# Settlement Models
source: https://developer.mastercard.com/cross-border-services/documentation/api-ref/settlement-model/index.md

## Settlement Models {#settlement-models}

Cross Border Services offers three different settlement models.

### Prefunding Settlement Model {#prefunding-settlement-model}

Prefunding Settlement Model requires Originating Institutions to allocate their own funds into a settlement account designated for Cross-Border transactions. The Balance API and Balance Management user interface help customers manage their prefunding settlement account(s) by displaying:

* **Available Balance**: The balance available for new Transactions in the applicable account according to the settlement model.
* **Processed Amount**: The total aggregate amount of debits and credit funds processed during the Processing Day.
* **Reserved Balance**: A portion of the Settlement Bank Account balance or Credit Line Account balance allocated for Transaction Instructions that are being processed, but are not currently eligible to be settled.
* **Opening Balance**: The Available Balance, plus Reserved Balance at predefined start of the 24-hour Processing Day based on the selected settlement model.

### Collateral Settlement Model {#collateral-settlement--model}

Collateral Settlement Model requires Originating Institutions to allocate their own funds into a collateral account designated for Cross-Border transactions. The Balance API and Balance Management user interface help customers manage their credit line account(s) by displaying:

* **Available Balance**: The balance available for new Transactions in the applicable account according to the settlement model.
* **Processed Amount**: The total aggregate amount of debits and credit funds processed during the Processing Day.
* **Reserved Balance**: This is a running total, which can span over several days. This is the total amount in the account reserved for transactions in the Pending/Processing stage or Quote Confirmation stage. This balance will be applied to the Processed Amount or returned to the Available Balance based on payment processing.
* **Opening Balance**: The Available Balance, plus Reserved Balance at predefined start of the 24-hour Processing Day based on the selected settlement model.

### Next Day Settlement Model {#next-day-settlement--model}

Next Day Settlement Model groups transactions processed between 1:00 AM UTC and 12:59 AM UTC the following day with a status of SUCCESS, RETURNED, or PENDING with a stage of Eligible for Settlement, to determine settlement funds due from the Customer. The time when funds are due is set by Mastercard Treasury specific to each settlement currency.