ACH
ACH is the United States' batch-processed electronic payment network, run by operators under Nacha rules, which moves payments cheaply by collecting them into files and settling them in scheduled windows rather than one at a time.
Payment railsThe settlement glossary
Clear terms. Better conversations.
From clearing to finality, from accounts to digital money. A working reference for the language of settlement.
64 terms
Asset-referenced token (ART)
An asset-referenced token is MiCA's category for a token that stabilizes its value against anything other than a single official currency, such as a basket of currencies, commodities, or other assets, under the regulation's heaviest authorization regime.
Digital cashAtomic settlement
Atomic settlement is the exchange of two assets so that both transfers happen or neither does, with no possibility of one completing while the other fails.
Risk & finalityCHAPS
CHAPS is the UK's high-value payment system, operated by the Bank of England, which settles sterling payments individually and irrevocably in central bank money the same day.
Payment railsCHIPS
CHIPS is the private-sector US high-value payment system, operated by The Clearing House, which uses a continuous netting algorithm to settle large dollar payments with a fraction of the liquidity a gross settlement system would need.
Payment railsClearing
Clearing is everything that happens between a payment's initiation and its settlement: transmitting and confirming the instruction, reconciling the details, and often netting many obligations into fewer, so that the final positions can settle.
Settlement mechanicsCLS
CLS is the market-owned utility that settles foreign exchange trades payment-versus-payment across 18 major currencies, removing the risk that one side of an FX trade pays out and the other side never does.
Risk & finalityCorrespondent banking
Correspondent banking is the arrangement in which one bank holds accounts for other banks and makes payments on their behalf, forming the chain through which most cross-border payments still travel.
Settlement mechanicsCut-off time
A cut-off time is the deadline after which a bank or payment system stops processing payments for the current business day, pushing anything received later into the next day's cycle.
Settlement mechanicsDeferred net settlement (DNS)
Deferred net settlement offsets many payments against each other and settles only the net amounts at set times, saving liquidity but leaving participants exposed to settlement risk until the netting cycle completes.
Settlement mechanicsDelivery versus payment
Delivery versus payment is the settlement rule for securities that links the transfer of the asset to the transfer of the money, so the seller delivers only if paid and the buyer pays only if delivered.
Risk & finalityDepeg
A depeg is the moment a stablecoin's market price breaks away from the fixed value it is designed to hold, usually one unit of a fiat currency, because holders doubt they can redeem it at par.
Digital cashDeposit token
A deposit token is a commercial bank deposit issued in token form on a shared ledger, carrying the same claim on the bank as the balance in an account, but transferable with ledger speed and programmability.
Digital cashDeterministic finality
Deterministic finality means a settlement is irrevocably final at a defined moment by rule, in contrast to probabilistic finality, where the chance of reversal shrinks over time but never formally reaches zero.
Risk & finalityE-money institution
An e-money institution (EMI) is a non-bank firm authorized to issue electronic money, stored monetary value representing a claim on the issuer, and to provide payment services, without holding a banking licence or taking insured deposits.
ComplianceE-money token (EMT)
An e-money token is MiCA's category for a stablecoin that references a single official currency, issuable in the EU only by authorized credit institutions or e-money institutions that must redeem it at par, at any time, for the currency it references.
Digital cashFaster Payments
Faster Payments is the UK's instant account-to-account payment system, operated by Pay.UK, which moves payments of up to £1 million between bank accounts within seconds, 24 hours a day, every day.
Payment railsFBO account
An FBO (for benefit of) account is a pooled bank account that one party, typically a fintech or trust company, opens and operates while the funds inside legally belong to its end customers, whose individual balances are tracked on a ledger outside the bank.
Settlement mechanicsFedNow
FedNow is the Federal Reserve's instant payment service, settling individual payments in central bank money within seconds, around the clock, every day of the year.
Payment railsFedwire
Fedwire is the Federal Reserve's real-time gross settlement system, which settles US dollar payments individually and irrevocably in central bank money during its operating day.
Payment railsHerstatt risk
Herstatt risk is the risk in a foreign exchange trade that one party pays away the currency it sold and never receives the currency it bought, named after the German bank whose 1974 failure made the danger famous.
