Embodiments provide methods and systems for merchant data cleansing in payment network. Method performed by server system includes accessing electronic payment transaction records from transaction database. Each electronic payment transaction record includes merchant data fields. Method includes determining set of electronic payment transaction records with ambiguous merchant data fields having matching probability scores less than predetermined threshold value computed by probabilistic matching model and identifying at least one issue for non-matching of each of set of electronic payment transaction records. Method includes determining data model based on at least one issue of each of set of electronic payment transaction records. Data model is one of: phone-to-city model, payment aggregator model, and merchant name normalization model. Method includes updating set of electronic payment transaction records with unambiguous merchant data fields corresponding to ambiguous merchant data fields by applying data model to each of set of electronic payment transaction records.