This article outlines all details around the daily transaction sweep process in which Aiwyn will sweep owed merchant fees from each transaction type (Credit, Debit/Prepaid, and ACH) on a daily basis.
Sweeping applies to all transaction types.
Included in this Article:
- Sweep Example by Transaction Type
- Reversed Transactions (Refunds, Disputes, and Failed ACH payments)
- Reconciling Aiwyn Transaction Fees in the General Ledger
Sweep example by transaction type
The following examples include merchant fee rates that are for demonstration purposes only. To determine your firm's actual merchant fees please review your contract with Aiwyn or reach out to support@aiwyn.ai for more information.
Credit card transactions
Scenario:
| Payout timeline | Payment deposits 2 business days after transaction |
| Firm's contracted merchant rate for cards | 3.5% |
| Credit card processing fee passed to clients | 3.5% |
| Client's payment principle (less surcharge) | $100.00 |
| Total client payment amount | $103.50 |
| Transaction fee amount swept by Aiwyn | $3.50 |
| Amount deposited to firm in daily payout | $100.00 |
| Daily cash file (used to reconcile payment in PM) - will not include any Processing Fee | $100.00 |
Debit card transactions
Scenario:
| Payout timeline | Payment deposits 2 business days after transaction |
| Firm's contracted merchant rate for cards | 3.5% |
| Credit card processing fee passed to clients | No surcharge -> debit cards cannot be surcharged |
| Client's payment principle | $100.00 |
| Total client payment amount | $100.00 |
| Transaction fee amount swept by Aiwyn | $3.50 (equals merchant rate) |
| Amount deposited to firm in daily payout | $96.50 |
| Daily cash file (used to reconcile payment in PM) | $100.00 |
| Daily transaction file (amount withheld by Aiwyn) | $3.50 |
|
Sum of daily cash file - sum of transaction file = payout amount deposited to firm $1,000 - $10 = $990 | |
ACH transactions
Scenario:
| Payout timeline | Payment deposits 2 business days after transaction |
| Firm's contracted merchant rate for cards | 1% |
| Credit card processing fee passed to clients | No surcharge -> ACH cannot be surcharged |
| Client's payment principle | $100.00 |
| Total client payment amount | $100.00 |
| Transaction fee amount swept by Aiwyn | $1.00 (equals merchant rate) |
| Amount deposited to firm in daily payout | $99.00 |
| Daily cash file (used to reconcile payment in PM) | $100.00 |
| Daily transaction file (amount withheld by Aiwyn) | $1.00 |
|
Sum of daily cash file - sum of transaction file = payout amount deposited to firm $1,000 - $10 = $990 | |
Reversed transactions (refunds, disputes, and failed ACH payments)
Swept transaction fees from the original transaction will be kept by Aiwyn upon the event of a reversal, because Aiwyn must pay to process these transactions, even if they were refunded, disputed, or failed.
