Foundations of Financial Technology

Clearing vs. settlement

Clearing reconciles trade obligations between counterparties (often via a CCP that nets exposures); settlement is the fi

ACH (Automated Clearing House)

A batch-based, net-settled US electronic payment rail operated by Nacha/the Fed for low-value credits and debits (payrol

Fedwire vs. SWIFT

Fedwire is a real-time gross settlement (RTGS) system run by the Fed that moves USD between US bank reserve accounts. SW

Four-party card payment model

Cardholder pays merchant; merchant's acquirer routes the authorization through the card network (Visa/Mastercard) to the

Interchange fee

A per-transaction fee paid by the merchant's acquirer to the cardholder's issuer, set by the card network. It is the lar