Settlement

What is settlement?

Settlement is the process where we ensure payments made to a merchant eventually end up in the merchant’s bank account. There are several steps in this process, starting when the payer first confirms the payment and ending when the money is in the merchant’s bank account.

Same Day Deposits

WePay offers automatic Same-Day Deposit capabilities for merchants on your Platform. If a merchant adds a Chase Bank Account where funds are to be deposited, they will receive their cash same day for all payments approved (released API state) by the cutoff time Sunday-Friday. Plus, Saturday transactions will be deposited Sunday morning.

For a non-Chase Bank Account, deposits will occur on the next business day, depending on the receiving bank. Essentially, we are reducing the existing ACH payout window to 1-3 business days (from the historical 2-5). For

There is no additional cost for this functionality.

For exact time frames and cutoff times, please reference this table:

SMB / Business Tools Crowdfunding
Cut-off Time 5:00 pm PT 12:00 am PT
Funding Time:
Chase Bank Account		 That Night That Afternoon
Funding Time:
Non-Chase Bank Account		 Next Business Day Next Business Day
Funding Days:
Chase Bank Account		 Business Days, Holidays, and Sundays*
Saturday transactions will deposit Sunday morning		 Business Days, Holidays, and Sundays*
Saturday transactions will deposit Sunday morning
Funding Days:
Non-Chase Bank Account		 Business days Business days

Same-Day Deposit requirements:

  • Depending on your platform’s vertical (crowdfunding or SMB), your merchants will be setup with either a 5 PM PT or a 12 am PT cut-off time for transactions, based on the chart above. Reach out to your integration team, relationship executive, technical account manager, or api@wepay.com to find out more.
  • The merchant must be based in the United States.

Same-Day Deposit limitations:

  • Same-Day Deposits are currently rolling out. Rollout will be complete by the end of Q4 2019.
  • ACH payments have a built-in delay of 2 business days. Once an ACH checkout is in a released API state, it will be eligible for Same-Day Deposit.
  • Saturday Deposits will be available on Sunday morning.
  • Funds deposited to non-Chase bank accounts may post as soon as the next business day, depending on the receiving bank.
  • All transactions are subject to WePay terms of service and exclusions therein, including risk assessment and fraud monitoring, which may result in delays.

Before a payment can be included in a settlement, the following requirements must be met:

  1. The merchant’s KYC must be verified
    • Note: WePay takes a risk-based approach to verification, and may require additional supporting documentation after a Legal Entity has been verified.
  2. The Payment must have "status": "released"; this means:
    • WePay review must be complete and successful
    • Any delayed capture checkouts must go through the capture step
    • Payment Banks must be verified (1-3 business days via micro deposit flow if not already verified)
    • ACH/Echeck Payments must pass the 2 business day hold (this is in place to mitigate rejections from the issuing bank)
  3. The checkout must not be in the merchant’s reserved balance
    • Identify these checkouts by fetching the account’s balance.reserved_balance and reconciling against the amount for the account’s most recent checkouts.

requirements for a payment to be included in a settlement

Steps in the Settlement Process

  1. Authorization: The Payer enters their payment information and we authorize the card for that amount.
  2. Payment Review: Happens for ~5% of payments. The rest are approved automatically. Payment review may also entail an account review
  3. Merchant verification: WePay is required by law to verify the identity of merchants. Merchants will need to verify their identity and link their bank account. This typically only needs to happen once.
  4. Withdrawals start after the user has verified their identity. Withdrawals may be delayed based on reserves (see reserve section below). Withdrawal Review happens for ~10% of withdrawals. Other withdrawals are approved automatically. Withdrawal review will often involve an account review including a review of reserves.

In each review process we may review both the individual transaction and the account as a whole. We will discuss each of these processes in detail below.

Authorization

When a payer enters their payment information and confirms the payment, we will attempt to authorize the card for the amount indicated. If successful, the checkout object will be in authorized state. If the payment is authorized then the money has been reserved on the credit card. In almost all cases this indicates that the payment is successful.

However, it is still possible for a payment to fail. For example, if we then detect that the card used was lost or stolen recently. If you have merchants shipping physical goods, it is a good idea to advise them to wait until the payment is released before shipping their items. On the other hand, if you have fundraisers accepting donations, you can probably consider an authorized payment to be successful (but you should still show it as “pending” to the merchant or payer).

Payment Review

Payment review is often our first opportunity for underwriting our merchants. Most payments are reviewed and cleared automatically by Veda, our risk engine. If the payment is automatically reviewed and cleared, it will proceed almost instantly from authorized to released.

