Payment reconciliation is the matching of every payment a business receives or sends with its own record of that payment and with the bank's settlement report. Fintechs, payment companies and banks that handle millions of transactions a day need a special engine for it. Their volumes are far beyond what the month-end tools in financial close software were built for.
A digital payment leaves three records. The first is the company's own record: an order, a loan EMI or a wallet top-up. The second is the record of the payment provider, such as a payment gateway or a card network. The third is the bank statement, which shows the money actually credited. The money for thousands of payments often arrives as one amount, a day or two later. This transfer is called settlement. The engine has to break that one amount back into individual payments and match each payment across all three records.
Consider a payments company in Gurugram that collects bill payments for electricity and broadband companies. On one day, it handles 12 lakh UPI payments. The next morning, the engine loads the company's own records, the UPI settlement files and the bank statement. It matches 11,99,400 payments across all three. It lists 600 exceptions. 450 of them were made late at night and will settle the next day, so the engine checks them again then. 120 are payments where the customer's money was debited but the bill was not marked paid. These must be completed or refunded quickly, because each one is a customer who has paid and may complain. The last 30 are duplicates, where a customer paid the same bill twice and must get a refund. The operations team handles only these 150 cases.
The engine also manages payouts, the money the company sends out. For this company, that is the money owed to each electricity and broadband company, minus its fee. The engine works out each amount, and checks that the payment sent through payouts matches it.
Speed matters. In India, the RBI sets time limits for resolving failed transactions. If a customer's account is debited but the transaction fails, the money must be returned within a fixed time, or the bank must pay the customer compensation for each day of delay. So exceptions must be found the next morning, not at month-end.
Matching itself is explained in general on the page on reconciliation.