Lessons a Merchant Can Learn from an Issuer's Reconciliation Journey

During a multi-year issuer reconciliation project, we discovered some merchant transaction behaviors were quietly creating financial exceptions, duplicate processing risks, and consumer confusion—even when the original sale appeared successful. Crafting a bespoke reconciliation process for an Issuer, Payment Operations Group had the opportunity to take away a few learnings that the merchant processing environment could leverage for interesting use cases. While the specific issues identified during this Issuing-side project are not relevant to every merchant, some could trigger an approach to transaction normalization that could aid a variety of merchants as they tackle their own 'last-mile' to success.

The Issuer, a Card Program Owner with both physical and virtual business debit cards, wanted to craft a custom approach to reconciliation. The project took time, but the learnings that sourced from the out-of-balance transactions were exciting. These, when reviewed and categorized, point to activities where merchant involvement may have crafted these complex financial conditions.

Timing Remains Critical

Believe it or not, in this advanced period of transaction processing, you would not envision an 'out-of-order' issue in transaction processing. Furthermore, this may not normally create an issue for the Issuing side. The variations, however, can source from transaction type complexity paired with variations and the payment flow.

While rare, some interesting use cases surfaced here such as auxiliary or upsell authorizations preceding the primary or original authorization. Obviously not relevant to all merchant types, these are interesting as the primary authorization loops through a variety of important risk services at the merchant and processor while the add-on or incremental authorization does not need to route through as many additional scrutiny layers. The Issuer sees a request for an incremental authorization before the initial transaction authorization arrives and the re-alignment may rely upon the specific exception handling of the cardholder's bank.

Please remember that debit cards will withdraw from the consumer's account as soon as the first transaction is seen, and the dual-message track involved in signature debit processing can easily be aligned in any necessary manner. It's the third, and even fourth item, which can introduce process muddling. Server locations can add complexity as processor and vendor routes that vary across time zones can delay portions of the series. Batch processing is yet another way for sets of records to be separated in the process as smaller batches complete faster, releasing transactions into downstream systems while a larger batch may still be transmitting or validating.

For merchants, identifying all internal paths for transactions which rely upon each other to craft an overall condition, can identify opportunities separation through the various vendors and processing paths. A latency study or even idempotency activity review may add value for merchants where certain items can generate multiple transactions to be fully processed.

Now these sequence variations do not cause severe out of balance conditions, but they do carry the opportunity for misalignment, inaccurate withdrawal, and posting variations which could cause consumer confusion. Disrupting a consumer's perspective is the last thing any entity along the payments continuum wants.

Corrections and Repairs

It's exciting to see the variety of ways a consumer, a merchant, and a processor can become involved in the overall process of making a transaction accurate. It should be noted, however, that the Issuer is often left to decipher the initial and corrective activities into a cohesive posting pattern. Knowing this, merchants may want to take a moment to review recommended 'correction' processes in play with their staff to ensure they align with payment processing paths, vendor responsibilities, and complexities of the current ecosystems. While a paper review is great, the actual customer-facing staff is exposed to the most extreme variation of all — conversations with customers. Involve that team in all areas of change to make sure your simple instructions are not confounded by the reality of customers.

Connecting Transactions

Merchants, processors, and card brands are all heavily involved in promoting the concept of connecting related transactions using Merchant Reference Numbers. Issuing-side exception processing may be needed when that Merchant Reference Number is used in unique and exciting ways or not used at all. The variations abound.

Starting at one end, lack of a viable Merchant Reference Number may not seem important to some merchants or transaction types. If you feel like you'll never need to link to a prior transaction, let's remember, there are still refunds and chargebacks to consider. The point here is to honor the premise, generate a unique record, and store the crafted information for later reference, even if you believe it does not immediately apply to your line of business.

In a thought-provoking approach to the use of Merchant Reference Number, some records are seen to change the data between the authorization and the clearing/settlement process. While rare, adding suffixes or sub-record counters like '-001', '-002', etc., can dilute the value of Merchant Reference Numbers.

