Payments 101: Understanding Payment Logging—The Backbone of Transaction Transparency

Cash is no longer king. As the volume of credit, debit, ACH bank transactions, and other forms of digital payments continues to increase, it is paramount that companies can offer secure and seamless transactions.

It is vital to keep thorough and accurate records of each transaction as it progresses through the payment process from the payment processor to the payment gateway to the financial institution, and so on. Without these payment logs, it’s difficult to pinpoint what went wrong if and when a transaction fails due to a processing error.

With so many different components communicating massive amounts of data practically simultaneously, the likelihood of payment processing errors increases exponentially, as the amount of transactions increases.

Instituting a rigorous payment logging system ensures that transaction details can be recalled easily for internal reviews or when providing records for a financial audit.

So, what exactly is payment logging, and why should you care about it?

What is Payment Logging?

Payment logging is the methodical recording of the raw data, i.e., non-sensitive details, related to a transaction during the payment process. This data is linked to a specific transaction via a unique ID tag created by the payment logging software so that it can be recalled easily.

For example, a payment logging system would capture the raw data sent from the payment processor to the gateway, including information such as a date and time stamp, the name of the app, the gateway’s response, etc. This process is then repeated for each interaction or communication between components as the transaction progresses until it is complete.

In the simplest terms, payment logging records what message is sent to an app or other component and what message is sent back.

Why Payment Logging is Important

Improved User and End-User Experience

Companies, or users, and their payment operations teams, should care about how a payment is communicated to and from a given 3rd party software or API. Proper payment logging enhances accountability and transparency. Plus, it can improve the user experience (UX) of customers, aka the end-user.

How? The recorded transaction data is easily recalled and leveraged to resolve discrepancies efficiently. A company that can identify and communicate what went wrong and how to fix an error builds and maintains consumer trust.

Improved Diagnostics

It’s crucial to record what data was sent and what data was received to increase the speed and effectiveness of diagnostics. Logging ensures a transactional timeline of accurate information is readily available for troubleshooting.

If and when issues arise, it’s a lot easier to communicate with payment processors and gateways if you can provide almost exact payloads to and from them to make the diagnosis quicker on their end. It’s a real timesaver for tech support, i.e., you can bypass the “Did you try rebooting your computer?” line of questioning.

Prevention of Fraud and Other Security Risks

According to the Open Web Application Security Project (OWASP), a highly regarded non-profit foundation that works to improve software security, good logging practices allow companies to detect security risks. Security breaches go undetected without proper logging, often for 200 days or more.

Malicious entities or attackers are ready to exploit the lack of oversight and access private information.
Meticulous payment logging, auditing, and alerts allow companies to spot these breaches in real time to safeguard information and prevent widespread data leakage.

The Multifaceted Benefits of Payment Logging

Payment logging can also significantly enhance the UX for users (the companies utilizing payment software) and the end-users (their customers).

In our experience, both parties report greater satisfaction when payment errors are easy to identify and rapidly resolved.

Payment logging offers a bevy of benefits to businesses, their customers, and the financial ecosystem as a whole:

Enhanced Transparency

Payment logs provide a detailed record of every transaction, offering businesses and customers a clear view of the transaction journey—from initiation to completion.

Efficient Dispute Resolution

In case of discrepancies or misunderstandings, logs serve as an invaluable resource to quickly pinpoint the issue and facilitate resolutions.

Improved Accountability

By maintaining a record of every transaction, businesses remain accountable to their customers, partners, and regulatory bodies.

Increased Security

Some primary security concerns that logging can help with include:

• Unauthorized access to sensitive information
• Tampering of transaction records
• Data breaches leading to financial fraud

Monitoring and logging payment activities can help prevent or limit fraudulent activities, ensuring that potential threats are identified and addressed promptly. For example, if it’s normal for .01% of calls to fail, there may be a security breach, network outage, or another issue if 1-5% of calls suddenly begin to fail.

Users can limit unauthorized access and security breaches by following industry best practices, data logging, utilizing advanced security methods, and performing regular system audits.

Audit Trail & Regulatory Compliance

Implementing audits ensures users maintain a high level of security and remain compliant. Payment logs provide an unambiguous record of transactions, making the audit process smoother by proving compliance standards are met.

For many businesses, especially in the financial sector, maintaining detailed transaction logs is not only best practice but a regulatory requirement. Regulations and standards are a necessity and protect companies and consumers. Non-compliance leads to system vulnerabilities, not to mention the potential legal repercussions and reputational damages.

