Payment Service Providers, or PSP for short, help process transactions for businesses. They serve as as an intermediary between businesses and customers for payment related tasks. Since payments are done online, the money are temporarily kept in the PSP cash account, which is also called a merchant account.
Then when money is transferred out of merchant account, into a business cash account, that's considered a Payout event, sometimes also called a Settlement event.
This is when an accounting journal entry needs to be created to represent the payout event.
|calendar date of when the payout event occurred|
|full amount of the payout|
|e.g. Stripe Merchant Account|
For the month of November, an e-commerce company received $1,000,000 from Stripe in their bank account.
The company sets up Stripe to payout at every month end. The following journal entry is created when $1,000,000 received on November 2022.
|Date||Account||Debit Amount||Credit Amount|
|Stripe Merchant Account||1,000,000|
Updated about 1 year ago