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Insights and Expertise
2. What is most misunderstood regarding reconcilia-
tion? Spotlighting companies that promote
Key risks in ISO reconciliation
Settlement reconciliation is essential to the financial Settlement data is provided at a portfolio level, not a innovation in the payments industry
health of ISOs and merchant processors, but the pro- merchant level. When there is a merchant-level issue
cess is full of pitfalls. Here are critical risks to watch: that does not resolve itself, any research involves assis-
tance or intervention from the processor to drill down
• Timing gaps: Delays between network funding a problem to a specific merchant or merchants.
and merchant payouts can mask shortfalls.
Many times we know there is a problem but need to
• Data mismatches: Merchant-level issues often work with the processor to determine if it is a global
require deep dives into processor reports. issue or something merchant specific.
• Reserve mismanagement: Misapplied or unrec- 3. When is the best time to hire someone to handle set-
onciled reserves can distort balances. tlement reconcilement?
• Chargeback confusion: Improper handling of
disputes may result in missed or duplicate deb- Whether it be someone like me or an internal person
its. at your company, you should have someone involved
in reconciling the settlement account when live testing
• Processor variability: Different processors and begins (before any merchants are boarded).
card brands mean no universal reconciliation
method. And, if you are establishing a new relationship with
a processor, it can be beneficial to have someone in-
Diligent, daily oversight helps prevent costly errors volved with the implementation calls, so that funding
and protects businesses from financial surprises. protocols are set up correctly before going live.
Karen's contact email is karen@pmtsconsult.com. Custom pages on our high-tra c website showcasing

I'll close this article by emphasizing her last point. Pro-
As mentioned, some merchants pay a daily discount. Fur- cessors have core settlement reports, but the reconciliation your company’s unique message
ther, dispute items must be accounted for and again, by process will differ depending on the set-up instructions
card network. Chargebacks are netted against an acquir- provided.
er's funding wire, and the merchant processor needs to • Your own, customized News from the Wire that highlights
determine if the merchant is in turn debited or if the funds Because the set-up instructions are set prior to any pro-
are suspended while an item is adjudicated. cessing, they are sometimes not fully understood, but stories about your company
once set, they are often immutable and dictate the daily
Exception item transactions must be monitored daily to processes required to reconcile and settle a portfolio. • Featured content: updated monthly, either by your in-house
ensure any item that was debited is either corresponding- Some of these decisions are critical and need to be fully
ly assessed to a merchant or rejected back to the issuer ... contemplated. writers or by one of ours
and within the prescribed time frames. Again, reconcili-
ation is not automatic, and rejects and on-the-floor items Reconciliation issues will occur. Understanding the pro- • Custom infographics and videos
are commonplace and require manual intervention. cess and underlying reporting is key to resolving these

issues in order to prevent larger and more systemic prob- • Premier content placement in each issue of e Green Sheet
A real-life balancer lems.
Karen Currie makes her living providing reconciliation As founder of Humboldt Merchant Services, co-founder of Eureka • And so much more...
services for merchant processors and sponsor banks. She Payments, and a former executive for such payments innovators as
works with all the common processors and is well versed WePay, a division of JPMorgan Chase, Ken Musante has experience in
in their recommended reconciliation custom and practic- all aspects of successful ISO building. He currently provides consulting
es. I asked Karen three questions as follows:
services and expert witness testimony as founder of Napa Payments
1. What is the most difficult part of daily/monthly rec- and Consulting, www.napapaymentsandconsulting.com. Contact him Rick@greensheet.com
onciliation? at kenm@napapaymentsandconsulting.com, 707-601-7656 or www.
linkedin.com/in/ken-musante-us.
It can be very tedious and time consuming. Some days
run smoothly; but when there is a problem or reject is-
sue, there are thousands of reasons, and each of these
could have a different resolution to make the settle- 707-284-1693
ment account whole.

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