Payment gateway reconciliation: what you need to know

Ross McGee
Ross McGee

The payments landscape is one of immense opportunity. Various factors create these conditions but one contributes the greatest, the volume of options which exist within the sector. In fact, over 200 alternative payment methods exist worldwide. Rightly, no firm wishes to miss out on any payment option. As a result, payment gateways exist - gifting companies with the ability to operate with numerous PSPs through just one connection.

Whilst this is great on paper, it inevitably adds greater volume and complexity to transactions, creating a difficult-to-execute reconciliation process. However, payment gateways are not to be missed out on. Discover the intricacies of payment gateway reconciliation and how to simplify this process.

What you should know about payment consolidation

There’s a reason that every firm has a financial department - they value their money. As a result, payment consolidation is a core activity which finance teams must fulfil. Here is both the rundown on it and every reason why it is so important:

What does "reconciling your payments" mean?

Every single payment involves a minimum of two accounts. One will be debited and the other will be credited. In order for no disputes to take place, it is crucial that these totals match up. “Reconciling your payments” ensures that this is the case by simply cross-referencing payment totals between accounts.

Examples of instances when reconciling payments takes place include:

  • Bank account reconciliation
  • Credit card and debit card reconciliation
  • Digital wallet reconciliation

Settlements and payment reconciliation have different functions

When defining what payment reconciliation is, it is also important to be mindful of what it is not. As a result, a distinction should be made between settlements and payment reconciliation.

Settlements are simply the action of exchanging funds or assets once a deal has been agreed.  In contrast, payment reconciliation is the activity which happens after a settlement to check that financial records from one party match those recorded by a counterparty. 

Why is regular payment reconciliation important for your business?

It’s forecast that by 2026, roughly 60 million payments will happen every single day in the UK alone. Failure to keep up with just one of these can easily create a domino effect of inaccuracies within a company’s financial books. This is what makes regular payment reconciliation important. It spots errors before they detrimentally affect accuracy.

With accuracy assured, companies can ensure:

  • Compliance with regulations 
  • Identification of fraud
  • Reliable insights
  • Informed forecasting
  • Dependable financial reporting

What is the process of payment reconciliation?

As mentioned, reconciliation is ultimately bringing together and cross-referencing internal and external sources of data. However, both before and after reconciliation takes place, additional internal and external activities must be executed.

Internal functions

To commence payment reconciliation, finance teams are responsible for sourcing internal payment data such as bank statements, invoices and receipts. Once this data has been reconciled against an external data set, further internal functions take place. These include:

  • Investigating discrepancies
  • Documenting discrepancies with supporting evidence to support resolutions and audits
  • Attend to any adjustments to accommodate for discrepancies
  • Producing a reconciliation report
  • Final approval of reconciliation report

External activities

The collection of internal payment data is only one-half of what is required to initiate reconciliation - external payment data must be sourced too. This is typically from bank statements, payment providers, vendor statements etc. 

Additional external activities include external auditing of the reconciliation process, compliance checks and sharing reconciliation reports with relevant stakeholders. None of these activities actually contribute to the process of payment reconciliation but are necessary nevertheless.

Payment gateway reconciliation

Payment reconciliation is therefore a process which is informed by multiple sources of data and requires the utmost levels of accuracy. When conducted with the inclusion of payment gateways, the facets of good payment reconciliation become even more important.

After all, payment gateways increase the volume of transactions whilst adding a level of complexity. For example, transaction aggregation, processing delays, fees and chargebacks are all common with payment gateways and are tricky to contend with when reconciling manually. However, automated reconciliation software can overcome these problems: 

Reconciliation in real-time

With the processing power to reconcile transactions in seconds, automated reconciliation software can keep up with the constant flow of payments which take place via payment gateways. For reconciliation professionals and others within financial departments, this saves them a considerable amount of time, allowing them to focus on value-adding initiatives instead.

Financial analytics

With high volumes of transactions making it difficult to manually reconcile data from payment gateways instantaneously, this inevitably has a knock-on effect on financial analytics. Fortunately, automated reconciliation not only cuts through the issue of volume, it also has the capability to accommodate for fees, processing delays and other complications which would normally slow down reconciliation. 

As a result, finance teams can reconcile payment gateway data whenever necessary. This means that no delays should occur when it comes to gathering financial analytics. Moreover, due to the fact that financial insights should always be based on reconciled data, many automated reconciliation providers - including Aurum - recognise that it is conducive to offer data visualisation tools within one platform.

Ease for users

Motivation for implementing payment gateways often includes making life simpler for payment professionals by bringing multiple PSPs and other services under one roof. However, as demonstrated throughout this article, when it comes to reconciling payment gateways, there can be complications. Automated reconciliation though restores ease to finance professionals who adopt payment gateways.

Along with being able to reconcile high volumes of transactions in seconds and provide influential analytics, the best-automated reconciliation software also provides end-to-end automation. This includes extracting data from external parties, data transformation, loading reconciled data to internal finance systems, journal entry automation and more, encompassing what it means to make things easier for end users. With over 600 APIs Aurum is able to provide all of these services to any client, no matter who else they work with.

Pinpoint problems at their source

To identify potential payment discrepancies, an independent and agnostic reconciliation software should be able to connect to both gateways and PSPs. This allows for a thorough, deeper investigation to take place of all transactions, so that exceptions are identified along with their source. Whilst most gateways offer ‘reconciliation’, not all of them can help identify where the issue really is happening: in their system, or with one of the vast amount of PSPs available.

Make the most of payment gateways

With 8% of 1,799 survey respondents stating that they have abandoned a checkout process due to not being offered enough payment options, it is easy to see why firms regularly look to payment gateways to lower their abandonment ratio. Even though reconciliation with this technology can be difficult, the positives they offer are far greater. 

Yet, the best of both worlds is attainable. The benefits of payment gateways and simple, quick and accurate reconciliation are not mutually exclusive. Experience this today by booking your Aurum demo.


How do I reconcile my payment gateway?

The easiest way to reconcile transactions which involve a payment gateway is through automated reconciliation software such as Aurum. With over 600 APIs, unlimited scalability, and the ability to reconcile real-time data in seconds, Aurum is perfectly designed for the high volume of complex transactions which payment gateways generate.

What are the things you need to consider during payment reconciliation?

Fundamental to reconciliation is accuracy. For example, accuracy regarding cross-referencing variables such as account number, payment amount, and more are all required in order for reconciliation to be successful. In addition, audit trails and timeliness must also be considered in relation to reconciliation. This is because reconciliation is a core activity to ensure both compliance and valuable data insights respectively. To achieve a mix of accuracy, compliance and speed, adopt automated reconciliation software.

Ross McGee
Ross McGee

Content and Community Marketing Manager

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Ross McGee is a marketing manager at Aurum Solutions who deep dives into financial processes, technology, and best practices to share insights that help finance professionals of all levels maximise their potential.

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