Payment Gateways: Reporting Services

Gateways 101

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on May27

The purpose of this article is to discuss availability of financial reporting services as a criterion to be considered during payment gateway selection.

If this is the first time you are reading our “Selecting a Payment Gateway” mini-series, please, start with the Introduction to improve your understanding of this post.


Irrespectively of business size, it is very important for every merchant to deal with a processor whose payment gateway software includes elaborate financial reporting services. A business involved in credit card processing requires reporting services around the aspects listed below.

Reporting services evaluation criteria:

  • transactions activity – to reconcile transactions sent to the payment gateway and responses received from it. This information needs to be available by activity date (when the transaction was authorized) and by settlement date (when the transaction was settled). Since authorization and settlement date may differ, having the ability to analyze transactions by either of these dates considerably simplifies overall reconciliation process
  • funding – to reconcile bank deposits made by the processor for the transactions processed
  • chargebacks and ACH returns – to reconcile respective deductions from the account
  • processing costs – to analyze the costs charged for processing and the types of cards that the business is dealing with
  • commissions (for resellers only) – to understand residual revenue\commissions that are paid by the processor to the reseller for the business it generated.

It is important to verify that the reports are available not only in summary format (by date or by merchant), but also as a detailed version (on the level of individual transaction). It is particularly useful to have a detailed report listing all types of the transactions processed (including approvals, declines, blacklists, errors, chargebacks and ACH returns) with processing costs (interchange and assessments) available for each.

When a business considers potential partnership with a payment gateway, it should ensure, that the abovementioned data is easily accessible through payment gateway software’s reporting module, as this information is extensively used in transactions and bank deposit reconciliation processes.

Merchant perspective

The ability to dissect and analyze data by various criteria (authorization date, settlement date, merchant ID – especially when multiple MIDs are used) is crucial for a merchant.

Example

It is common for a multi-location fitness club chain to maintain a separate MID for each location to track all the funds coming in and out. Any health club, which has multiple locations, will be routinely dealing with reconciliation process across different MIDs and credit card processing terminals. Availability of a summary\aggregate report across all MIDs with drilling capability for an individual MID will be of great value under such circumstances, and can save a lot of time and money.

Conclusion

To reduce potential reconciliation overhead, it is important for a merchant to deal with a processor that provides aggregate and detailed reporting services at all levels of the merchant’s business structure (company level, MID level, terminal level).

Reseller perspective

Resellers have the same reporting concerns and considerations as independent merchants, but require two additional features: reports around commissions and reports on transactions across different merchants in its portfolio.

Example

As an example of a reseller, let us consider a software company servicing a franchise of small-size fitness clubs for women. The reseller has to deal with a large number of small merchants and multiple club owners, each owning a different number of clubs and having its own processing fee structure. The ability to analyze data at corporate level, individual club level, as well as individual owner level, will be critically important for the reseller.

Conclusion

If the two reseller-specific features are not provided by the payment gateway, the process of understanding commissions will take considerable time and effort. Under such circumstances, if the number of merchants in reseller’s portfolio grows, unavailability of accurate reporting services can make reconciliation process completely unmanageable and cost prohibitive.

The next post will address chargeback information handling.

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