Authorized Settlement Agent

Imagine the U.S. banking system as a pyramid. At the top is the central bank, known as the Federal Reserve. It prints the money and provides regulation and oversight for the other banks, all the way down to your local branch, housing the $103.22 you currently have in your checking account.

One of the designations along the pyramid is the "authorized settlement agent." This sounds like a fancy term for a police hostage negotiator. But in reality, it refers to a bank that can send checks to the Federal Reserve. Money then moves from there through the rest of the banking system.