Software platforms offering payments need settlement flexibility to scale adoption, payment volume, and revenue.
It’s not always the first question in an RFP, or even a top decision criterion when choosing a payments partner, but it often determines how many of your software customers actually adopt payments.
Why does settlement flexibility matter?
Every small and mid-sized business has an accountant or controller behind the scenes. If they can’t easily reconcile the deposits hitting their bank account with the sales reported in your platform, they’ll push back or worse, refuse to adopt your payments offering altogether.
Settlement options give your customers the clarity and control they need. Without them, adoption stalls.
Common “flavors” of settlement
Here are some of the ways funding can be structured to meet customer needs:
- Standard funding: Funds are sent via ACH once they’ve cleared the networks/issuing banks, typically landing 2–3 days after the sale.
- Next-day funding: Same process as standard, but guaranteed to arrive the following business day.
- Gross daily funding: The merchant receives 100% of sales in a deposit, with a separate debit for fees.
- Gross monthly funding: Similar to daily, but fees are netted out once per month in a single debit.
- Gateway cut-off funding: Rather than splitting a day’s sales across multiple deposits, merchants may prefer all of Monday’s sales arriving together on Wednesday.
- ACH vs. bankcard funding: Card payments are authorized and funds are held until settlement, but ACH transactions carry more risk. Many platforms delay ACH funding until the majority of return codes have cleared.
- Split funding: A single transaction is divided between multiple parties (e.g., a $100 salon sale split between the stylist and the salon).
- Surcharge/fee funding: Merchants receive the face value of the transaction, while an added consumer fee (e.g., $3 on a $100 sale) is split to cover interchange and create payments income.
Going deeper: mix and match
Settlement models aren’t one-size-fits-all. Large customers often require a tailored mix of approaches.
One of our software partners closed a $50M-volume client only because they could support:
- A convenience fee
- 100% gross settlement
- Next-bank-day funding
- A strict 24-hour activity window
Without that flexibility, the deal never would’ve happened.
The adoption barrier you might be missing
Early on, you may have chosen a payments partner for their brand, global reach, or price. But if only a fraction of your customers are adopting payments, it’s worth re-examining whether settlement flexibility is the missing piece.
At Forward, we’ve seen platforms unlock major adoption (and revenue) simply by removing this hidden barrier. If that sounds familiar, let’s talk.
