Basic Concepts

Welcome to the comprehensive guide on payment processes within a marketplace utilizing EveryPay. This document breaks down key concepts and processes, providing real-world examples to illustrate each function.

Seller

Definition:

A seller is an individual or business that offers products or services on the marketplace. Sellers receive payments for the sales made on the platform and are subject to the marketplace's payout and compliance processes.

Seller Role in the Payment Flow

Receiving Payments: Sellers earn money when buyers make purchases from their store or service on the marketplace.
Payout: After the payment is processed and split, the seller's portion is transferred to their account.

Seller Payouts

Frequency: The marketplace defines how often sellers are paid, such as daily, weekly, or biweekly.
On Hold: The marketplace can place a seller's payout on hold for specific reasons (e.g., disputes, compliance checks).

Marketplace Role:

Onboarding Sellers: Ensure sellers are properly registered, verified, and onboarded to the marketplace.
Processing Payments: Manage payment flows, including payment splitting and timely payouts.

Balances

In EveryPay, the financial state of a marketplace account is managed through two key types of balances: Available Balance and Current Balance.

1. Available Balance

The Available Balance represents funds that the marketplace can immediately use. It reflects the liquid, usable funds within the account.

Sources of Available Balance

Commissions: Funds retained by the marketplace as commissions from split payments.
Top-Ups: Direct credit transfers initiated by the marketplace to increase the available balance.

Characteristics of Available Balance

All Direct Transfers initiated via API calls use the Available Balance as either the sender or recipient.
The Available Balance enables the marketplace to fund its operations and manage non-sale-related transactions.

2. Current Balance

The Current Balance reflects unsettled seller payments—funds received from customers but not yet transferred to sellers. This balance acts as a temporary holding state for payments and refunds.

Characteristics of Current Balance

Payments and refunds enter the Current Balance upon successful capture, awaiting further processing.
A captured split payment must be transferred to the respective seller via a Payment Transfer before it can be included in a payout.
Funds in the Current Balance must not remain indefinitely; they should flow to the Seller Account Balance promptly.

Debit and Credit Activities

The Current Balance can be impacted by:

Payments: Credited upon successful customer transactions.
Refunds: Debited when returning funds to customers.
Payment Transfers: Debited to transfer funds to seller accounts.
Reversals: Adjusted to undo prior transactions as needed.

Efficient management of the Current Balance ensures a smooth operational flow within the marketplace ecosystem.

Payment

A payment represents the initial transaction where a customer pays for goods or services offered on the marketplace.

Real-World Example: Imagine a buyer purchasing a bag of zucchinis from an online marketplace. Upon confirming their order and entering payment details, a payment transaction is initiated.

Flow: The marketplace communicates with EveryPay to process the payment and transfer funds from the buyer's account.
Marketplace Role: The marketplace ensures that the payment request includes the split flag, enabling proper fund allocation.
EveryPay Role: EveryPay securely authorizes the transaction, transferring funds to the marketplace's account.

Please see EveryPay API Reference

Refund

A refund occurs when the marketplace returns funds to a customer for a transaction. Refunds may happen due to customer dissatisfaction, order cancellation, or other valid reasons. Refunds are closely tied to the original payment transaction.

Real-World Example: If the buyer cancels their order for the bag of zucchinis before shipping, the marketplace processes a refund.

Flow: The marketplace initiates a refund of the payment amount back to the buyer.
Marketplace Role: The marketplace decides when a refund is warranted and manages the communication with the buyer.
Conditions for Refunds: A split payment can only be refunded if it has not been settled, meaning funds have not yet been distributed to sellers. If settled, the marketplace must use reversals to reclaim funds from sellers.

Please see EveryPay API Reference

Transfers

Transfers are the movements of funds within the marketplace, enabling the flow of money between accounts. Transfers can be classified into two types: Payment Transfers and Direct Transfers.

Payment Transfers

Payment Transfer occurs when the marketplace moves funds from its Current Account Balance to a seller's account after a payment is successfully captured. Payment Transfers are directly linked to Payments and are integral to ensuring sellers receive their earnings.

Real-World Example

A customer purchases a bag of zucchinis for €50. The marketplace retains a €5 commission and transfers the remaining €45 to the seller's account.

Flow of Funds

The marketplace calculates the amount to transfer based on the sales details and applicable fees.
It initiates a Payment Transfer of €50 from its Current Balance to the seller's Account Balance.

