Reconciliation – not so simple and more important than you thought


Ian Steyn, Executive : Products and Sales at Innervation Value Added Services explains how reconciliation can be used both as a strategic advantage and as business-critical safety net.

Many retailers are implementing Value Added Services (VAS) in an effort to enhance the customer experience, to generate incremental revenue, and to ultimately gain a competitive advantage.

EFT, gift cards, loyalty programmes, bill payments and pre-paid services such as electricity and airtime are now commonplace. However, ensuring accurate delivery, operation, support and management of these services from multiple service providers across multiple channels (POS, web, mobile etc) can be complex. A powerful reconciliation solution can simplify this in various ways.

The principal objective with transaction reconciliation in the EFT and VAS domain is to ensure that the final status of a transaction is the same across the channel that initiated a transaction and the VAS or EFT application that ultimately authorised or processed the transaction. This ensures data integrity, accurate clearing and payment of commissions, customer service, while also supporting certifications, the identification of shortcomings and defects in VAS implementations and fraud detection.

However, the reconciliation is much more than a simple accounting functionality. The smart retailer sees reconciliation as a safety net to protect the customer experience and, more particularly, understands that if this function is not performed properly, it could mean far more than a loss of current income.

At a high level, reconciliation assists retailers to understand why and how money is flowing between individual stores and head office and between head office and VAS Providers. This can be used to make strategic decisions on product and service offerings at a granular level.

A recent TowerGroup report estimates that around $2 billion worth of gift cards will be unredeemed this year. While the naive retailer may dismiss this as cash in the bank, the purpose of a gift card solution is to encourage the uptake and use of that stored value to secure first-time customers and convert them into regular shoppers, not to mention the provision of the consumer Protection Act in this regard.

The customer experience when using a gift card then, is critical. It may well be the first time they visit a store and their experience should be flawless. Being unable to use a gift card or an incorrect balance after their first transaction will result in frustration. This leads to a negative perception of the retail chain and could very well result in the loss of potential repeat business. Transaction level reconciliation goes a long way to prevent such a scenario from occurring when exceptional scenarios occur during the normal processing of transactions.

The reconciliation process offers valuable management information. Picking up trends, such as repeated reversed transactions by specific cashiers, could alert retailers to possible fraud and is their best defence in identifying and routing out nefarious behaviour. With ever-increasing fiduciary and compliance requirements, the reconciliation solution offers additional, if not the only, protection for a retailer.

There is no doubt that value added services are on the increase. Retailers are now dealing with a host of offerings in a domain that is becoming more regulated by the day. If they don’t have a reconciliation solution that allows them to deal with multiple channels and service providers utilising common business processes, they could be exposing themselves to risk which could, at best see them lose customers, and at worst, see them defending themselves in court. Performing these functions manually is complex, prohibitively expensive and often simply not possible.

About Innervation Value Added Services

Innervation Value Added Services assists retailers to achieve enhanced customer service, increased revenue and sustainable competitive advantage via strategic engagement and by enabling a wide range of services across all customer touch points. Innervation utilises an agile switching and reconciliation platform to seamlessly integrate to customer touch points (POS, mobile, web, call centre, self -service kiosks and social media) and also to retail enterprise financial and CRM systems. The company’s core product offerings include the Destiny electronic payments switch and the Destiny Stored Value suite of products, including gift card, loyalty, vouchers and coupons. Commodity services such as prepaid airtime and bill payment are supported via interfaces to the Value Added Service Providers preferred by the merchant.


Ian Steyn


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