1. Make sure the SharePoint List from where the merge needs to be triggered from, contains a string field. Each row item will need to contain the input parameter/s for your web service in that string field.
2. Make sure the template is associated to that SharePoint List you want to trigger the merge from. This can be done via the "Associate Template" button on the ribbon. (If the template has been created inside the template gallery, it will automatically be associated to the SharePoint list the template gallery was accessed via).
For more information on Template Association, click here
3. Make sure Template Initiation is set to; "SharePoint List Event".
For more information on Template Initiation, click here
For more information on SharePoint List Events, click here
4. Set the Rule to Manual or which ever list event suits your need.
5. Next, edit the Web Service data source and set your input parameter to the SharePoint List field from the default data source. Since the template is being manually merged, the merged file will probably need to the saved to a document library. This can be set in the templates properties.
For more information on Storage Properties, click here
Once all these prerequisites are set, save and publish the template and conduct a merge test by updating, adding or manually selecting an item and assembling the template.
Article on Assembling a Template: here