When using a Merchant Reference Number, don't overdo it either. Tying transaction number 2 to its preceding, successful item through the Merchant Reference Number is advisable — using the correct 'Prior Reference Number Field'. Using the same Merchant Reference Number for every transaction that consumer ever makes can lead to confusion and eventually negative reputation impacts. While you may not believe you are acting this way, double check if the client ID in your system, or even the email account, is being used as the Merchant Reference Number. This ties together disparate records, not the sequential records you intend.

Causing the same situation, attempting to 'improve' the approvability of the next transaction in the series by recycling the Merchant Reference Number is not an advised behavior. This type of reuse, even if it relates to small dollar, test transactions, can appear to Issuers as an attempt to duplicate a previous item or as an incremental approval well after the initial transaction. No matter how it is perceived at the receiving end, that same data in the same field can lead to an adverse perception of this new item. There is a 'Prior Reference Number' field for this purpose.

Odd variants tie to corrections where merchants perform a void then execute a re-authorization set to repair a transaction. The problem arises when the merchant ties together the void and the next transaction with the same Merchant Reference Number. These can work but they can also cause confusion or even duplicate processing declines.

Disconnect vs. Decline

As merchants expand their vendors, retry logic, and processor connections, there is an increasing opportunity to step on the tail of preceding transactions. Relevant to both credit and debit cards, it is a potential issue that disconnections occur after the authorization is granted by the Issuer. The more connections in the chain of providers, the greater this opportunity is. Always remember that the connection drop may be the message of the provider or the interim vendor as opposed to a drop from the card brand or Issuer. Batching together similar decline responses can cause these types of connection failures to be conflated.

Also increasing this problem is assuming 'no response' is a connection issue at the authorization stage as opposed to simply not receiving responses. In all cases not truly related to a failed authorization attempt, remember to 'look up' a transaction before resending it for re-authorization. Unless the connection failure is truly before the auth was generated, re-requesting an authorization is handled in many ways by Issuers. Decode the connectivity responses, to ensure you are reacting appropriately. Make sure your re-try vendors are doing this also.

Improvements and Intent

There are few situations where merchants and Issuers can thoroughly collaborate to ensure the consumer's financial condition is properly managed along the true transaction records. While reconciliation is never the 'fun' part of payments, it can always show where the outliers can impact accuracy — And potentially where improvements can clarify intent.

There are very few fields where a merchant can send 'instructions' to the Issuer related to a transaction's intent. There are an increasing number of optional fields, however, designed to ensure clarity and continuity. Ensuring each field is used and it carries information that matches its purpose is one of the rare ways merchants can talk to Issuers so it should be protected. That protection should extend to merchants' vendors. Merchants that know how to include valuable data can be thwarted by vendors whose goal is tied to other KPIs and only contract and process clarity, paired with oversight, can ameliorate these anomalies.

There were more scenarios, and solutions, which surfaced during this exploration of transactions from the Issuer's side. A complete review is generated by Payment Operations Group in a Case Study published in June 2026. This Case Study is available to any requestor by sending a note to Info@PaymentOperationsGroup.com.

About Payment Operations Group

Payment Operations Group, POG, is a Consultancy founded by a Payment Professional with 40 years' experience in the payments industry. Applying experience from the perspectives of a Processor, a Fortune 50 Merchant, and a Global Subscription Merchant, this Consultancy has expanded to support clients from Merchants, to Vendors, to Issuers while addressing situations specific to each segment in a deep and comprehensive manner.

Whether a condition is Risk or Fraud based, Cost Control targeted, or Authorization Improvement, POG carries expertise ready to deploy. Beyond the services regularly discussed, POG designs customized processes and evaluations for any area of payment processing from Reconciliation, to PayFac Review, to Vendor RFPs, to Acquisition Reviews, and beyond. Located in Dallas, POG supports clients around the world.

About the Author

Sally Baptiste is a Payment Consultant who co-founded Payment Operations Group ten years ago. Having run payments for multiple merchants for over 16+ years and worked for an acquirer for another 13+ years, she is able to leverage multiple perspectives to deliver comprehensive approaches to payment processing for a variety of audiences around the world.