You might have noticed the term ‘DC Settlement’ in your bank statement. Have you ever wondered what it stands for? A DC or d/c settlement in a bank statement refers to a debit/credit settlement procedure. On the other hand, DC generally stands for Debit/Credit in a bank statement.
Alternatively, a DC settlement can indicate a debit card settlement on a bank statement. So, it simply indicates a transaction through your debit card. Let’s dig deeper into the DC settlement, its purposes, and more.
When Does a DC Settlement Appear on Your Bank Statement?
A DC or d/c settlement in a bank statement means a debit/credit transaction, as you already know. On the other hand, a specific amount will be deducted from your bank account when you use your debit card. And, that transaction can appear as a DC settlement too.
However, you might confuse between a DC settlement and a DC payment. Well, a DC payment is different from a DC settlement. This is because a DC payment means a Documentary Credit. It refers to a specific payment method that protects both the exporter or seller and the importer or buyer in a contract of sale.
In a documentary credit, the buyer’s bank guarantees the payment to the respective seller with the terms and conditions that the seller has to maintain. Hence, it differs completely from a debit/credit or d/c settlement in a bank statement.
What’s the Purpose of a DC Settlement?
The DC settlement term might appear on your online bank statement to imply that the intended debit card transaction is complete. Thus, you can be assured that the intended merchant or payment processor has deducted the amount from your bank account.
You might notice the mention of DC settlement more frequently on your bank statement, as a debit card is one of the most used payment methods. How does a debit card work, by the way?
For example, if you use a debit card or swipe it at a store, your bank pre-authorises the payment first. This means the money will be automatically debited from your bank account when you swipe your card.
On the other hand, your bank account must have sufficient balance to initiate the payment. After pre-authorising the fund, the bank releases the fund to the desired merchant’s account and settles the debit transaction. That’s how you get a DC settlement in your bank statement.
Let’s see an example of a DC settlement. Suppose your bank account has a balance of $500. Now, you make a purchase of $50 through your debit card. The bank will deduct $50 from your account. So, your bank account will have $450 that you can use later.
A Detailed View of How a DC Settlement Works
You got a pretty clear idea about how a d/c settlement works. However, we have mentioned how it works and how different parties get involved.
Let’s review the process in depth:
- The debit cardholder uses or swipes the debit card. It can be an online payment portal or a card reader machine.
- Next, the payment processor or the card reader machine connects to the card-issuing company or the acquirer.
- The card issuing company recognises and verifies the card.
- Afterwards, the acquirer ensures the user’s account has enough funds to complete the transaction.
- Now, the mentioned amount gets deducted from the debit card-related account of the user.
- Well, the merchant’s account doesn’t readily get the funds. Instead, the merchant generally transfers all the day’s transactions to the card issuing company.
- Next, the card issuing company transfers the ‘hold’ funds to the merchant’s account.
Thus, the DC settlement process comes to an end.
What Can DC Possibly Mean, Otherwise?
Apart from d/c settlement on a bank statement, DC can refer to a Debit Card. So, you might notice DC in the place of a debit card on your online bank statement. Similarly, a Credit Card can be abbreviated as a CC.
Now, what’s the main difference between a debit card and a credit card? When you use a debit card, the mentioned fund gets directly deducted from your bank account. Simply put, the fund gets transferred from your bank account to the intended merchant’s account when you use a debit card transaction.
However, you get to use the credit assigned by the card-issuing company when you use a credit card. You don’t have to pay the amount from your bank account immediately. Later, you have to pay the card-issuing company or bank with the calculated interest and charge.
On the other hand, you can use your debit card as long as you have a sufficient balance. However, your credit card is eligible for payment on your behalf as long as it has credits.
On a contrary note, DC can also refer to a direct deposit. Direct deposit indicates a process of transferring funds from one account to another. The Automated Clearing House system makes the transfer possible.
Wrapping up…
Hopefully, the guide explains what a d/c settlement in a bank statement implies. If you notice irregular debit or credit transactions on your bank statement, contact your bank and take necessary action.
