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Net Settlement on Paylias

Traditional payment networks like Visa and Mastercard rely on net settlement to resolve balances between issuers and acquirers. But these systems are closed, expensive, and built on legacy financial infrastructure that wasn’t designed for modern software platforms. At Paylias we’re rebuilding the settlement layer from the ground up—using open infrastructure, programmable money, and verifiable proofs to enable netting across platforms on-chain. This is a preview of how Paylias calculates net positions between participants and settles funds using stablecoins and smart contracts.

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How it works

Settlement on Paylias runs once per day, at a predefined cutoff window. During this window, all transactions flowing through the network are recorded. When the cutoff hits, the engine kicks off.

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1. Aggregate transactions

The engine collects all transactions initiated during the cutoff window. This includes:
  • Push payments from one alias to another
  • Pull requests (like a merchant requesting payment from a customer)
  • Refunds, and network-level fee adjustments

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2. Group by participant

Each transaction is tied to two participants:
  • The issuer — the participant initiating the transaction
  • The acquirer — the participant receiving funds
We use this mapping to understand the directional flow of funds across the network.

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3. Calculate net positions

Instead of settling each transaction individually, we collapse all activity into a single net position for each participant.
  • Credits (funds received) are added
  • Debits (funds sent or refunded) are subtracted
The result is a single value per participant: a net credit (they are owed funds) or a net debit (they owe funds into the network).

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Submitting to the blockchain

Once all net positions are calculated, they are encoded into a Merkle tree. Each leaf in the tree represents a participant’s final position: 
{
  "partner_id": "part_xyz",
  "amount": 125000,
  "direction": "credit"
}
The root of the tree is published to a Paylias smart contract on-chain. Participants receive a Merkle proof that they can later use to settle their dues. For a detailed walkthrough of how we use Merkle trees in this process, read our blog post, Netting Payments with Merkle Trees.

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On-chain settlement

Once the root is live:
  • Participants with a debit position are expected to fund the smart contract
  • Participants with a credit position can withdraw their funds, but only once all required funds have been received
This gating ensures that no participant is paid until all dues have been funded, enabling atomic net settlement across the entire network.

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Why this matters

Most fintechs today are locked out of direct access to settlement networks. They rely on expensive intermediaries and opaque pricing structures just to move money between platforms. Paylias makes this infrastructure accessible. By pushing settlement on-chain:
  • There is no central clearing house
  • Every participant has a cryptographic proof of what they owe or are owed
  • The entire flow is verifiable, programmable, and capital efficient

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What’s next

This system is still in development. We’re currently:
  • Finalizing smart contract logic for proof verification and withdrawal gating
  • Designing tooling for reconciliation, test rounds, and monitoring
  • Iterating on feedback and refining the system
If you’re a fintech, a wallet provider, or a stablecoin issuer and have feedback on how you would like settlement to work for your platform, I’d love to speak with you! Reach out to me at ziyad@paylias.xyz.