What is meant by 'Funding' in the context of merchant payments?

'Funding' in the context of merchant payments refers specifically to the process of transferring money to a merchant for the sales transactions that have been processed. When a transaction is completed, the funds from the customer are ultimately transferred to the merchant's account, which is referred to as "funding."

This process typically occurs after the merchant submits their deposits to the payment processor or acquirer following a period of transaction settlement. Funding is crucial for merchants, as it directly affects their cash flow and overall business operations. The timing, method, and amount of funding can vary depending on the agreements established with payment processors or financial institutions.

In contrast, the other options touch on different aspects of the financial process related to merchant transactions but do not encapsulate the concept of 'funding' accurately. For instance, while fees and transaction processing costs are elements of the overall costs associated with accepting payments, they do not represent the transfer of funds that constitutes funding. Understanding this concept helps clarify how merchants receive payment for their goods or services after a customer transaction is processed.