What is Credit Deduct in payment processing?

Credit Deduct in payment processing refers specifically to a deduction from the proceeds of a payment. This typically occurs when there are various adjustments made to the payment amount due to different factors, such as chargebacks, refunds, or disputes. Essentially, it is a way for financial institutions or payment processors to reflect the true amount that will be settled after considering any necessary deductions from the originally processed payment.

This understanding is critical in payment processing as it helps businesses account for their actual revenue accurately. When understanding payment flows, recognizing what deductions might be applied allows businesses to manage their cash flow effectively and anticipate changes in their financial statements.