We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Straight Through Processing?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Straight through processing is an automated approach to payment processing used in the financial world for activities like handling trades at brokerage firms. This approach streamlines and accelerates the process, making same day processing a possibility and reducing many of the risks associated with financial transactions. It requires the use of automated systems at each stage. Such systems are not universally available and thus, straight through processing is not always an option for a transaction.

In straight through processing, the details of a transaction are entered initially into an electronic system. Automated functions take over, sending the details down the line to parties involved in the transaction. This data can be transmitted in a very short period of time and no human beings are required to enter or doublecheck the information, with the computers handling all of the details. This allows the transaction to be processed extremely quickly. If there are legal restrictions on how transactions can be performed, a human may be required at a particular stage to ensure that the transaction is compliant.

One advantage to using straight through processing is that it reduces transaction risk. All parties involved must provide payment immediately and also submit the materials being sold instantly. This reduces the risk that a transaction will not be completed properly. In addition, the instantaneous nature allows for real-time pricing and feedback, allowing people to get better prices on transactions. The use of automated systems cuts down on transaction costs as well, allowing people to pocket more of a profit on their transactions.

The removal of delay puts the settlement date on the same day as the transaction. For both buyers and sellers, this is a distinct advantage. Under older payment processing systems, it could take as many as three days to settle and finalize the transaction. Intervening events could cause problems with the transaction, ranging from misunderstandings about funds availability to people backing out of contracts after the fact.

Systems used for straight through processing are constantly under improvement. The systems must be highly accurate, stable, and secure to ensure that they will process transactions safely and in a timely fashion. Failures of automated systems can create a ripple effect as transactions back up. Companies that provide such systems usually offer 24 hour support to their customers, with on-call technicians available to address problems rapidly by fixing the system or providing alternate methods of transaction processing while the system is inspected and restored.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.