When PAY. processes a payment from a payer, an important financial process starts behind the scenes: reconciliation. This checks whether every successfully processed payment matches one-to-one with the settlement that PAY. receives from the payment option provider, card scheme (VISA, Mastercard, AMEX), or the bank.
Reconciliation therefore forms an essential link between processing a payment and ultimately paying out the merchant. PAY. can only clear reconciled funds. This limits the risk of financial arrears and losses.
Depending on the type of payment option, this process works in different ways. We distinguish four situations:
The basics: every payment is reconciled
The process starts with the consumer. The consumer makes a payment in a webshop, app, or physical store. PAY. processes and registers this transaction and forwards it to the relevant payment option provider, card scheme, or bank.
PAY. then receives a settlement from that same party. This settlement contains the financial statement of the previously processed transactions.
After that, reconciliation takes place. PAY. compares the registered transactions with the settlement received. Among other things, amounts, references, and statuses must match each other.
There are then two possible outcomes:
- Match: the payment and settlement match one-to-one. The funds are reconciled and can, depending on the release period and clearing frequency, be paid out to the merchant.
- Mismatch: a discrepancy is identified. The transaction cannot then simply be cleared. The discrepancy must first be investigated and, where necessary, corrected.
This principle protects both PAY. and the merchant. We want to prevent funds from being paid out when there is insufficient certainty that PAY. has actually received or will receive them.
Payment Options with a Guaranteed Payout
For certain payment options, there is in advance sufficient certainty that the payment option provider will pay out the processed transactions. In that case, PAY. can base clearing on the established release period.
The consumer pays and PAY. processes the transaction. The payment option provider then guarantees the pass-through payment according to the applicable terms. Based on this, PAY. can determine when the funds are expected to become available.
When the settlement is received, the transactions are reconciled. The reconciled funds can then be transferred to the merchant according to the configured clearing frequency.
Non-Guaranteed SEPA Payment Options
Not every SEPA payment option provider offers the same certainty in advance regarding the ultimate receipt of the funds. With non-guaranteed SEPA payment options, the transaction status alone is therefore not sufficient to proceed with payout.
For example, a transaction can already have the status PAID or SUCCESS , while PAY. has not yet actually received the corresponding funds. In that case, PAY. waits until the money has been credited to the third-party funds account.
Only after receipt can it be established that the financial statement matches the transaction. Reconciliation then takes place, and the reconciled funds can be included in the clearing to the merchant.
BNPL Providers
With Buy Now, Pay Later (BNPL), the process works differently. The merchant makes contractual agreements with the BNPL provider regarding the pass-through payment period.
Suppose it has been agreed that the provider pays out after 14 days. Based on that agreement, PAY. then expects to receive the corresponding pass-through payment and settlement on day 14.
After receipt, PAY. needs at least one business day to process the submitted files and reconcile the transactions. When everything matches correctly, the funds can then be released for clearing.
Sometimes, however, a submitted file contains discrepancies. We call this an impure file. In that case, the settlement cannot be automatically and reliably linked to all underlying transactions.
Our Finance department investigates the discrepancies, repairs the file, and performs the reconciliation again. As a result, clearing may take place later than the originally expected date.
What Happens in the Case of a Retrocession?
A guaranteed payout does not necessarily mean that a payment can never be reversed afterward. A payment option provider can, for example, retrocede a previously processed payment, such as with a reversal, rollback, or chargeback.
If this happens, PAY. retains, in accordance with the Terms and Conditions, the option to deduct the relevant amount from the merchant's account balance. This ensures the financial records continue to match the actual settlement with the payment option provider.
Why Reconciliation Is So Important
A transaction with the status PAID or SUCCESS is not automatically the same as received and reconciled.
The transaction status indicates whether the payment has been technically processed. Reconciliation then checks whether the financial statement from the payment option provider, bank, or card scheme matches it.
By aligning clearing with this, PAY. prevents funds from being structurally paid out to merchants that PAY. itself has not yet received or will ultimately not receive. This keeps the entire money flow verifiable, predictable, and financially manageable.