Ixaris has entered a definitive agreement to be acquired by Nium

8th April 2021

Under the hood: A powerful engine for automation at scale

Automated reconciliation

Charlot Agius

Head of Business Intelligence

In the latest instalment of our Payments IQ series, Head of Business Intelligence Charlot Agius explains how the powerful engine under the hood of Ixaris Payments enables automation at scale to power Ixaris' own laser focus on growth.

Ixaris Payments’ virtual card platform enables businesses to cut overhead costs, improve efficiency and automate back-office operations — so it may not come as a surprise that, within our own operations at Ixaris, we constantly strive to improve on these three indicators, too. Here’s how we do it.

We know from experience that back-office efficiency is the secret sauce to powering businesses to freely scale and grow. Today, Ixaris processes over 5 million individual balance movements on our platform, and our business is growing at a rate of 75% year-on-year. That is a lot of financial movements across 3 payment scheme networks and 15 underlying scheme products, across 2 regions for 24+ settlement currencies. That all translates to a tremendous number of reconciliations, regulatory requirements and back-office financial operations.

At the heart of any Ixaris product, process, or partner is our Reconciliation Engine. The reconciliation engine has a number of system inputs, delivers a number of outputs, and at its core, there are numerous reconciliation processes working on top of our internal data, external data, and bank account statement feeds. Let’s explore what flows in and out of our reconciliation (system inputs and outputs) to better understand the powerful processes this engine is responsible for every day, and the value this ultimately drives for our business.

System Inputs

Issuer Processor Data: Issuer Processors can provide daily transactional data (authorisation, settlement, cardholder fees, interchange, scheme fees, card events, card balance adjustments, dispute entries), daily card balance snapshots and also real-time data feeds, which are all crucial third-party data validation for reconciliation.

Scheme Data: Scheme networks all have direct reporting feeds, including both transactional and summary reporting that vary from settlement requests, cycle settlement reporting, and reconciliation reports. All of this data is crucial for timely settlement payments and for reconciliations against Issuer Processor third-party data, which we use to validate settlement requests.

Bin Sponsor Account Feed: Whenever direct access to a scheme network is not provided for any Bin sponsorship outside of our regulatory licensed area, then the Bin Sponsor Accounts (Float, Client Funds, Settlement, Chargebacks, Revenues) are all used instead of the Scheme Data to validate activity against Issuer Processor Data.

Third-party Payment Providers: Whenever there is a third-party e-money institution involved between the client and our bank, or between our settlement bank and the supplier (destination beneficiary), then there is a direct feed of the account transaction history. This enables us to cross-check each fund movement is as expected with our central ledger system.

System Outputs

There are several outputs that vary between internal requirements and external requirements.

Internal outputs: Internal outputs are generally associated with KPI reporting, management information reporting, revenue recognition and accruals, customer incentives and rebates generation, accounting general ledger entry generation, and reconciliations. Reconciliation outputs show us matched items as well as unmatched items. Our system also holds automated capabilities to generate ad-hoc checks on matched items for audit purposes.

External outputs: External outputs are generally associated with the treasury function, whereby (as a regulated financial institution) we are required to:

  • Segregate funds as soon as the data is available. Our Reconciliation engine allows us to generate a single file that is uploaded to our banking partner and processes all necessary treasury movements, including segregation of client funds appropriately with the card issuer, segregation of all revenues from all accounts and moved to a corporate account, and segregation of any dispute associated funds in a separate account held in the name of the card issuer.
  • Hold a clear safeguarding position every day, which outlines funds sitting on each safeguarded bank and compares these against the outstanding client funds liability of the day considering any outstanding payments (incoming/outgoing) to the accounts, as part of the daily treasury.
  • Undertake scheme settlement daily as per settlement request from each respective scheme network
  • Undertake regulatory reporting to member states and/or reporting bodies as required for each financial institution held within the Ixaris group of companies.

Reconciliation Engine

Our reconciliation engine works in real-time as files become available. Daily, the engine reconciles:

  • Card balances held and reported at the Issuer Processor, with all internal balances held for each card, after considering any reconciling items or pending transactions
  • Daily Scheme settlement, delivering the appropriate treasury file and accounting ledger file that reconciles each settlement to the corresponding components of settlement (purchases, refunds, fees, revenues, disputes, etc.)
  • Interchange received against the expected interchange to be received, per transaction based on the card domicile, the merchant location, the product used, the scheme network, transaction authentication and the underlying transaction data provided by the acquirer
  • BIN Sponsor Account movements for any card issuing via a third-party BIN sponsor, whereby Ixaris does not hold a direct scheme membership. In this way, we validate that the BIN sponsor is performing movements in a timely and correct manner and that these reconcile with our third-party Issuer Processor data

Our reconciliation engine’s automation of these critical workflows gives our team the peace of mind they need to focus on scaling our business through relentless innovation. At Ixaris, we believe that innovation starts within — and by within, we mean deep within, at the starting point of your own internal processes. Fast, smart growth has efficiency at its core.

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