financial report linked to P-104 |
| Network settlement | Example provider report refers to settlement | Issuer/acquirer and network; provider supplies merchant-facing evidence | Check the separate merchant payout arrangement | settlement reference; not a bank receipt |
| Merchant payout / bank deposit | Unresolved: no matched receiving-bank credit | Provider supplies payout reference; merchant checks its bank | Ask provider for payout status/reference, then reconcile with bank | payout association; matched bank credit not supplied |
For this walkthrough, treat approval and capture as confirmed, then match the payout to a bank credit. Fees, net deposit amount and elapsed time remain outside the calculation.
The payment records, one check at a time
Step-by-step payment checks. No duration, deduction or deposit amount is assumed.
Authorization
The approval record links payment P-104 to order R-104 for $120. Check the capture mode and the authorization’s expiry next.
Capture
The provider record confirms full $120 capture of P-104 after the merchant submits it. Find the financial-processing record next.
Clearing
The financial report links P-104 to processing. Ask the provider what that status confirms.
Network settlement
The settlement reference describes network processing. Check the merchant payout arrangement separately.
Payout and bank deposit: unresolved
The shop has no matched bank credit in this example. Use the provider’s payout status and reference to reconcile the transfer with the bank record.
Match your question to the record
Work through these checks with the records available in your setup. If a record is missing, leave the status unresolved and note what you need to find next.
- Was the request approved? Find the payment reference, approved amount and authorization response. Keep the order number with it.
- Was the approved payment captured? Check the provider’s confirmed capture result and amount. Identify who submits capture in your setup.
- What financial stage is confirmed? Read the provider’s processing or settlement report and its definition of the displayed state.
- Which payout contains it? Use the applicable payout detail or reconciliation report; keep the transfer reference and destination.
- Did the bank receive it? Match the payout with the actual bank entry. Save a next action when the match is still missing.
Before you use delayed capture
- Which card transactions in this arrangement support separate authorization and capture?
- Where can staff see the actual capture deadline, and who checks uncaptured orders?
- What happens when the final amount changes, the customer cancels or the authorization expires?
- Which provider report joins the order, payment and payout references?
- Who investigates each unresolved stage, and what reference do they need?
For help considering your setup, read the card pre-authorization overview or merchant payment solutions. Bring one real order and its payment references to the discussion. Agree who is responsible for capture and which records will trace the sale to funding. Browse more published guides in Payments Blog & Resources.