Risk & finalityIntermediary bank
An intermediary bank is a bank that sits between the sender's and the beneficiary's banks in a cross-border payment, passing the payment along because the two end banks hold no account relationship with each other.
Settlement mechanicsInteroperability
Interoperability is the technical, legal, and commercial compatibility that lets one payment or settlement system be used in conjunction with others, so that value can move between systems rather than being trapped inside each.
Settlement mechanicsISO 20022
ISO 20022 is the international standard for financial messaging that replaced the SWIFT MT format for cross-border payment instructions in November 2025, carrying structured, richer data about every payment.
Payment railsLiquidity fragmentation
Liquidity fragmentation is the splitting of money and assets across separate, unconnected systems, so that the same funds cannot be reused freely and must be pre-positioned in each place they are needed.
Settlement mechanicsMint and burn
Mint and burn are the mechanics by which a stablecoin's supply expands and contracts: the issuer creates (mints) new tokens when it receives fiat, and destroys (burns) tokens when holders redeem them for fiat.
Digital cashMoney transmitter license
A money transmitter license (MTL) is a US state-level authorization to receive and transmit funds on behalf of others; a firm serving customers nationwide needs a license from nearly every state, layered on top of federal registration with FinCEN as a money services business.
ComplianceMT103
An MT103 is the SWIFT message banks used for decades to instruct a single cross-border customer credit transfer; it proves an instruction was sent, never that funds settled, and its ISO 20022 successor is pacs.008.
Payment railsMultilateral netting
Multilateral netting offsets obligations among three or more parties so each ends up with a single net position against the group, replacing a web of gross payments with one settlement per participant.
Settlement mechanicsNetting
Netting is the offsetting of mutual obligations between parties so that only the difference changes hands, reducing the number and value of payments that must actually settle.
Settlement mechanicsNostro and vostro accounts
A nostro is an account a bank holds at another bank in a foreign currency; a vostro is that same account seen from the other side, the account a bank holds on behalf of a foreign bank.
Settlement mechanicsOff-ramp
An off-ramp is the service that converts a digital settlement asset such as a stablecoin back into fiat currency, delivering value from a shared ledger into a bank account.
Digital cashOmnibus account
An omnibus account is a single account that holds the pooled funds or assets of many underlying participants in one place, with the individual entitlements tracked by the account holder rather than the account provider.
Settlement mechanicsOn-chain attestation
On-chain attestation is a machine-verifiable proof, recorded on a ledger, that a condition has been met, which any authorised party can check without taking the claimant's word for it.
Frame categoryOn-ramp
An on-ramp is the service that converts fiat currency into a digital settlement asset such as a stablecoin, moving value from a bank account onto a shared ledger.
Digital cashOrchestration layer
An orchestration layer is software that coordinates payments across multiple rails, networks, and providers through one integration, deciding how each transaction executes without itself being the rail that carries it.
Frame categoryPayment stablecoin
A payment stablecoin is the GENIUS Act's defined term for a digital asset issued for payments, redeemable at a fixed dollar value, and backed one-for-one by high-quality liquid reserves, issuable in the US only by permitted issuers.
Digital cashPayment versus payment (PvP)
Payment versus payment is a settlement mechanism in which each currency leg of a foreign-exchange trade settles only if the other leg settles too, removing the risk that one party pays and the other does not.
Risk & finalityPre-funding
Pre-funding is posting money in advance so a payment can settle, because the settlement system does not net obligations or extend intraday credit, which ties up liquidity that could otherwise be put to work.
Settlement mechanicsProgrammable settlement
Programmable settlement is the settlement of payments on infrastructure that can carry conditional logic, so that transfers execute automatically when defined conditions, including compliance checks, are met.
Frame categoryQualified custodian
A qualified custodian is a regulated institution, such as a bank, trust company, registered broker-dealer, or futures commission merchant, that is legally eligible to hold client assets on a client's behalf under US custody rules.
Risk & finalityReal-time gross settlement (RTGS)
Real-time gross settlement is the settlement of payments one at a time, at full value, continuously through the day, in central bank money, so that each payment is final the moment it settles.
Settlement mechanicsReserve assets
Reserve assets are the holdings, typically cash, bank deposits, and short-dated government debt, that a stablecoin issuer keeps against the tokens it has issued, so that every token can be redeemed at its face value.
