For online sellers, everything in the world makes sense if by the end of the day their bank account tallies correctly with all the payments made by customers.
Unfortunately, that doesn’t happen very often as discrepancies arise between the final sales reports and funds received in merchants’ banks. The reasons could range from payment delays, discounts, to chargebacks and payment failures.
These inconsistencies in accounts can become quite a challenge for merchants in the long run. An effective merchant settlement reconciliation system can solve this problem.
What is merchant settlement reconciliation?
It is simply a process to match merchants’ bank accounts with customers’ digital payments. Payment reconciliation, especially via payment gateways, is crucial for businesses to track cash flows.
Since online merchants offer discounts and cashback, more often than not reconciliation of digital payments becomes quite a challenge. Then, there is the probability of online transactions failing or getting delayed.
An effective way to reconcile merchants’ settlements is to align every step of the payment process to map the cash flow. Such a process can catch any faulty or fraudulent transactions.
Challenges with payment reconciliation
In a day, online businesses accept multiple payments via a handful of digital channels. Very often, merchants do batch settlements at the end of the day or during a particular period.
Many credit card and debit card payments can take as much as three business days to settle payments. On top of it, chargebacks and reversals have a separate timeline.
With so many uncertainties, how does a merchant identify and solve issues with individual invoices?
An automated settlement reconciliation system can identify individual transactions against the amount credited to the merchant’s bank account. This way, any missing or faulty transactions, double debits, and frauds can be identified swiftly and fixed before the whole accounting process crumbles.
Advantages of an effective payment reconciliation process
Apart from making the process of reconciliation easy for your accountants, having an effective merchant settlement reconciliation system has many benefits for business:
- Effective cash flow management
A system that can identify individual transactions including discounts, chargebacks, and refunds, to specific customer payments can catch discrepancies like a double refund. In case of a dispute, merchants can approach their banks with these IDs to claim the money.
- Defense against frauds
It is imperative to insulate your business from fraudulent payments. Having a line-by-line tally of every transaction is a great way to keep such frauds at an arm’s distance. Merchants need a system that automatically reconciles all settlements and provides a detailed report of electronic transactions for every digital channel. This will help merchants quickly identify any suspicious activity and report the same without delay.
- Keeping track of failures and defaults
You must have heard of the phrase, “keep your friends close, and enemies closer.”
Payment failures are merchants’ biggest enemies and they should keep a keen eye on them. The settlement reconciliation report provided by payment gateways is a great resource for that. It provides merchants with details of failed transactions and patchy payment networks.
It also allows merchants to identify channels that often go through network issues. Without raising an alarm, inform them that their preferred network is patchy and that they should pay using another payment method.
Now, you have not only reduced the number of failed transactions, but also improved customer service.
- Better dispute settlement
Despite all the efforts, it’s inevitable for a few payments to fall through the crack leading to payment failures. In such scenarios, merchants can rely on payment reports to efficiently settle disputes. A payment reconciliation system can throw up details of failed transactions or delayed refunds, thereby allowing your team to correct them sooner.
Paytm Payment Gateway’s efficient settlement reconciliation
At Paytm, we understand how crucial payments are, especially for small and medium businesses. That is why Paytm Payment Gateway provides easy solutions to reconcile payments.
Here is a quick snapshot of a few top features of our payment gateway:
- Settlement API: Every merchant who chooses to use our payment gateway gets access to our integrated API solutions. You can use the API to match payments against the amount credited to your bank account. It allows you to map each and every transaction as it can give the smallest details of online payments such as transfer reference number, refund amount and commission. The system also provides an option to choose custom date ranges to track down individual transactions for a specific date and time
- Custom dashboard: Paytm Payment Gateway’s settlement dashboard is made keeping everyone’s needs in mind. Thus we give merchants the freedom to customize their dashboards. If you are looking for something specific, you can easily change settings in the dashboard to show those specific fields that you wish to monitor. Having access to only relevant information can simplify the reconciliation process
- Reports on your fingertips: Apart from viewing payment reconciliations on the dashboard, you can also download a reconciliation report. The report is also shared on your registered email. You can also enable SMS notifications for better visibility
- Update of transaction status: For merchants who want to track each and every transaction in real-time, Paytm Payment Gateway has you covered. We notify you of the status of individual transactions so you are always aware of successful, failed, and pending transactions. This will help with better payments management, dispute resolution, and fraud detection
Best practices of payment reconciliation
When it comes to tallying the books, there are two types of merchants in the market: anxious ones, and then the ones with a laid-back approach. We believe both attitudes are detrimental to your business. We have outlined a few of the best industry practices to follow for payment reconciliation:
- Reconcile payments frequently rather than putting them off till the end of the month or quarter
- If there is an option, use different reconciliation ways to group payments together to see if the sums tally. Paytm Payment Gateway has multiple ways of payment reconciliation, giving you an ample number of ways to check settlements
- Analyze individual transactions only if you find that the total does not match
- Dispute double charges, incorrect refunds, chargebacks, or suspicious activity immediately
There comes a day in every online merchants’ life when they are left scratching their heads trying to make heads or tails of their accounts. If you don’t want that day to come to your life sooner, switch to Paytm Payment Gateway.
