In terms of payments, when is settlement finality typically reached?

Settlement finality is achieved when the funds are irrevocably transferred between financial institutions or parties involved in a payment transaction. This means that once the transfer of funds has been executed, it cannot be reversed or undone. This finality is crucial because it provides certainty and assurance to both the payer and the payee that the payment process has been completed and that the funds are now available to the recipient without the risk of reclamation.

The essence of settlement finality lies in establishing a clear endpoint in the payment process, which is essential for maintaining trust in the payment system. It ensures that once a transaction is settled, it stands as a definitive record that the obligations between the parties have been fulfilled.

While the submission of payment instructions or the confirmation by the recipient are important stages in the payment process, they do not signify that the transaction is complete and final. Likewise, the exchange of payment information, although a necessary component of the transaction, does not reflect the actual transfer of funds. Thus, irrevocable transfer marks the decisive moment of settlement finality.