Payment terms explained

Clearing and settlement

Clearing is the processing stage: the banks exchange the instruction, check the details and agree what is owed. Settlement is the moment the money actually moves between them.

The gap between the two is why a payment can be visible as sent, visible as incoming, and still not be available. A seller who releases an authorisation code against a payment that has been instructed but not settled has released the name against nothing.

For a domestic transfer in the same currency, clearing and settlement usually happen the same day. Cross border, and particularly outside a single currency area, the two can be days apart.

Value date and availability

The value date is the date from which a payment counts as received. Availability is when the funds can be used. Banks sometimes credit an account before funds are final, which produces the worst kind of confirmation: a balance that goes up and then comes back down.

The rule that follows is simple. Confirmation of receipt means the bank statement or the escrow platform showing the funds as received, not a notification, not a screen in the sending bank and not a screenshot from the payer.

Beneficiary and remitter

The beneficiary is the party being paid, identified by an account number and an account name. The remitter or payer is the party sending.

Two checks live here. The beneficiary name must match the counterparty in the agreement, and the remitter name must match the buyer. A payment arriving from an unrelated name is a reason to stop, because it can indicate either a compromised deal or funds that will later be recalled.

Some banks verify that the beneficiary name matches the account before sending. Where that check exists, a mismatch warning is a genuine signal, not a formality.

Reference

The reference is the free text field carried with the payment. It is the only thing linking a bank line to an invoice.

Use the invoice number and nothing that identifies the domain in a way that invites attention. A reference that is missing or generic turns reconciliation into guesswork, particularly where a seller receives several payments in a week.

Holding period

A holding period is time during which money sits with a provider before it is released. Escrow platforms hold funds by design, until the domain has been handed over and accepted. Payment processors also apply holding periods of their own, particularly on new accounts or unusual amounts.

Two consequences matter in a domain deal. A seller expecting funds immediately after release may wait longer than expected. A buyer relying on the inspection period should know the exact date it ends, because an inspection period that expires automatically releases the money whether or not the name arrived.

Chargeback, recall and reversal

A chargeback is a card payment reversed at the request of the cardholder bank, and the window for one is measured in months rather than days. A recall is a bank transfer that the sending bank asks to have returned, usually where fraud or an error is alleged.

Both share one feature that matters more than the mechanics: the reversal can arrive long after the domain has been transferred, and the seller has no name to reclaim. This is the reason payment method and sequence are part of the deal rather than an administrative detail, as set out in chargebacks and reversals.

Escrow specific terms

• Funding: the buyer paying money into the escrow account. Only a confirmation inside the platform counts.
• Inspection period: the days a buyer has after handover to accept or reject.
• Acceptance: the buyer confirming the name arrived as described, which triggers release.
• Release: the escrow provider paying the seller.
• Dispute: a formal objection raised before the inspection period ends, which pauses release.

A transaction that reaches acceptance without the buyer checking anything is an escrow arrangement in name only. The state each side should be in before opening one is listed in escrow readiness.

Currency and charges

Where the payment crosses a currency, one side carries the conversion and one side may carry intermediary bank charges. Agree in advance which currency the deal is denominated in and who absorbs the difference, so that an amount arriving slightly short does not become a reason to delay handover.

A payment that arrives short is still a payment that arrived. Agree in advance whether the shortfall is topped up or ignored, rather than negotiating it while the transfer is pending.