Digital cashRetail CBDC
A retail CBDC is a digital form of central bank money issued for use by the general public, unlike wholesale CBDC, which is reserved for banks and financial institutions settling between themselves.
Digital cashRTP network
The RTP network is The Clearing House's instant payment system, live since 2017, which settles US payments individually and irrevocably within seconds, 24/7, with a $10 million transaction limit.
Payment railsSafeguarding
Safeguarding is the legal obligation on e-money and payment institutions to protect customer funds by segregating them in designated accounts or covering them with insurance, so the money can be returned if the firm fails.
ComplianceSEPA
SEPA, the Single Euro Payments Area, is a set of common payment schemes that let euro credit transfers and direct debits move across 41 European countries and territories under one rulebook, as easily as domestic payments.
Payment railsSEPA Instant
SEPA Instant, formally the SEPA Instant Credit Transfer scheme, moves euro payments between accounts in ten seconds or less, 24 hours a day, every day of the year, and EU law now obliges euro-area payment providers to offer it.
Payment railsSettlement finality
Settlement finality is the point at which a transfer of money or assets becomes irrevocable and unconditional, and cannot be reversed even if a party later fails.
Risk & finalitySettlement layer
A settlement layer is infrastructure that sits above individual payment rails and networks, routing each payment to a fitting rail, enforcing the policies that govern it, and producing evidence that settlement conditions were met.
Frame categorySettlement rail
A settlement rail is the infrastructure over which money actually moves between parties, such as an RTGS system, an ACH network, a card scheme, an instant payment system, or a shared ledger carrying stablecoins or tokenized deposits.
Settlement mechanicsSettlement risk
Settlement risk is the risk that one party to a trade delivers what it owes while the other fails to deliver in return, exposing the first party to the loss of the full amount.
Risk & finalitySettlement venue
A settlement venue is any system where payment obligations are finally discharged, from central bank RTGS systems and CLS to consortium ledgers and stablecoin networks, each with its own settlement asset, membership, and rulebook.
Settlement mechanicsSingleness of money
Singleness of money is the property that all forms of a currency settle at par, so that a dollar is worth a dollar regardless of which bank or instrument holds it.
Digital cashStablecoin
A stablecoin is a digital token designed to hold a stable value by referencing an official currency, issued by a non-bank against a reserve of backing assets and, under new laws, redeemable at par.
Digital cashStablecoin float
Stablecoin float is the pool of reserve assets an issuer holds against the tokens in circulation, and by extension the interest income those reserves earn, which token holders do not receive.
Digital cashSWIFT gpi
SWIFT gpi is a set of service rules on the SWIFT network that gives cross-border payments end-to-end tracking through a unique reference, transparency over fees and FX applied along the route, and same-day processing commitments between member banks.
Payment railsTARGET2 (T2)
TARGET2 was the Eurosystem's real-time gross settlement system for euro payments, replaced on 20 March 2023 by its successor T2, which settles large-value euro payments one by one in central bank money.
Payment railsTokenised deposits
A tokenised deposit is a commercial bank deposit recorded on a programmable ledger, remaining a claim on the bank that issued it and settling at par in central bank money.
Digital cashTravel Rule
The Travel Rule is the FATF requirement that identifying information about a payment's originator and beneficiary must travel with the transfer, applying to bank wires and, since 2019, to virtual asset transfers above a threshold of about USD/EUR 1,000.
ComplianceValue date
The value date is the date on which a payment's funds actually become available to the receiving party and start earning or costing interest, which can differ from the date the payment was sent or the date it appears on a statement.
Settlement mechanicsVASP
A VASP (virtual asset service provider) is the FATF's term for any business that exchanges, transfers, safekeeps, or helps issue virtual assets for customers, the category that brings crypto-asset businesses inside global anti-money-laundering rules.
ComplianceWire transfer
A wire transfer is an electronic bank-to-bank credit transfer, settled individually rather than in a batch, typically same-day and irrevocable once settled, over systems such as Fedwire or CHAPS domestically and the correspondent network internationally.
Payment railsZero-knowledge proof
A zero-knowledge proof is a cryptographic method by which one party convinces another that a statement is true without revealing any information beyond the fact that it is true.
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