If you receive your bank statement online then you might be familiar with the term DC settlement. Here, DC stands for Debit/Credit and DC settlement refers to the Debit/Credit settlement process. Moreover, in many, circumstances, DC settlement also refers to debit card settlement.
- When you use a debit card to make the payment, the fund is automatically deducted from your bank account
- DC payment is totally different from DC settlement and DC payment refers to Documentary Credit
- When you use a debit card, the bank authority put a hold on the balance and then releases the funds to the merchant’s account and settles the transaction
Purpose of DC Settlement
One of the main purposes of DC settlement is to complete the debit card transaction. A debit card is one of the most commonly used banking cards. The working procedure of a debit card is, that when you use the card, the payment is pre-authorized by the bank. It means when we swipe our debit card the fund is automatically deducted from our bank account.
This is to ensure that the fund is always available for use. Later, the bank authority releases the funds to the merchant’s account and settles the transaction. This process is known as DC settlement. For example, let’s say your bank account has $1000 and you make a payment of $100 with your debit card. Now the bank will hold the $100 in your account. It means, your bank account balance is $1000 but you can use $900. When the bank settles the transaction, your account balance will become $900.
Detail Steps of DC Settlement
Here is how the DC settlement process is completed –
- First, the user swipes the debit card in a card reader machine
- Now the card reader machine connects with the acquirer (card-issuing company)
- The card issuing company then verifies the card
- Next, the acquirer checks, if the account has sufficient balance to complete the transaction
- After that, the card-issuing company put a hold on to the payment amount
- Then the hold amount is deducted from the account of the debit card user
- However, the deducted amount is yet to transfer to the merchant’s account
- Now, after the day’s transaction, the merchant transfers all the transaction information from the card machine to the card-issuing company
- Then the card-issuing company transfers all the “hold” funds to the merchant account and the DC settlement process is completed
FAQs about What is the Meaning of DC Settlement in the Online Bank Statement
What is a DC payment?
DC payment is totally different from DC settlement. DC payment refers to Documentary Credit. Documentary Credit is also known as a Letter of Credit (LC). Usually, DC payment is used in international trades. When you are doing business with a foreign company, the company offers a Documentary Credit as security for payments.
What does BP mean on my bank statement?
BP is a very common term in a bank statement. In a bank statement, BP stands for Bill Pay. The amount stated in the Bill Pay indicates how much of your balance you have spent on various bill payments.
What does BGC mean on a bank statement?
On a bank statement, BGC stands for Bank Giro Credit. This is a very commonly used abbreviation on a bank statement. If you deposit cash or check at a bank branch then the bank statement will show BGC. It means you have deposited cash or cheques to your bank account from a bank branch.
What does DC mean in fund transfer?
In fund transfer, DC stands for direct deposit. Direct deposit is an electronic way of transferring funds from one bank account to another. This fund transfer process is done by using the Automated Clearing House (ACH) system. It is one of the safest and fastest ways of transferring money.
What is the difference between DC and CC?
DC stands for the debit card while CC stands for a credit card. One main difference between a debit card and a credit card is, that when you are using the debit card, the fund is transferred directly from your bank account. But for a credit card, you are using the bank’s money and later pay the due amount with an interest.
Another key difference is debit cards don’t have any limits, as long as your account has a balance, you can use your debit card. However, credit card has a credit limit. If you cross the credit limit then you won’t be able to use your credit card to make any payment. You have to clear your previous dues and then you will be able to use your credit card again.
What is a DC plan?
A DC plan is a defined-contribution plan. It is a type of retirement plan and it is quite similar to a 401(k) or a 403(b). In a defined-contribution plan, you have to contribute a fixed amount or a percentage of your paychecks to fund this retirement plan. Like other retirement plans, a defined-contribution plan is also tax-deferred.
Last Updated on November 15, 2022 by Magalie D.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.