Flow of Funds · Learn
Learn the flow of funds
Payments has its own language: issuers and acquirers, authorization and settlement, ODFI and RDFI, FBO accounts and on-ramps. This is the plain-English companion to the studio: a glossary that defines the parts, and guides that walk through how the money actually moves, keeping the message legs (instructions) honest about the money legs (funds).
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.
Glossary
37 termsShort, source-cited definitions of the parties and steps in a payment, and the misconceptions people trip on.
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17 guidesStep-by-step walkthroughs of real flows: Interac e-Transfer, a card tap, ACH payroll, a cross-border wire, stablecoin on/off-ramps, money leg by message leg.
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- How an Interac e-Transfer actually moves moneyAn Interac e-Transfer feels like sending money by email or text, but the email/phone alias and the notification are just messages, the actual money moves as a debit and credit between the two people's banks, with the interbank position settled through Payments Canada's underlying clearing and settlement system.
- From a card tap to settlement: the four-party model (Visa as the example)When you tap a card, an authorization is a real-time check and hold that moves no money; the network switch routes that message and later the clearing records, and only afterward do the banks settle the actual money, typically funding the merchant a day or two later, net of fees.
- ACH credit vs ACH debit: who pulls and who pushesIn an ACH credit you push money out to someone; in an ACH debit you pull money in from someone's account with their prior authorization.
- How payroll runs over ACHPayroll is a batch of ACH credit entries: the employer's bank pushes funds toward each employee's bank so they land on a chosen payday.
Annotated flows
One real flow, read straight down in plain English, then pull a margin open on any leg for the timing, the rulebook, or where it actually trips people up. Same flow, whatever depth you’re after.
- An Interac e-Transfer, leg by legAlmost everything that feels instant is a message; the money itself moves between the banks separately, and usually later.
- A card tap, from 'Approved' to actually paidThe 'Approved' at the counter is a message reserving credit; the money moves a day later, and the merchant is funded (net of fees) a day or two after that.
- Payday: how your wages actually arriveDirect deposit is a batch of instructions; the wages post on the effective date on the strength of the rules, while the banks settle separately, and the credit can still be returned.
- A cross-border wire, and where the money really goesNothing flies overseas: SWIFT carries instructions, the money moves as a debit to a US dollar account your bank already holds abroad, and the fees are mostly hidden in the exchange rate.
- A stablecoin payout, on-ramp to off-rampThe customer pays normal dollars and the supplier receives normal euros; only the middle leg is on-chain, and the stablecoin issuer governs the reserve without ever moving your money.
Handy terms
See it as a diagram
Describe any payment in plain English and the studio draws the whole flow, every party, rail, and settlement leg.
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