A settlement batch is a set of transactions grouped together so they can be cleared and settled as a single unit, the basic building block of batch settlement; the main entry explains the process and its advantages and drawbacks. The term refers to the group itself rather than the method.
In card acceptance, a terminal or payment gateway collects the day's authorised transactions into an open batch. At the end of the trading day, or at a time the merchant sets, the batch is closed and sent to the acquirer for clearing, and the merchant is later paid the net value in one deposit. Transactions authorised but not included in a closed batch are not settled, which is a common cause of missing funds, and authorisations left unbatched for too long may expire.
Batches also exist in bank payment systems. ACH batches group entries with the same originator and type inside an ACH file, and many clearing houses process payments in scheduled cycles. By contrast, real-time gross settlement and instant payment systems settle each payment individually as it arrives.