Traditionally, all mobile check and ACH deposits follow the “good funds” model. This model mandates a waiting period before the settlement of deposits.

While this model is effective in safeguarding against fraud, it inadvertently imposes a waiting period for customers to access their funds. This delay can be particularly challenging for those living paycheck to paycheck, who may need immediate access to their funds. As a result, there’s an increased likelihood of these customers seeking alternative financial services.

The "Early Release of Funds" feature is designed to alleviate the challenges posed by the waiting period in the "good funds" model. This feature will empower your end customers to:

1. Release deposited funds earlier than the standard timeframe set by the good funds model.

2. Develop custom business rules to determine the eligibility and timing for early fund release.

Key benefits

• Enhanced Customer Experience: Customers gain quicker access to their funds, reducing financial strain and improving overall satisfaction.

• Reduced Dependency on Alternative Financial Services: Early access to funds means customers are less likely to seek external financial solutions, such as check cashing services.

• Balanced Security and Convenience: While accelerating fund availability, the feature maintains a strong stance against fraud.

How it works: API integrationCopied!

The Early Release of Funds feature is seamlessly integrated into our API, allowing for a straightforward and efficient process. Below is a breakdown of how a typical request to release funds early would work using the "/transactions/release" API endpoint.

API request example

To initiate the Early Release of Funds, a POST request is sent to the "/transactions/release" endpoint. Here is an example of the request body:

{ "external_id": "1AS245CHK", "transaction_uuid": "3a6bcbed-b7dc-4791-84fe-b20f12be4001", "release_amount": 1000, "service_fees": [ { "external_id": "string", "description": "string", "calc_type": "DEDUCT", "category": { "release_fee": { "value": { "amount": 1000 } } } } ] }

Request parameters

• external_id: A unique identifier for the transaction, provided by the program.

• transaction_uuid: The universally unique identifier (UUID) of the transaction in our system.

• release_amount: The amount of funds to be released early. This is represented in the smallest unit of the currency (e.g., cents for USD).

• service_fees: An array of service fee objects that might be applicable to the transaction. Each object includes:

  • external_id: An identifier for the service fee.

  • description: A brief description of the service fee.

  • calc_type: The calculation type for the fee, e.g., "DEDUCT" indicates that the fee should be deducted from the transaction amount. For releses, only "DEDUCT" is supported.

  • category: Specifies the category of the fee, For releases, only "release_fee", along with its value.

Fund release mechanism

The "Early Release of Funds" feature operates by adjusting the fund allocations within a user's Wallet entity. Specifically, it involves transferring funds from one 'bucket' to another within the Wallet's funds object. Here's how it works:

1. Pending Bucket: Initially, funds from MCD and ACH deposits are placed in the

   pending bucket. This is where they remain during the standard waiting period as per the 'good funds' model.

2. Transit Bucket: When a request for early release of funds is approved, the specified amount is moved from the pending bucket to the transit bucket. This transfer signifies that the funds are now accessible to the customer, albeit not yet settled.

Spending the released funds

Once the funds are in the transit bucket, they are effectively available for the customer to use. Here's the process that follows when these funds are spent:

1. Consumer Spending: When the consumer decides to spend the funds, the transaction is initiated from the Wallet.

2. Prefunding Treasury Vault: If the funds in the balance bucket are not sufficient to cover the transaction, additional funds are temporarily sourced from the prefunding Treasury Vault.

3. Settlement and Reconciliation: Eventually, when the funds are settled, any temporary coverage provided by the

   prefunding

   treasury vault is reconciled.

Ensuring smooth transactions

• Automated Transfers: The movement of funds between these buckets is automated, ensuring a seamless experience for the customer.

• Real-time Updates: The Wallet entity is updated in real-time to reflect the current state of the funds across different buckets.

Decision-making process for funds releaseCopied!

The decision to release funds early is critical and requires a careful evaluation of the risk involved. One of the key factors in this process is the assessment of the funding instrument used in transactions, particularly for CHECK_DEPOSIT and LOAD_FUNDS transaction types. The Transaction entity provides detailed information about the funding instrument, which is pivotal in the decision-making process.

Funding Instrument

Funding instruments represent the bank account information or other financial instrument used to pay for a transaction such as a check or load.

The Transaction entity's funds_source contains the funding_instrument_details object, which encapsulates the following information:

• Funding Instrument token: Each funding instrument is identified by a unique token (funding_instrument_uuid). This identifier helps in recognizing if the funding source is trusted and has been previously verified. This UUID is not just a marker of the instrument within a single financial program but is shared across all programs enabled by our platform. The shared nature of the UUID facilitates the pooling and sharing of fraud intelligence across different programs, enhancing our capability to detect and mitigate fraud on a broader scale. These tokens are created as soon as a new Payor is identified in the system in relation to a relevant transaction.

• Bank account information: Beyond the UUID, the funding instrument object encapsulates bank account details (bank_account_details) including the routing and bank account numbers. This enables the identification of transactions linked to known bank accounts, particularly those associated with trusted third parties.

Utilizing transactional summary data

To further refine the decision-making process, the platform offers the capability to analyze transactional history through the Calculate transactional summary data endpoint. This functionality allows for a detailed examination of an account's or funding instrument's transaction history by providing insights into:

• The number of returned transactions

• Completed and failed transactions

• Total and average returned value

Accessing this data requires submitting the account_uuid or funding_instrument_uuid, enriching the decision framework with quantitative metrics on transactional behavior.

Implementing decision criteria

The decision to release funds early should be based on a multifaceted assessment strategy:

1. Trusted funding instruments: The recognition of a funding instrument as trusted, underpinned by its UUID and bank account information, further corroborated by cross-program fraud intelligence, can trigger an instant release of funds.

2. Known third-party payors: Favorable consideration could also be given to transactions involving bank accounts of verified third parties.

3. Transactional behavior: The aggregated transactional data, reflective of an instrument's or account's historical activity, plays a crucial role in evaluating the risk and determining fund release eligibility.