Some payments, however, may be flagged for manual review. Our goal is to help protect our payers, merchants and platforms from unexpected fraud. While manual review is slower than an automated system, it does allow us to make smarter, more nuanced decisions about payments and merchants. Only 5% of payments go through manual review and manual review happens in 1-2 business days.

Some things you can do to help make sure payments are reviewed quickly and efficiently:

  1. Make sure the payer info is accurate (especially the payer email).
  2. Include detailed information about what the payment is for (typically in the short_description and long_description of the checkout).
  3. Have the merchant verify their identity and link their bank account earlier rather than later.
  4. If the merchant has their own page or site, include a link to it in the short_description or long_description.
  5. If you know the merchant type and MCC code, provide it in the /account/create call.

Rarely, our review system may fail a payment. Reasons this may happen include:

  1. The payment was identified as likely fraud. This usually is due to a stolen credit card being used.
  2. The payment is prohibited under our Terms of Service.
  3. The payer or merchant is a known fraudster.
  4. There is not enough information about what the payment is for.

If a payment is failed, both the payer and the merchant will receive an email explaining the failure. Additionally, if you have set a callback_uri on the payment, you will receive an IPN notifying you of the failure.

Once the payment has been reviewed and accepted by our risk engine, it will be released. The payment will be counted towards the balance of the WePay account. If the payment is not held in reserve, it will be withdrawn at the next scheduled withdrawal time.

Reserves

WePay has a unique and sophisticated reserves system that tries to balance getting merchants their money as soon as possible while also protecting against fraud.

Every merchant has their own reserves threshold. Thresholds range from $500/week to $10,000/week, but most merchants have a threshold of $2,500/week or higher. This threshold determines the amount that can be immediately withdrawn every week. Any amount over this threshold will be available 7 days after first being received.

For example, let’s say a merchant receives 3 payments of $250 each, and the merchant has a threshold of $500/week. The first two payments will be immediately available for withdrawal, but the 3rd payment will not be available until one week after that payment was first made. Any additional payments that week will also not be available until 7 days after they were made. When the next week rolls around, the first $500 collected that week will be available for withdrawal immediately, but any subsequent payments will have to wait 7 days.

When setting the thresholds for each merchant, we try to balance making sure that the merchant receives almost all of their average weekly payment volume immediately, while also protecting against fraud and riskier merchants.

If you have a merchant that you’d like to increase the threshold for, or have a merchant you believe will be doing more than $10,000/week in payment volume, please contact either your account manager (if you have one) or the WePay support team at support@wepay.com

In order to make merchants’ accounting easier, we will not split up payments. If part of a payment would go over a threshold, the entire payment will be held for the standard 7 days before clearing.

Account Review

WePay is required by law to verify the identity of every merchant that collects money. Each account is reviewed with a combination of automated and manual review. You can read about how we collect this information in the embedded withdrawals guide.

Merchants do not need to verify their identity or link their bank account before collecting their first payment. However, they must complete this step before they can withdraw any funds.

Additionally, if merchants do not complete this step within 30 days of receiving their first payment, we are required by law to refund their payments. Please make sure your merchants are completing this step in a timely manner!

Information that we ask the merchant depends on what type of merchant they are. Here is the full list:

Information asked for personal accounts:

  • Name
  • Birthday
  • Address
  • Phone number
  • Social security number

Information asked for business or nonprofit organizations:

  • Organization’s EIN
  • Organization’s legal operating name
  • Organization’s phone number
  • Organization’s address
  • Organization’s website
  • Organizations’ description
  • Personal name
  • Personal birthday
  • Personal social security number

We may verify some or all of this information with 3rd parties, such as Experian or the United States Department of Treasury’s OFAC list. You can read more about this in our privacy policy.

If you want to see the review status for an account, you can look at the statuses and action_reasons parameters on the /account call. If incoming or outgoing payments are blocked, the action_reasons parameter will tell you why.

Withdrawal Review

Once a payment is released and has passed the reserves system, and the payment account has been reviewed, the withdrawal will be queued.

Most withdrawals will be reviewed and passed automatically, but some may require manual review. This process is similar to the payment review process.

We use the ACH system to withdraw payments from the merchant’s WePay account to their bank account. ACH transfers take 1-3 business days depending on the bank account receiving the payment. Some bank accounts (such as Wells Fargo) are faster and take only 1 business day. However, some bank accounts (such as small credit unions) may take much longer.