The Money Caught Between Authorisation and Capture

In one line

Between a card authorization and the actual charge there is a gap of several days, and the money in between cannot enter any confirmed account and sits on a suspense account — if you do not manage this balance, it becomes money you cannot explain one day.

Why this was needed

Inquiries like "I paid, so why has it not been deducted yet?" come in every day at bank and card company call centers. To answer this question, you need to know that a payment is not a single event.

승인(Authorization)  이 금액을 쓸 수 있는지 확인하고 한도를 잡아 둔다.
                     가맹점 단말에서 몇 초 만에 끝난다. 아직 돈은 안 움직였다.
매입(Capture)        가맹점이 실제로 청구한다. 보통 1~3영업일 뒤.
                     여기서 비로소 돈이 움직인다.
정산(Settlement)     기관들끼리 하루치를 상계해 실제 자금을 주고받는다.

A transaction that has only been authorized and for which no capture has come is in the pending state. It is money that is out of the customer's limit but has not yet entered any confirmed account. Where to put this money is the question, and the answer is the suspense account.

How it works

A suspense account is a place that holds "money whose owner has not yet been decided." Not only pending transactions but also money that was deposited but whose customer account cannot be confirmed, and money that came from an external institution for which the corresponding original transaction could not be found, all go in here. On the opposite side there is the suspense payment account.

The reason a suspense account is dangerous is that no error occurs even when its balance grows. The system works normally, the trial balance is right, and no alerts appear. Then at closing, you get asked, "what is this 300 million?" By then several months' worth has piled up and you have to retrace it one by one.

So a suspense account is managed not by balance but by age. You look every day at how many items are older than a certain number of days and how much they amount to. An authorization has a validity period, and after it passes you must clear it by canceling the authorization, but what piles up without being cleared becomes a balance you cannot explain later.

The settlement side has one more concept. It is net settlement. If institutions exchanged funds transaction by transaction, hundreds of thousands of settlements would occur in a day, so they offset a day's worth and settle once per institution.

BNK001 에 지급할 금액   82,951,000
BNK001 에서 받을 금액   85,040,000
                       ─────────────
차액정산 포지션         +2,089,000  (우리가 받는다)

This structure produces one property. Even if individual items are wrong, if the netted result is right, the settlement goes through as it is. That is why reconciliation must finish before the settlement instruction is issued.

What it looks like in the field

First, when you reconcile, you must not mix in items that are only authorized. The counterparty institution's settlement file contains only captured items, so it is normal for authorized-state items not to be in the file. If you reconcile without distinguishing state, dozens of normal items all come up as anomalies, and the two or three real deviations are buried among them. This is the kind of mistake that makes investigation impossible.

Second, in a total reconciliation, always look at the count and the amount separately. This is because the way these two diverge almost decides the cause.

건수 같고 금액 다름   같은 건을 서로 다른 금액으로 알고 있다.
                      수수료 차감 규칙 불일치, 통화 환산 절사, 자릿수 오류.
금액 같고 건수 다름   한쪽이 여러 건을 묶었거나 쪼갰다.
                      상대 기관의 배치 병합, 분할 청구.
둘 다 다름            위 두 가지가 섞여 있거나, 파일 자체가 다른 날짜의 것이다.

When the amount matches and only the count differs, there is no problem with the settlement itself, so it is easy to let it pass. But item-by-item traceability is cut. Later, if a customer raises an objection about one item, that one item cannot be pinpointed from the records of either side.

Third, passing reconciliation does not mean the books are right. Reconciliation asks "are the two books the same," not "are the books right." A duplicate transfer that both sides processed twice in exactly the same way can never be caught by reconciliation. This is covered in the next reading.

What you will do in the lab after that

First, in the next reading, you look at messages and retransmission, and then you go to the lab.

You reconcile our ledger against the counterparty institution's settlement file. You match totals per institution to tell apart institutions where only the count diverges and institutions where only the amount diverges, and narrow the cause of each down to the level of individual items. You also confirm in numbers that the deviation splits into 2 versus 18 depending on whether you exclude the 16 items that are only authorized from the reconciliation. At the end, you produce the net settlement position and count the money tied up in the suspense account.