Clearing is the step after a payment is approved where the banks exchange the detailed records of each transaction. These records are used to calculate the net amounts each bank owes the others. Think of it as everyone comparing their books and agreeing on the totals before any cash changes hands. In a common card pattern, the merchant's side submits the captured transactions in batches, the network sorts and forwards them, and positions are tallied up. Money still has not moved; that is settlement's job.
In a flow
After authorizations are captured, the acquirer submits transaction records into the network, which clears them by routing each to the right issuer and computing net positions. The output of clearing is an agreed set of obligations that settlement then discharges.
Common misconceptions
Myth: Clearing is when the money gets transferred between banks.
Reality: Clearing exchanges records and computes who owes whom. The actual bank-to-bank money movement is settlement, a separate step.
Myth: Authorization and clearing are the same event.
Reality: Authorization is a real-time yes/no check with a hold. Clearing happens later, often in batches, and is about reconciling the records that determine final amounts.
Related terms
See it in a guide
Sources
- Visa Core Rules and Visa Product and Service Rules ↗ · Visa (operator)
- ACH network: clearing and settlement basics ↗ · Nacha. Illustrates clearing as record exchange ahead of settlement, generalizing beyond cards.
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.