A transaction is the overall process of withdrawing money from one entities bank account and depositing it into another entities bank account. The entity sending the money is referred to as the payor and the entity receiving the money is referred to as the payee.

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Entities

An entity can either be one of three types: business, merchant or person.
  • Business: a corporate entity.
  • Merchant: a corporate entity that has passed a KYB check.
  • Person: an individual person.
It is a requirement that at least one of the parties involved in the transaction, either the payor or payee, must be a merchant.

Read more about transaction states here

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Capture and Payout

A successful transaction consists of two parts, the capture and the payout. Depending on how your system is configured, more than one transaction can exist within a single payout, this is referred to as a batch payout. A transaction can contain other sub-operations that are used to track independent activities such as clawbacks and reverse-payouts.

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How Transactions Work

When a transaction is created using the Transaction API, money is debited from the payor’s bank account to our FBO account. Once the money clears, it is then credited directly to the payee’s bank account or, in the case of a batch payout, included in a batch deposit to the Processor FBO account and then in turn paid out to the individual merchants.

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Delays

The timing of the transaction payout depends on a few factors which can cause a delay on either the capture or payout operations:
  • Weekends: banks do not process ACH payments on weekends.
  • Bank Holidays: banks do not process ACH payments on bank holidays.
  • Timing: a next day transaction created after 5:30pm EST will not be processed until the following day which adds an extra day to the payout.
  • Risk: if a transaction triggers certain rules that determine it to be a higher than normal risk, the payout may be delayed by a number of days to minimize the risk of a return.

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Refunds

Using the Refund API, a refund can be triggered on behalf of the payee to return the money to the payor.

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Chargebacks

During a chargeback, also known as a return, a payor can contact the bank and have them issue a chargeback which will take the money back from the FBO account and return it to the payor. This in turn will trigger the ACH API to do a clawback of the funds sent to the payee, or in the case of a batch payout, a clawback from the Processor FBO account and then in turn, the processor will clawback from the payee. Something to keep in mind:
  • If the payor is a business, they have up to two calendar days to request a chargeback.
  • If the payor is a person, they have up to 60 calendar days to request a chargeback.

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Example Scenarios

In order to understand the different scenarios and points of failure that can occur when a transaction is created, take a look at the links below.

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Direct Payouts

Direct Payouts are when a processor is configured for one direct payout per capture.

Transaction Scenarios - Direct Payouts

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Batch Payouts

Batch Payouts are when a processor is configured to receive a single daily batch payment that includes all transactions processed the previous day, with the processor in turn sending out individual or batch payments to the payees.

Transaction Scenarios - Batch Payouts