For a transaction to go through the clearing process, the card-issuing bank and the merchant bank must be different.
If the card-issuing bank and the POS bank are the same in a transaction, that transaction is not subject to clearing. It is instead processed directly by the bank, posted to the cardholder's account and, according to the terms agreed with the merchant, to the merchant's account.
On-us and not-on-us transactions
In payment systems, transactions where the card-issuing bank and the merchant bank are the same are called "on-us" transactions, while those where they differ are called "not-on-us" transactions. In on-us transactions, the money moves from the cardholder's account to the merchant's account within the same bank, so there is no need to settle with another bank.
How are on-us transactions processed?
On-us transactions are approved and recorded by the bank within its own systems. Since the transaction does not enter the clearing file, it does not wait for the clearing period. How it affects the cardholder's limit and the merchant's account depends on the bank's own internal processing.
Differences from not-on-us transactions
- Clearing and settlement: Not-on-us transactions are sent to the clearing system and settled between banks. On-us transactions have no such step.
- Fee sharing: In not-on-us transactions, fees are shared between the card-issuing bank and the merchant bank. In on-us transactions, the entire fee stays with the same bank. For this reason, some banks may offer merchants different terms for transactions made with their own cards.
- Dispute process: When an on-us transaction is disputed, the process is handled within the bank, not between two banks.
