mClearing: Transaction Clearing Solutions
Universal Engine For Clearing, Billing & Payment Settlement
More and more sophisticated business processes and constantly increasing level of their complexity, requires capable IT systems, to support modern economy and unique demands of our customers. Softman, over 25 years of market presence, has focused on delivering tailored-made software solutions to Financial Services and Public Sector entities in Poland and across European Union. We have gained deep knowledge and expertise, to play a role of a trusted partner in the areas of any financial processes of reconciliation, settlement and clearing. Based on our project experience we have productized a universal payment reconciliation engine that we use for our standard out-of-the-box systems (e.g. mLoan, mLease) as well as for bespoke implementations of tailored-made solutions dedicated to manage and process any complex financial transactions to support operations of our customers. Our payment reconciliation engine is designed to be quickly adaptable to customer requirements, thus shorteninig implementation time and cost. It has proven it’s value in numerous projects we have delivered across various industries.
Examples of Projects We Have Delivered
SR System
Billing, clearing & payment settlement system for card payments and other financial transactions (top up-s, cashback, etc.) processed by the biggest providers of card payment acceptance and electronic transaction processing services in Poland: since 2005 at eService Sp. z o.o. (entity of US based EVO Payments International) and since 1999 at First Data Polska S.A. (entity of US based First Data Corporation) and.
SODiR System
System for managing subsidies and refunds of salaries paid to disabled workers across Poland. SODIR calculates subsidies, proceeds with payments and does clearing of both individual and companies financial files. System has been implemented together with Sygnity S.A.
SOF2 System
SOF2 is a financial management system that has been delivered for PFRON (National Fund for the Rehabilitation of Disabled People) in Poland to support their financial processes such as planning and budgeting, controlling, agreements processing and debt collection related to statutory operations of PFRON according to Government’s legal act.
mAFS: Multi Acquiring
Comprehensive Clearing and Payment Reconciliation Engine for Acquirers and Payment Facilitators
The mAFS is a comprehensive clearing and payment automation oriented system. Its mechanisms allow flexible definition of daily and periodic (weekly, monthly) processing. Incoming interfaces are customised for the payment cards market; clearing and settlement models are fully automatic and allow defining multi-option interoperation models for sales networks (e.g. restaurant chains) also for franchised models. The design of database structures and their processing (Oracle DB) allows processing tens of millions of transactions per day for networks consisting of hundreds of thousands of devices. System performance is scalable based on Oracle DB processes’ scalability.
Payment Clearing And Reconciliation Based On The Rules of Accounting
mAFS is based on proprietary clearing and settlement engine designed in accordance with the principles and rules of accounting record keeping. Clearing and settlements performed by the system are automatically posted to the sub-ledger (the result of clearing and settlements of cash flows is cyclically transferred to the general ledger). Correctness of settlements, including tax settlements, is validated using accounting rules compliant with the requirements of the financial market regulator and internal security rules. This assures full transparency of clearing and settlement and assures its full openness to implementations of new clearing and settlement models required by the market or new products and services that may be sold through the acceptance networks. They key benefit of possibility of implementing new products is their automatic integration with other components of merchant clearing and settlements, in turn allowing control over and shaping the financial (credit) risk policy. The accounting record keeping techniques are also the basis for advanced financial instruments and discount policy mechanisms.
Merchant Cash Advance
The financial instruments based on accounting record keeping of clearing and settlements techniques (sub ledger) currently supported by mAFS include the merchant cash advance. The model of repayments of the loan granted to a merchant is based on percentage of daily turnover, allowing matching the repayments to merchant’s capacity. This feature is expected and welcome by merchants and allows building product based market advantage.
Acquirer, Multi-Acquirer and Payment Facilitator
mAFS is a system dedicated to both the acquirers and payment facilitators (PFs). For the purpose of PF support the transaction processing interfaces and the incoming interface are customised for collaboration with the acquirer (replacing integration with card systems from the point of view of financial processes).
Basic Services Catalogue
- Sales processing (in-store and online) including: Dynamic currency conversion & Cashback
- Bill Payment
- Prepaid cell phone top up services
- Express payments clearing and settlements
- Cash withdrawals (ATMs, cash desks)
Key Features And The Role of mAFS In The Architectures of IT Systems of The Acquirer And Payment Facilitator (Agent)
The system is responsible for providing comprehensive clearing and settlement services for transactions performed in the agent’s network in compliance with the national laws, tax ordinance, accounting and the requirements (standards) of the card payment market. Key system operation areas focus on:
- Merchant network management (acceptance and service sales networks) – CRM
- Capture and evaluation of transactions performed in the sales networks
- Merchant clearing and settlements processing
- Card systems’ financial settlement process handling (including chargeback)
- Accounting and tax services as well as controlling and risk management.
