<!-- Source: https://blnkfinance.com/glossary/settlement -->

[Glossary](https://blnkfinance.com/glossary) Settlement

# What is settlement?

Settlement

Settlement is when value actually moves between the parties who owe it. Clearing is the matching of instructions. Finality is the point after which the payment will not be unwound. A ledger can record the obligation long before settlement, and must record the moment it happens.

## How does settlement work?

Two institutions agree they owe each other. They net or they pay gross. Central-bank money or a correspondent account changes. Until that happens, you have an instruction, not settled funds. Your customer may already see a pending credit. The bank has not finished.

## Clearing vs settlement vs finality

Clearing is “we both have the same instruction.” Settlement is “the money moved.” Finality is “this will not be reversed through the rail.” ACH can clear and still return. RTP often settles and is final in one step. Do not collapse the three words. They fail at different times.

## What happens if settlement fails?

The rail rejects, returns, or never posts. If you already applied the transfer in your book, you now have a hole. Hold the amount until settlement, then commit or void. Reconciling after the fact is how you find the ones you missed.

## How it works with Blnk

In Blnk, settlement is the moment you commit an inflight hold or void it.

Record the obligation from a named source to a named destination first. Commit applies that post to settled balances. Void releases the hold without moving settled funds.

Settle an inflight post in four steps:

1.  1
    
    Record the obligation first
    
    Post from a named source to a named destination with `inflight: true`. The rail has not finished. The book already has the obligation.
    
    <!-- record-obligation.ts -->
    ```
    await blnk.Transactions.create({
      precise_amount: 25000,
      precision: 100,
      reference: 'ach_in_20260816_001',
      currency: 'USD',
      source: '@WorldUSD_ACH',
      destination: 'customer_wallet_id',
      description: 'Deposit via ACH',
      inflight: true,
      meta_data: {
        rail: 'ach',
        nacha_trace: '021000021234567',
        customer_id: 'cus_8f21a4',
      },
    });
    ```
    
2.  2
    
    Wait for the rail
    
    Your bank or processor still moves the funds. Settled balances stay unchanged until you commit or void.
    
3.  3
    
    Commit the settlement or void a failure
    
    Commit when the rail settles. Void the post if it fails or returns. See [update inflight](https://docs.blnkfinance.com/transactions/inflight/updating-inflight).
    
    <!-- Commit -->
    ```
    await blnk.Transactions.updateStatus(
      'txn_c4e70eb8-e4d6-4e04-a2e2-92a43b969e0c',
      { status: 'commit' },
    );
    ```
    
    <!-- Void -->
    ```
    await blnk.Transactions.updateStatus(
      'txn_c4e70eb8-e4d6-4e04-a2e2-92a43b969e0c',
      { status: 'void' },
    );
    ```
    
4.  4
    
    Match the bank file
    
    Upload the bank file in [reconciliation](https://docs.blnkfinance.com/reconciliations/overview) so clearing, settlement, and the book agree.
    

Related terms

-   [Payment rail](https://blnkfinance.com/glossary/payment-rail)
-   [Reconciliation](https://blnkfinance.com/glossary/reconciliation)
-   [Inflight](https://blnkfinance.com/glossary/inflight)
-   [Float](https://blnkfinance.com/glossary/float)