Implement Merchant IC+ Pricing Model

Interchange Plus (IC+) is a pricing model for credit card processing, where merchants are billed for processing fees, (interchange fees), rather than interchange fees being applied in real time. In addition to interchange fees, processors charge a markup, referred to by the “Plus.” Interchange and markup fees are calculated and billed to merchants at the end of each billing cycle.

IC+ provides the most transparent pricing for your merchants by calculating breaking down the card network processing costs vs. the processor costs of each transaction. A number of data points factor into a given transaction’s processing cost, which is what gets tracked and calculated. Rather than approximating processing costs and charging a standard fee across all transactions (as with our out-of-the-box blended rate pricing), Merchant IC+ pricing allows WePay to track interchange costs per transaction, in addition to WePay processing fees and your platform fees, and then to compile a billing statement for merchants at the end of each billing cycle.

Use this guide if your signed contract with WePay indicates that your platform has access to the Merchant IC+ feature.

An IC+ pricing model breaks down fees into the following three categories:

1. Interchange fees from issuing banks
2. Fees & assessments charged from the card network*
3. Processor Markup where Markup = X% + Y¢ (a percentage fee and a per transaction fee)

* Some monthly fees may be estimated by WePay, as those are reported at platform level.

Conversely, a Merchant IC+ pricing model breaks down fees into the following three categories:

1. Interchange fees from issuing banks
2. Fees & assessments charged from the network*
3. Platform Markup where Markup = X% + Y¢(a percentage fee and a per transaction fee)

To implement Merchant IC+, you’ll use the pricing API to set the fixed and variable amounts that your platform will charge per transaction. At the end of the billing cycle, your pricing will be added to the merchant’s bill in addition to the interchange fees. For instance, your platform may want to charge a higher percentage rate for credit card transactions than for ACH/Echeck transactions, and may want to apply a $0.50 flat rate across both credit card and ACH/Echeck transactions. Setting a fee pricing like this will be outlined in this guide.

Set Up

Before getting started, be sure to subscribe to the following Notifications:

• billing_statements.created
• billing_statements.charge_succeeded**
• billing_statements.charge_failed**
• adjustments.created
• recoveries.completed
• accounts.created *
• recoveries.created *
• recoveries. failed *

* Subscribing to these Notification event topics is recommended, but not mandatory for a functional Merchant IC+ integration. ** These Notification Event Topics are currently Limited Availability. Reach out to WePay if you need access.

The billing statement Notification will give you the Account and the amount details of fees owed, but it does not reflect the actual money movement related to Merchant IC+ to and from an Account. Adjustment and Recovery Notifications will reflect money movement to and from an Account in association with Merchant IC+. To help differentiate a Merchant IC+ related Recovery or Adjustment Notification from other types of Recoveries and Adjustments, you can look at the reason JSON block in Notifications.

To find out more about what getting notified looks like, see the section below on Consume Billing Statements.

Define Merchant IC+ Pricing

This section outlines how to set the markup fees on each transaction.

Your markup fees should be inclusive of WePay processing fees, which will be debited from your platform Account. For any markup that you define, you’ll receive that amount less WePay fees. If you choose to have a lower markup than the fees WePay charges, your Account will be debited to cover the difference.

Use the pricing parameter on the POST /accounts request with the merchant’s currency. For merchants using an alternate method of payments such as eCheck, you can define the pricing using the argument payment_bank.

Using Merchant IC+, you can define pricing for any items nested in the pricing structure of Accounts.

