Payment Type & Investment Payment Processing #

• Depending on the investment payment processing provider, there are currently two payment types: North Capital and Dwolla.
• North Capital is responsible for ACH and WIRE payments.
• Dwolla is responsible for Dwolla Wallet and Bank account (TBD) payments.
• For all investment payments, the transfer creation is triggered when all conditions are met - investment profile has approved KYC & Accreditation AND investment status is legally confirmed. Funds are moved to an escrow account in North Capital, where the funds are held in escrow until the deal is either finalized or canceled.
• Investors are refunded if a deal closes unsuccessfully (either because an admin user confirms the investment cancellation or the offering is unsuccessfully closed)

North Capital. ACH #

• There is an ability to add one external account for ACH payments per one Account ID on NC end.
• External account is created on the 1st investor’s ACH investment under the investment profile.
• No ability to add several external accounts, but there is an ability to change the one added previously.
• To create an external account for ACH payment, the investor is requested to provide - Account nickname, Account type (saving/checking), Account number, Routing number. The info is requested on the funding step of the investment process.
• Due to NC limitations, the maximum amount per transaction is $100K.
• In the case of ACH payment along with trade status - there is funding status for ACH payments returned by NC:
  • pending - for created transfer
  • submitted - for transfer being processed
  • settled - for processed transfer
  • returned - for failed transfer because of insufficient funds/wrong funding source and etc. See more here
  • voided - transfer has been voided and will not be processed
  • declined - this means that NC operations team has declined to process this transaction. See how NC statuses are matched with our internal funding statuses list.
  • To process a refund for investment paid with ACH, the cancellation process should be triggered by API. After processing the request on North Capital end, the funds should be returned to the originating bank account.
• Payment progress:
  1. Trade is created (status Created) AND Investment gets Legally confirmed status - Transaction creation is triggered. Funding status - initialize, on NC end - pending.
  2. Transaction is being processed. Funding status - in progress, on NC end - submitted.
  3. Transaction is processed successfully. Funding status - received, on NC end - settled. Once NC clears legal side, funding status - settled, on NC end - still settled.
  4. Trade status - Funded. Note: before being processed the transfer on NC end could be Voided/Declined. In case of transfer on NC end fail status will be Returned.

North Capital. WIRE #

• To enable wire payments no further action is required.
• Wire transfers are initiated manually by the investor and their bank; therefore, there is no other action that needs to be required. When a wire is received in escrow, the trade status is updated to FUNDED.
• In the case of a refund, a DocuSign will be sent to the investor from the escrow operations team to verify wire fees/amounts/banking information, and the wire transfer will be sent within 1-2 business days of completion.
• Payment progress:
  1. Trade is created (status Created) and the investor initiated wire transfer.
  2. Wire transfer is received in the escrow account.
  3. Trade status is Funded.

Dwolla. Wallet #

• To use this payment method, the user should pass KYC and go through the wallet creation process before the investment is submitted.
• Wallet status should be Verified.
• The investor can use pending wallet balance to pay for investment. The formula for calculating the Pending Balance is: Current balance + Pending incoming funds - Pending outgoing funds.
• If the Investment gets Legally confirmed status but there is a pending load funds transaction intended to partially or fully cover the investment, the Dwolla transfer will not be created until the transaction is processed and funds are settled in the user’s wallet.
• Payment progress:
  1. Trade is created (status Created) AND Investment gets Legally confirmed status - Transaction creation is triggered. Funding status - initialize, on Dwolla end - pending. A transfer is considered pending when the funds have not yet left the funding source or are in transit to their destination.
  2. After the transfer is successfully completed, it is marked as Processed. This indicates that the funds have arrived at the appropriate balance in North Capital. Funding status - received. Once NC clears the legal side, funding status - settled.
  3. Trade status - Funded. Note: Between the transfer statuses of “pending” and “processed,” two other statuses can occur: “cancelled” or “failed.”
• Users cannot cancel a pending investment transaction on their own until the investment is in Cancelled by manager status. Money can be returned during the refund process to the original funding source.
• In the case of a refund, funds are returned from the escrow at North Capital to the investor’s Dwolla wallet.

Dwolla. Bank account #

TBD