Credit card transaction reversal
Scenario: Credit refund or dispute + international Fee
| Original amount paid by client | $104.50 |
| Processing fee rate for client | 3.5% | client pays this fee |
| International fee rate for client | 1.0% | client pays this fee |
| Original transaction sweep amount kept by Aiwyn | $3.50 + $1.00 = $4.50 | firm has paid neither of these fees |
| Original amount deposited to firm in daily payout | $100 |
| Amount debited from firm daily payout when a refund or dispute occurs and clears | $104.50 ($100 + $4.50) |
| Amount returned to client | $104.50 | full original payment amount must be returned to Client |
| Display of reversal to firm |
|
Debit card transaction reversal
Scenario: Debit refund or dispute + international fee
| Original amount paid by client | $100.00 |
| Firm's contracted merchant rate for cards + scenario amount | 3.5% ($3.50) | because it is debit, client cannot pay this fee |
| International fee rate + scenario amount | 1.0% ($1.00) | because it is debit, client cannot pay this fee |
| Original transaction sweep amount kept by Aiwyn | $3.50 + $1.00 = $4.50 |
| Original amount deposited to firm in daily payout | $96.50 |
| Amount debited from firm's daily payout when a refund or dispute occurs | $100.00 ($96.50 + $4.50) |
| Amount returned to client | $100.00 | full original payment amount must be returned to Client |
| Display of reversal to firm |
|
ACH transaction reversal
Scenario: ACH refund, dispute, or payment failure ("Failed ACH")
| Original amount paid by client | $100.00 |
| Firm's contracted merchant rate for ACH + scenario amount | 1.0% ($1.00) | because it is ACH, client cannot pay this fee |
| Original transaction sweep amount kept by Aiwyn | $1.00 |
| Original amount deposited to firm in daily payout | $99.00 |
| Amount debited from firm when a refund, dispute, or payment failure occurs | $100.00 ($99.00 + $1.00) |
| Amount returned to client | $100.00 | full original payment amount must be returned to Client |
| Display of reversal to firm |
|
Reconciling Aiwyn transaction fees in the general ledger
For accounting firms using Aiwyn's payment processing services, it's crucial to accurately record both the reported payment amounts from clients and the associated transaction fees in your General Ledger (GL). This guide will help you understand how to reconcile these entries to match your actual cash deposits.
Key concepts
1. Reported payment amount: The total amount of payments reported by Aiwyn, which includes the transaction fees.
2. Transaction tees: Fees deducted by Aiwyn for processing the payment.
3. Actual cash received: The amount actually deposited in your bank account (reported payment amount minus transaction fees).
Reconciliation process
To ensure your GL accurately reflects both the revenue from client payments and the expenses from transaction fees, follow these steps:
1. Record the full reported payment amount from Aiwyn as revenue.
2. Record the Aiwyn transaction fees as an expense.
3. Verify that the actual cash received in your bank account equals the difference between these two amounts.
Example scenario
Let's walk through a practical example:
- Reported payment amount (from Aiwyn payment file): $5,500
- Aiwyn transaction fees: $211.50
- Actual cash received in bank account: $5,288.50
GL Entries
| Account | Debit | Credit |
| Cash (Bank Account) | $5,288.50 | |
| Aiwyn Fee Expense | $211.50 | |
| Revenue (Client Payments) | $5,500 |
Verification
- Revenue (reported payments): $5,500
- Less: Aiwyn Fee Expense: $211.50
- Equals: Actual Cash Received: $5,288.50
By recording transactions this way, you ensure that your GL accurately reflects the total revenue reported from client payments, the expenses incurred from payment processing fees, and matches the actual cash received in your bank account.
Best practices
- Regularly reconcile your Aiwyn payment reports with your GL entries and bank statements.
- Create a specific expense account for Aiwyn transaction fees for easier tracking.
- Use the Aiwyn payment report to verify the reported payment amounts from clients.
- Always ensure that your actual cash received equals the reported payments minus the transaction fees.
- Be aware that the reported payment amount includes fees, which will not be reflected in your actual cash deposits.
Reporting
- Because transaction sweeps can imply that firms do not receive the full principle of a payment from a Debit or ACH payment method, Aiwyn provides additional reporting to accompany a Daily Cash report to aid the firm in reconciling their net cash
- The Daily Cash file will always relay to a firm the entirety of the client's payment that the firm receives. This report will never include the fee that Aiwyn kept from the transaction.
- A separate Transaction_Fee report is provided to the firm to account for the fees kept by Aiwyn from a given deposit.
- Daily Cash File sum - Transaction Fee sum = net cash received by firm
- Attached: ExampleTransaction Fee report
Important note
Remember that while Aiwyn reports the full payment amount (including fees) as $5,500 in this example, your firm actually receives $5,288.50 in cash. The $211.50 difference represents the fees that Aiwyn deducts before depositing the funds into your account. This accounting method ensures that your revenue reflects the full amount clients paid, while also accurately recording the fees as a separate expense.
By following these guidelines, you'll maintain accurate financial records that properly reflect your revenue, the costs associated with payment processing, and the actual cash received from client payments.