The Payment Card Industry Data Security Standard (PCI DSS) is a standard of compliance set forth by the PCI Security Standards Council. There are many levels to PCI DSS compliance, and users must meet the compliance requirements levied based on the volume of transactions they process each year. For more information on PCI DSS compliance, check out our article on payment security.

Enhanced Customer Support

When customers face issues related to their transactions, a detailed log enables customer support representatives to quickly access the transaction details, leading to faster and more efficient support.

Risk Management

By analyzing payment logs, businesses can identify patterns that indicate increased risk, allowing them to take preventive measures.

Informed Decision Making

When analyzed over time, payment logs can offer insight into trends and patterns, aiding businesses in making strategic decisions around payment systems and customer engagement.

Challenges and Their Solutions

Setting up a payment logging system comes with its challenges. There can be various obstacles due to customer preferences, technical glitches, meeting the continually evolving industry standards, etc.

Let’s explore these challenges and potential solutions.

Complex Integration with Multiple Systems

Challenge: Payment systems often need to integrate with various existing platforms such as accounting software, inventory systems, and more. This integration can be complicated depending on the capabilities of any new and existing systems.
Solution: Opt for API-friendly logging systems designed for easy integration.

Ensuring Data Security and Compliance

Challenge: Some pieces of payment data are sensitive. Regulatory boards like the PCI Security Standards Council set the standard and regulate the handling of sensitive data. Ensuring data is both secure and compliant is crucial.
Solution: Avoid logging sensitive information such as cardholder data. Sanitize your logs regularly and be wary of including any personally identifiable information in them.

Handling Large Volumes of Transaction Data

Challenge: High transaction volumes can overwhelm some logging systems, making them slow or even causing failures.
Solution: Opt for scalable cloud-based solutions. Monitor data loads and optimize database structures.

Disparate Data Formats Across Systems

Challenge: Different systems may log data in varying formats, making consolidation and analysis difficult.
Solution: Implement data normalization processes that can standardize data before logging.

Log Data Retrieval and Analysis

Challenge: With the vast amount of logged data, retrieving specific transaction details or conducting analyses can become time-consuming.
Solution: Incorporate advanced search functionalities and analytics tools. Regularly archive old data to improve system performance.

System Downtime and Maintenance

Challenge: Regular system updates or unforeseen issues can create system downtime, negatively impacting business operations.
Solution: Schedule maintenance during off-peak hours. Invest in robust backup systems and have a contingency plan for unforeseen outages.

Cost Implications

Challenge: Setting up a comprehensive payment logging system can be costly, especially for small businesses.
Solution: Consider hybrid solutions that combine both off-the-shelf and custom-built components. Regularly review and optimize the system to eliminate unnecessary costs.

Ensuring Long-Term Scalability

Challenge: As businesses grow, payment logging needs may evolve, demanding more from the current system.
Solution: Periodically review the system’s performance and capacity. Consider future growth and prioritize scalability when selecting and implementing a new system.

A custom software solution can address any of the challenges mentioned and more. A custom solution allows companies to:

• Efficiently and accurately log a large volume of transaction records
• Create custom reports
• Set up alerts for real-time notifications
• Improve the UX for internal teams and end-users
• Aid in customer support efforts
• And more

Whether or not you need a custom software solution for payment logging comes down to your specific needs and the scale of your company.

Let us lend a hand! If you aren’t sure whether you need an off-the-shelf or custom solution, a brief consultation is all we need to determine the best solution for you. Schedule a call with us today!

From Past to Future: The Evolution of Payment Logging

Historically, payment logging was elementary and involved minimal record keeping. As technology has progressed, so have logging systems. Even more logging tools are on the horizon due to emerging technologies like AI and blockchain. Users should expect significant advancements over the next decade.

Businesses must remain proactive, staying attuned to trends and ensuring they can leverage new technologies and methods in payment logging.

Ensuring a Smooth Experience

Payment logging is a tool companies can leverage to improve payment operations and offer a better experience to their customers. As our world and interactions become increasingly digital, data logs will be essential for guaranteeing easy, secure payments.

To achieve the best possible outcome, focus on proper implementation and maintenance. Put your company at a competitive advantage by choosing a flexible, scalable, and secure solution. While there may be ready-made software on the market that meets your needs, custom payment logging software solutions can surpass the capabilities of most pre-built software.

Want to learn more about payment logging and how a custom solution can help you create and maintain logs? Book a call with us!

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