Settlement & Clearing

ColossusNet eliminates the traditional dual-message authorization/clearing cycle by combining authorization and settlement into a single atomic transaction.

Single Message System

ColossusNet operates as a Single Message System (SMS) where authorization and settlement occur atomically in the same transaction:

1. The ISO 8583 MTI 0200 (Financial Request Message) triggers both authorization validation and token transfer.
2. There is no separate clearing or settlement batch. The ERC-20 transfer executes during authorization.
3. The ARPC (MTI 0210) confirms that settlement has already occurred.

This eliminates the traditional dual-message authorization/clearing cycle and the associated settlement risk window.

Settlement Flow

The settlement flow follows this sequence:

If validation fails at any point, the entire transaction reverts and the terminal receives a decline response code (DE39=05). When validation succeeds, all fee transfers and the merchant payment execute atomically, and the terminal receives an approval (DE39=00).

Real-Time Settlement Properties

Cardholder Balance & Credit

ColossusNet supports three settlement tiers:

Direct Debit (0%)

The cardholder's ERC-4337 kernel account on ColossusNet holds stablecoin tokens. Transactions debit directly from this balance without issuer involvement. The merchant receives the full transaction amount. No chargebacks.

Consumer Credit (1.70%) and Premium Credit (2.20%)

The issuer posts collateral to ColossusNet and funds transactions on behalf of the cardholder. The settlement flow works as follows:

1. The merchant is settled instantly from the issuer's collateral pool (minus the interchange fee: 1.70% or 2.20%).
2. The issuer asynchronously retrieves the settlement amount from the cardholder's source chain wallet.
3. Retrieval uses the card's EMV signature and the ERC-7579 modules (EMVValidator, EMVSettlement) installed on the cardholder's source chain account.

Consumer Credit requires a $100K refundable deposit and is permissionless. Premium Credit is permissioned with KYC/AML mandatory, capped at 20% of total card issuance.

Credit Limit Enforcement

Credit limits are managed by the issuer via the signing API (/api/v1/eth_signRawTransactionSync). The issuer evaluates cardholder creditworthiness and balance before returning a signed funding authorization. Available credit calculation is handled externally by the issuer, outside ColossusNet's authority.

Merchant & Acquirer Settlement

During an EMV transaction, stablecoin balances are transferred directly to the merchant or acquirer account on ColossusNet:

Wire Liquidation

Merchants and acquirers can optionally liquidate stablecoin balances via wire transfer to a traditional bank account.

• Wire liquidation requires a KYB/AML (Know Your Business / Anti-Money Laundering) check.
• Liquidations can be scheduled on a batch cycle.
• Implementation details are a work in progress.

Settlement Export API

Acquirers who conduct follow-on settlement with their merchants after wire liquidation can generate a settlement export. ColossusNet indexes and hosts a settlement export registry.

Request

GET /api/v1/settlements/{acquirer_id}

Response

[
    {
        "merchantId": "...",
        "amount": "0.00"
    }
]

The response returns an array of merchant settlement records for the specified acquirer, including the merchant identifier and the accumulated settlement amount.

Disputes & Chargebacks

Dispute handling depends on the settlement tier:

• Direct Debit: No chargebacks. Transactions are final. The cardholder authorized the payment, the funds moved, and the merchant has them. Disputes between buyer and seller are resolved outside the payment network.
• Consumer Credit: Dispute resolution is backed by the issuer's $100K refundable deposit (separate from the collateral pool).
• Premium Credit: Same dispute resolution as Consumer Credit, backed by the issuer's deposit (amount set by request).

In all cases, on-chain settlement is atomic and final at the protocol level. The on-chain transaction record provides an immutable audit trail for dispute evidence.

v1 Limitations

Card-present and card-not-present transactions use the same cryptographic authentication and cost the merchant the same rate.