Reconciliation is the back-office practice of comparing what you think happened (your internal ledger, order records, or expected payouts) against what the bank and networks report actually settled. The goal is to confirm that every money leg lines up with its message leg, and to catch the gaps: a payment that authorized but never cleared, a fee that came out differently than expected, a refund that did not land. Because authorization, clearing, and settlement happen at different times and often in batches, records can drift apart temporarily, and reconciliation is how you prove they came back together. It is the quiet step that makes a flow trustworthy rather than just plausible.
In a flow
It typically runs after settlement, when the bank or processor sends statements and settlement files. The operator matches each expected transaction against the settled record, flags mismatches (called exceptions or breaks), and investigates them. Good reconciliation closes the loop on a flow: the diagram says money should have moved a certain way, and recon is the evidence that it did.
Common misconceptions
Myth: If a payment was approved, reconciliation is unnecessary.
Reality: Approval (authorization) is only a promise. Money moves later at settlement, and amounts, fees, timing, and reversals can all differ. Reconciliation confirms what truly settled.
Myth: Reconciliation moves or fixes money.
Reality: It is a matching and checking step, a message-layer activity. It surfaces discrepancies, but correcting them still requires a real money leg such as an adjustment, refund, or repayment handled by the banks.
Related terms
See it in a guide
Sources
- Visa Core Rules and Visa Product and Service Rules ↗ · Visa (operator)
- NACHA ACH operating rules ↗ · NACHA
- Payments Canada clearing and settlement ↗ · Payments Canada
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.