What it means
A card payment has two broad stages. First the purchase is approved in a matter of seconds, and then, later, the banks involved exchange the transaction details and the money.
INET belonged to the second stage, carrying the information and settlement instructions that allowed banks to balance what they owed each other. To see why this is needed, picture a customer paying $80 at a shop.
The cardholder's bank (the issuer) agrees to pay, and the shop's bank (the acquirer) credits the merchant. The two banks must then settle between themselves, usually in a single net amount for many transactions rather than one payment per purchase.
Netting is the practice of offsetting what each bank owes the other so that only the difference moves. This reduces the number and size of transfers and the cash that banks must hold to complete them.
Card networks in general rely on netting to keep settlement efficient. The system also deals with fees.
The merchant receives the sale amount minus a charge, part of which goes to the issuer as an interchange fee, part to the network and part to the acquirer. The settlement networks calculate and apply these amounts so each party receives the correct net sum.
INET is mainly of historical interest today. It was later merged with INAS into a combined network known as Banknet, so modern documents refer to the combined system and not to the two original ones.
For finance and operations teams, the lasting lesson is the lag. Card sales are not cash on the day, because the money moves through clearing and settlement, which is why payment providers quote payout times such as one or two business days.
In practice
Real-world examples.
Example
A grocery store takes thousands of card payments in a day. The sales are batched and sent through the network, and the store's bank receives a single net amount for the day after fees. The shop owner does not see the transfer between banks directly, only the net deposit that later appears in the business account.
Example
A small online business is surprised that a sale made on Monday reaches its bank account on Wednesday. Its accountant explains that the approval was instant but the settlement of funds between banks follows later.
Example
A payments analyst reading older documents finds INET described as the network that moved funds between banks. She notes in her glossary that the function now sits within the combined Mastercard network. In her notes she adds that the details of settlement vary by country and bank, so a business should check the payout schedule in its own merchant agreement.
Case study
Seen in the real world.
Brightwater Cafes is an illustrative, fictional group of five cafes that accepts card payments for about 80% of sales. The new finance assistant could not understand why the bank balance was always lower than the sales report.
The finance manager explained settlement timing. On a day with $10,000 of card sales, the cafes would receive roughly 10,000 less a fee of 2%, which is 10,000 x 0.02 = $200, so $9,800 would arrive after one or two business days. She stressed that the difference was a timing and fee effect, not missing money, and she showed the assistant how to reconcile the bank statement to the sales report line by line.
She then built a simple cash forecast that shifted card takings forward by two days and deducted the fees. The forecast also allowed for weekends and bank holidays, when settlement is paused and several days of sales arrive together on the next working day. In this illustrative story, the forecast removed the weekly surprises and let the group plan its supplier payments with confidence. The group's bank statement showed the card deposits as a single line each day, not as individual sales, which is how netting works in practice. Her forecast also set aside a small allowance for chargebacks, which are refunds forced on a merchant when a cardholder successfully disputes a purchase.
Watch out
Common mistakes.
- Counting card sales as cash on the day of the sale, when the money usually arrives one or more days later.
- Forgetting that fees are deducted before the merchant is paid, so the amount received is lower than the sale total.
- Believing INET is still a separate system, when it was combined with INAS into Banknet.
Questions
People also ask.
What was INET used for?
It was used within the Mastercard system to transfer settlement information and funds between banks after card transactions.
What is the difference between INAS and INET?
INAS handled authorisation at the point of sale, while INET handled the later transfer of money between banks.
Why does it take days for card payments to reach my account?
Because approval is instant, but clearing and settlement happen in batches, and the payment provider may add its own processing time.
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