Direct Transfers

A Direct Transfer occurs when the marketplace moves funds to or from a seller's account for purposes unrelated to specific sales.

Real-World Example

If the marketplace charges a seller a €10 monthly service fee, it may initiate a Direct Transfer to collect the fee from the seller's account.

Flow of Funds

The marketplace initiates a Direct Transfer of €10 from the seller's Account Balance to the marketplace's Available Balance.

When to Use

Direct Transfers are used for adjustments like fees or other non-sale-related charges.

Characteristics

Direct Transfers can be credit or debit transactions.

They always involve the Available Balance of the marketplace, which acts as the central reference point for these transactions.

For implementation details, please consult EveryPay API Reference

Reversals

A reversal is the process of undoing a transfer. Every reversal is tied to a specific transfer, ensuring transparency and traceability. Reversals allow the flow of funds to be corrected in scenarios where money needs to be returned to its original source.

Reversal of a Payment Transfer

When a payment transfer is reversed, the flow of funds is undone, impacting the Current Balance of the marketplace and the Seller Account Balance.

Example: Reversing a Payment Transfer

A customer makes a payment of €100, and the marketplace splits this payment by executing a Payment Transfer of €100 to the seller's account.
- €100 is credited to the seller's Account Balance.
- Simultaneously, €100 is debited from the marketplace's Current Balance.
Later, if the funds need to be returned to the marketplace (e.g., due to a refund or a dispute), the marketplace initiates a reversal of the payment transfer:
- €100 is debited from the seller's Account Balance.
- €100 is credited back to the marketplace's Current Balance.

Reversal of a Direct Transfer

When a direct transfer is reversed, the flow of funds is undone, impacting the Available Balance of the marketplace and the Seller Account Balance.

Example: Reversing a Direct Transfer

The marketplace initiates a Direct Transfer of €100 from the seller's Account Balance to the marketplace's Available Balance.
If the funds need to be returned to the seller (e.g., due to an error or a business decision), the marketplace executes a reversal of the direct transfer:
- €100 is credited back to the seller's Account Balance.
- €100 is debited from the marketplace's Available Balance.

Reversals ensure that transactions remain flexible and can be corrected when necessary, maintaining the integrity of the marketplace's financial ecosystem.

For implementation details, please consult: EveryPay API Reference

Payout

A payout is the process of transferring funds from a seller's account balance to their linked bank account. Payouts are essential for ensuring sellers receive the funds they've earned.

Payout Creation and Scheduling

Payouts are created and processed automatically by EveryPay (EVP) according to a seller's predefined schedule. This schedule is configured during the seller's account creation. By default, the marketplace is set to issue payouts daily to all eligible seller accounts without any manual intervention.

Payout Composition

Each payout includes all transfers and reversals that occurred up until 12:00 a.m. of the day prior to the payout's execution date. For instance:

If a seller's payout schedule is weekly, with payouts occurring every Monday, the Monday payout will include all transfers and reversals successfully executed up to 12:00 a.m. on Sunday.

Payout Status

When a payout reaches the status of "deposited", it signifies that the funds have been successfully transferred to the seller's bank account.

For implementation details, please consult: EveryPay API Reference

Settlement

Settlement is the process of reconciling all transactions to ensure that payments, transfers, and fees are accurately accounted for. EveryPay uses settlement to deduct its service fees from the payments processed by the marketplace.

Real-World Example:

Imagine a single payment of €100 is processed by the marketplace. The marketplace is then required to complete €100 in total transfers to sellers to fulfill this payment. Once the total transfers match the payment amount, EveryPay deducts its fees from the aggregated funds of the Available Balance. These fees are added to an invoice.

Flow:

The marketplace processes multiple payments, each contributing to the total transaction amount.

Once the settlement threshold is met (e.g., €100 in total transfers), EveryPay deducts its service fees.

Payments included in the settlement are added to an invoice for the marketplace, detailing all fees deducted.

Marketplace Role:

The marketplace ensures that all payments are fully split and transfers are processed accurately.

EveryPay Role:

EveryPay aggregates the marketplace's transactions and monitors the total payment transfers.

When the threshold is met, EveryPay deducts its service fees from the marketplace's transfers.

This approach provides a streamlined and transparent way to manage fees, ensuring that both the marketplace and EveryPay maintain accurate financial records.