The mAFS supports clearing and settlements of multiple agents in a single infrastructure (providing payment and settlement services to external acquirers as well as payment facilitators and processors). mAFS supports multicurrency clearing and settlement (including e-commerce). Transactions performed in a sales network chain mainly concern processing of card payments. The equipment – POS terminals – also allows sales of other services.
mAFS Merchant Network Management Processes
- Onboarding and change of characteristics of merchants, definition of structures of services they are provided with, description of commercial terms and conditions – price lists and discount plans and fees and commissions tables for service provision
- Keeping the merchants informed about details of settlements via:
- Transmission of statements and reports (by traditional mail and electronically)
- Publication of invoices, statements and reports with online analysis capability for merchant’s own transaction based on Client Portal
- Call centre service – providing answers to merchant’s enquiries about his processing
- Issuance of information relating to payment arrears processing and payment deadline reminders
Capture And Evaluation of Sales Network Transactions
The mAFS is fed with transactions (card, pre-paid, bill payment and fee related transactions) through dedicated interfaces. Interface processing includes procedures for transaction validation, evaluation (costs and revenues), and determination of settlement and tax aggregates in the settlement currency. Evaluation methods are based on use of current per product price lists assigned to merchant’s agreement. In case of chains (including franchising chains) the pricelists are defined at various levels of merchant structure definition and correspond to merchants’ requirements on shaping the chain settlements outsourcing policy. Commission billing is done using direct models and based on the value of the interchange fee (IF) i.e. IF+ and IF++.
Settlements With Merchants
Settlements with merchants include the processes of automatic internal calculation of balances within the merchant’s network and automatic cash transfers based on:
- Transfer instruction
- Direct debit
- Individualised bank accounts (mass payments)
Balance accruals are performed in line with the agent’s risk policy and in this context are set to automatic compensation of mutually due amounts on the payment date. The compensation level mechanisms implemented in the system, which define the settlement model for the type of clearing and settlement (transaction type), in combination with the mechanisms of billing fees and commissions at appropriate levels of merchant’s network and using the receivables assignment mechanisms – allow for fully flexible development of clearing and settlement models. The clearing and settlement engine of the mAFS allows automation of billing (and clearing and settlement of) incidental and cyclical charges relating to e.g. provision of services (maintenance, training), lease of equipment, charging additional fees to the merchant, e.g. resulting from bounced direct debits. Processing of fee billing events may be automatically initiated in the mAFS processes, be time triggered or triggered from outside the mAFS. The fee events are subject to validation and evaluation in the fees interface. The clearing and settlement engine and sub ledger processing handles the processes of component capture and processing of issuance of periodic invoices and statements. Invoices and payment processing documents are presented in relation to the transactions in the statements. The statements and the supplementary detailed reports agreed to with the merchant form the basis for information provided to the merchant under the CRM services (described above).
Card Systems Financial Clearing And Settlement Processing
Card systems financial clearing and settlement processing is performed by the clearing and settlement engine and the sub ledger based on information provided by the system (and possibly by card issuers in bilateral settlements). Aggregates of information on mutual charges are fed in using the incoming interface and are subject to validation against the values submitted for settlement. The validation mechanisms are based on account balances and rejected transactions as well as chargeback processing mechanisms. The financial controls concern both the card system and synthetic values for merchant and system sides. mAFS handles other types of transactions, like the BLIK “mobile payments” system implemented in the Polish market, similarly to clearing and settlements of systems and transactions relating to card payments.
Accounting, Tax Service, Controlling And Risk Management
Accounting and tax service as well as controlling and risk management are included in the operating processes. Delivery of these processes is based on implementation of the sub ledger. The chart of accounts customised for the transaction settlement and clearing business models is processed automatically by the operating processes. Merchant monitoring and fraud prevention is performed based on the turnover figures and ledger balances. Synthetic and analytical analyses may be conducted using standard accounting tools (trial balance, account analytics) or may be reported in form of dedicated operating summaries or aggregated to an external data mart. Reporting in an external data mart may be provided using Oracle Business Intelligence and may include analyses of sales and profitability of merchant network, card systems’ cost analyses, settlements ageing, and cash flow analysis. To provide control and detection of frauds and unauthorised transactions the system is equipped with fraud identification support mechanisms. The antifraud mechanisms are implemented in line with specific acquirer’s policy.
The Role of mAFS In The Acquirer Support Systems Architecture
- mAFS processes all financial settlements related to provision of services in the acceptance network, i.e. settlements with card systems, merchant network and third parties involved in service provision. In the area of these settlements mAFS integrates with home banking services systems (electronic statements, generation of transfers) and with the transaction clearing and settlement and card acceptance system that feeds the mAFS via the transactions interface and the incoming interface
- mAFS maintains a database of descriptions of merchant relation (CRM) necessary for correct and automatic clearing and settlement of transactions. It publishes information on the Client Portal. Merchant description data is replicated to other acquirer processing systems
- mAFS receives information on pre-paid sales and bill-payment transactions from systems processing these transactions
- mAFS transfers the financial aggregates to the general ledger and to the data mart
- mAFS may interoperate with terminal management systems – concerning capture of information on fee generating events, etc.