Reconciliation
- You match your sales records to your bank deposits. It takes three sources, not two: sales system, processor report, bank statement
- T+2 settlement means today's deposit covers transactions from two days ago. Track by settlement date, not transaction date, or you'll be off by one forever
- Unexplained gaps are almost always fees, chargebacks, refunds, or batch timing. Categorize the unknowns. Don't adjust them away
- Automate before you pass $100K/month. Manual work above that volume breeds errors that compound for months
You compare what you think happened against what actually happened. Your sales records against your bank deposits. Sounds simple. Then you try it.
The Three-Way Match
You need three sources, not two:
| Source | What It Shows | Where to Get It |
|---|---|---|
| Your POS/system | Every transaction processed | Your terminal, gateway, or POS software |
| Processor settlement report | Transactions settled, fees charged, chargebacks | Processor portal or API |
| Bank statement | Actual deposits received | Your bank |
All three should match. When they don't, you have a discrepancy to investigate.
Your reconciliation obligation:
Per Mastercard's Rules: "It is the responsibility of each Customer to reconcile the totals and Transactions provided by the Interchange System to its own internal records on a daily basis."
This isn't just best practice. It's a network requirement.
Why They Don't Match
Timing Differences
The most common issue. Your POS shows $10,000 in Monday sales. Your processor report shows $10,000 settled Tuesday. Your bank shows $9,720 deposited Wednesday. All normal. They're looking at different points on the same timeline.
Fee Deductions
Sales were $10,000. Deposit was $9,720. The $280 gap is fees. Miss that and you'll think you're short. See Reading Statements for how to read the deductions.
Batching Differences
You processed 100 transactions Monday. Your processor batched 98 of them Monday night. The other 2 came in after cutoff, so they batched Tuesday night. Your reports now show different counts for "Monday."
Chargebacks and Refunds
A chargeback or refund hits your current settlement. It doesn't get matched back to the original sale. So a $500 chargeback on a two-month-old order lands as a deduction today.
Reserves and Holdbacks
Your processor might hold 10% of every settlement. Sales say $10,000, fees are $280, and you got $8,748. The rest is reserve. See Holds and Reserves.
Common Discrepancies
| Discrepancy | Likely Cause | How to Fix |
|---|---|---|
| Transaction in POS, not in settlement | Auth only, never captured; voided; rejected at clearing | Check transaction status in gateway |
| Transaction in settlement, not in POS | System not syncing; manual transaction on terminal | Check all transaction sources |
| Amount mismatch | Tip adjustment; partial capture; currency conversion | Compare original vs settled amount |
| Extra fees | PCI non-compliance fee; chargeback fee; statement fee; instant payout fee | Review fee schedule |
| Missing deposit | Batch didn't close; settlement rejected; bank holiday | Check batch status, bank account |
| Unexpected deduction | Chargeback; refund; adjustment; reserve | Review processor deductions report |
Instant payout fees. Someone on your team taps "get it now". That's 1.95% on Square, 1.5% on Stripe in the US, 1.50% on PayPal Instant Transfer. It comes straight off the deposit.
Double dispute fees. Stripe charges $15 to receive a dispute and another $15 to counter it. Neither comes back on a partial win. PayPal charges $15 on wallet and Guest Checkout disputes, $20 on card chargebacks. So your ledger needs two fee codes even though only one fires per dispute. Assume a single $15 line and you'll be short on Stripe and wrong on PayPal.
Fees you were told didn't exist. Helcim publishes $0 for monthly, setup, PCI, cancellation and statement fees. See those lines on your statement? They're not standard. They're negotiable.
All figures verified against the vendor's own pricing page on 2026-08-02. See Processor Comparison for the sourced table.
Mismatch Troubleshooting Flowchart
When your numbers don't match, work through this before panicking:
Reading the flowchart: Green is normal, leave it. Red means something got deducted, so go look. Yellow is a timing issue and usually fixes itself. Blue is a batch shift. Purple means you're digging into line items.
Almost every mismatch is one of three things. Fees, which you expected. Chargebacks and refunds, which came out of today's settlement. Or timing, where the money shows up a day late. If none of those explain it, pull the line-item report and match row by row.
Reconciliation Frequency
How often should you reconcile?
| Business Type | Recommended Frequency | Why |
|---|---|---|
| High-volume e-commerce (1000+ txns/day) | Daily | Discrepancies compound quickly; fraud detection |
| Medium retail (100-1000 txns/day) | Daily or every 2-3 days | Catch issues before they age |
| Low-volume (under 100 txns/day) | Weekly | Sufficient for error detection |
| All businesses | Monthly (at minimum) | Month-end close, financial reporting |
The 3-day rule: a discrepancy is 10x easier to chase inside 3 days. After 30, some are gone for good.
The Reconciliation Process
Step 1: Export Your Data
- Pull settlement report from your processor (by settlement date)
- Pull bank statement or transaction export
- Export your POS/sales data for the same period
Step 2: Match Gross Amounts
- Total sales from your system
- Total settled amount (before fees) from processor
- Should match (or difference should be explainable)
Step 3: Verify Fees
- Expected fees based on your rate and volume
- Actual fees charged
- Variance should be under 1% (some interchange variation is normal)
Step 4: Match Deposits
- Settled amount minus fees = expected deposit
- Actual bank deposit
- Difference = chargebacks, reserves, or adjustments
Step 5: Investigate Discrepancies
- Document each discrepancy
- Research root cause
- Resolve or escalate
- Track patterns over time
Automation vs Manual
Manual works at a handful of transactions a day. Past that you need software:
| Volume | Approach |
|---|---|
| Under 100 transactions/day | Spreadsheet reconciliation feasible |
| 100-1000 transactions/day | Semi-automated (import/match tools) |
| 1000+ transactions/day | Fully automated reconciliation software |
Most processors ship reconciliation reports and an API. Your accounting software probably has an integration already. Third-party tools exist for messy multi-processor setups.
Settlement Holds and Reserves
Not all of your money reaches you right away. Processors and acquirers hold funds to cover their own risk.
| Reserve Type | How It Works | Typical Terms |
|---|---|---|
| Rolling | % held each batch, released after X days | 5-10% for 90-180 days |
| Capped | % held until reaching maximum | 10% up to $50K |
| Upfront | Lump sum held before processing | $10K-$50K |
| Minimum | Floor that must be maintained | $5K-$25K minimum |
See Holds and Reserves for complete coverage of why funds get held and how to negotiate reserve release.
Next Steps
Just learning reconciliation?
- Pull your last week's deposits and match them to sales
- Ask your processor for fee breakdown documentation
- Identify your batch cutoff time
Handling discrepancies?
- Understand chargebacks → Disputes cause the biggest gaps
- Build a fee tracking system → Catch overcharges
- Review your processor contract → Know what you agreed to pay
See Also
- Settlement Lifecycle - How a transaction goes from capture to deposit
- Money Flow - Where the fees come out and who gets paid
- Reading Statements - Interpret your processor statements
- Chargebacks - Dispute impact on reconciliation
- Holds and Reserves - Reserve mechanics
- Processor Management - Working with your processor
- Chargeback Metrics - Track dispute impact
- Accounting Integration - Connecting processors to QuickBooks/Xero