From Payment to Settlement: Mapping the Full Money Journey in Digital RMB

01. Full Payment Chain: The Money’s Travel Path

Every daily scan, card swipe, or transfer hides a sophisticated flow of funds. A single transaction moves from the payer’s account to the payee’s account through a chain involving the customer, banks, clearing institutions, and the central bank, each governed by explicit rules.

Payment Initiation : The customer triggers a payment at a merchant, enters a password, and sends a payment instruction.

Clearing : The instruction passes through the acquiring institution and the clearing network (e.g., UnionPay) to the issuing bank, where all transaction data are aggregated and net amounts are calculated.

Settlement : Based on the clearing results, the central bank’s payment system transfers funds from the issuing bank’s reserve account to the acquiring bank’s account, completing the actual money movement.

Accounting : Both issuing and acquiring banks record the transaction in their back‑office systems, ensuring the merchant finally receives the settled funds.

The core logic is a front‑end trigger, a middle‑end clearing, a back‑end fund transfer, and a final accounting record. The whole process can finish within seconds thanks to robust financial infrastructure.

02. Detailed Introduction of Each Link

1. Customer Payment – The Starting Point

"Payment" is the customer's action of initiating a transaction.

2. Acquiring & Acceptance – Who Receives the Order

Acquiring is the process of receiving and handling the payment request. Two key entities are involved:

Issuing Institution : The bank that issued the card and deducts the payer’s money.

Acquiring Institution : The entity that collects money for the merchant, which can be a bank or a payment service provider.

3. Clearing – Calculating Who Owes Whom

Clearing validates the legality of the payment instruction, aggregates transactions, and performs net‑ting ("轧差") to determine each participant’s net payable or receivable. It does not move real funds; it merely performs accounting calculations to reduce settlement frequency, improve efficiency, and control risk.

Key participants include banks, UnionPay, and NetClear. For example, if Bank A has 100 incoming and 80 outgoing items with Bank B, only the net amount is settled.

Major clearing systems:

High‑Value Payment System (HVPS) : Handles inter‑bank large‑value transfers (over ¥500,000) with real‑time settlement, acting like a "financial high‑speed rail".

Batch Electronic Payment System (BEPS) : Processes small‑value batch payments such as utility bill deductions, operating like a "city bus".

Internet Banking Payment System (IBPS) : Often called "super online banking", supports cross‑bank mobile transfers with instant settlement, similar to a "ride‑hailing" service.

UnionPay manages card‑based cross‑bank clearing, while NetClear handles third‑party payments (WeChat, Alipay), acting as a "transfer hub" that normalizes instructions across institutions.

4. Settlement – The Final Money Transfer

Settlement is the irreversible transfer of actual funds based on clearing results. In China, all banks hold a reserve account at the People’s Bank of China; settlement occurs through this account, giving the transaction legal effect.

5. Accounting – Recording the Transaction

After settlement, banks record the fund movement in their accounting systems, update ledgers, and generate reports in compliance with the "Enterprise Accounting Standards" and "Financial Enterprise Rules". Relevant accounts include "Funds Placed with the Central Bank", "Deposits Received", and "Clearing Funds".

Although accounting does not affect the cash flow directly, it ensures that books match reality and satisfies regulatory reporting requirements.

Conclusion

Digital RMB’s hallmark of "payment equals settlement" means that once a payment is made, clearing, settlement, and accounting happen instantly and irrevocably, offering a compelling advantage for scenarios that require immediate finality.