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Reconciliation of payment card transactions. Where exactly are the challenges?

Reconciling cashless payment methods in large retailer environments is not easy. Why is that? What are the challenges?

A retailer lives by selling goods to its customers. Nowadays, sales take place through traditional stores, on the Internet, at vending machines, via retailer portals, and through mobile channels. Not only have the sales channels and their processes expanded, but so have the payment methods. What remains, however, is that for all sales made, the retailer receives a credit to his bank account. For larger retailers, this can quickly add up to several hundred thousand euros a day. And this is where the problem begins. It’s not easy to reconcile such a large volume of credit notes with all the individual sales receipts. Time consuming steps are involved, accompanied by manual checks and a lot of individual know-how. Matching and reconciling becomes even more complex when a merchant receives multiple credits from multiple payment service providers (acquirers/network operators). And that's not all, there are also different acceptance contracts with different conditions and payment periods for the distance selling versus the face to face presence business. The complexity increases further when merchants trade in in multiple countries and accept different currencies. To add to the complexity, many countries have nationally popular debit cards, private credit cards and, more recently, an increasing number of mobile payment methods.

Requirements in a complex environment

In such a complex environment, without a professional solution approach, 100% reconciliation of payment cards is no longer possible. The reason is simple: digitisation and automation of end to end process are needed. To do this, data sources for the reconciliation processes must first be identified. Then an analysis of the reconciliation and matching criteria is required. This raises questions such as: What are the references that allow bookings to be automatically reconciled? How can a bank credit be referenced to the individual card transactions? How are differences identified, efficiently clarified and, if necessary, quickly and reliably corrected before they are transferred to accounting? What processes and audit measures need to be created?

We have researched these questions for years with many national and international retailers and have also implemented a variety of solutions. After many years of experience, we have come to the conclusion that a payment sub-ledger, similar to an accounts receivable ledger can best solve this problem. We have incorporated all the experience gained into our reconciliation solution and developed such a sub-ledger, which is optimized for the automated reconciliation of cashless means of payment;we call it payment card accounting.

Payment card accounting enables you to establish references between individual transactions (sales data-card data-bank credits). This allows each individual transaction to be automatically reconciled. Any discrepancies are immediately analysed and can be corrected and appropriately cleared  through the"ReconHub" user interface. Once everything has been reconciled, and when the bank credit can be 100% allocated to transactions, the data is automatically posted to the existing accounting system.

If you have any questions about how to integrate ReconHub into your payment card booking process please get in touch, and we will demonstrate all the benefits of digitising your booking processes.

Christian Vetsch

Christian is partner at Abrantix and he is responsible for client care. He works in the payment industry since 1991 a has tremendous knowledge and experience in the payment industry. With a strong national and international network he places a great deal of value on direct client contact.

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