A request to set Merchant IC+ pricing may look like this:

curl -X POST \
  --url 'https://stage-api.wepay.com/accounts' \
  -H 'Accept: application/json'\
  -H 'App-Id: {your-app-id}'\
  -H 'App-Token: {your-app-token}'\
  -H 'Api-Version: 3.0'\
  -H 'Content-Type: application/json' \
  --data-raw '{
    "legal_entity_id":"{insert-merchant's-LE-ID}",
    "name":"Foo Bar Shop",
    "statement_description":"Thanks for your Foo Bar Shop purchase",
    "pricing":{
      "currencies":{
        "USD":{
          "credit_card":{
            "type":"interchange_plus",
            "interchange_plus":{
              "transaction":{
                "fixed_fee_markup_amount":20,
                "variable_fee_markup_bps":195
              },
              "auth":{
                "fixed_fee_markup_amount":20
              },
              "refund_fee_for_transaction_markup":true
            }
          },
          "payment_bank":{
            "type":"standard",
            "standard":{
              "fixed_fee_amount":10,
              "variable_fee_bps":195,
              "max_fee_amount":1000,
              "min_fee_amount":200,
              "refund_fee_for_standard":true
            }
          },
          "recurring_fee":{
            "period":"monthly",
            "amount":1500
          }
        }
      }
    }
  }'

Process Diagram

Disclose Merchant IC+ Pricing

Present merchants with a fee disclosure document as part of onboarding. This step is a legal requirement which must be acknowledged and accepted by merchants on Merchant IC+ pricing.

The process for disclosing Merchant IC+ fees is as follows, and will be outlined in further detail in the rest of this section:

1. Ensure all your fees are defined in the “Platform Fees” section of the “Merchant IC+ Fee Disclosure Template”
2. Get merchant acceptance to this pricing document
3. Upload this document via API to WePay prior to setting the fees for the merchant
4. The API response will provide the following:
   • Document ID
   • Document type (Fee Disclosure)
   • Timestamp (Create time for doc upload)
5. If you change or update any platform fees for an existing merchant, ensure you repeat steps 1 - 3

Requirements:

• Provide a fee disclosure to all merchants the first time they are onboarding to the Merchant IC+ pricing model
• Fee disclosure must include all fees that your platform will charge, including non-IC fees (like ACH fees)
• Fee disclosures must accurately reflect all the platform fees listed below in “Platform Fee” and include all the interchange and assessment fees in the “Pass through Fee” section
• Provide, collect acceptance of, and upload a new fee disclosure every time any platform fee is updated
• Provide this resource to merchants so that they can track updates to interchange and assessment fees independently
• Notify merchants of updates to interchange and assessment fees (your WePay relationship executive will provide quarterly updates to you)
• Any deviations from the below template require approval from WePay

Example Debit Failure Fee order of events with $25.00 fee:

Recommended Implementation

Markup Fees

The merchant can scroll down on the above page to find passthrough fees

Fee Disclosure Template

See the Pen MIC+ Fee Disclosure by WePay (@WePay) on CodePen.

Once agreed to by a merchant, store the agreement as one of the file types listed in the Document Upload guide.

Implement Refund Policy

Implement the below refund policy:

1. IC+ fees for credit card payments will only be credited back to the merchant if they are credited back by the network
   • payers will receive a full refund, but the merchant will need to cover fees if the network does not credit them back
   • this varies by network; some do refund their fees while others do not
2. IC+ fees are not applicable to ACH/eCheck payments, so the entire fee charged will not be credited back to the merchant
3. Platform markup fees will not be refunded to the merchant
   • merchants pay the platform markup fees at the end of the billing cycle, discussed here
   • Similarly, WePay fees debited from the platform do not get credited back to the platform
4. If a platform charges merchants a fee for refunds, this fee must be disclosed to merchants
   • refund fees will be applied regardless of the refund amount (full vs. partial)
5. IC+ fees for credit card payments will be charged to the merchant if they are charged by the network

The following examples will help conceptualize how this policy plays out in real terms with different variables at play.

Example 1

• Payment method: credit card
• Refund amount: $100.00 (full)
• IC+ credit: yes
• Platform refund fee: none

Example 2

• Payment method: credit card
• Refund amount: $100.00 (full)
• IC+ credit: no
• Platform refund fee: $0.10

Example 3

• Payment method: credit card
• Refund amount: $40.00 (partial)
• IC+ credit: no
• Platform refund fee: $0.10

Example 4

• Payment method: bank account
• Refund amount: $100.00 (full)
• IC+ credit: N/A
• Platform refund fee: $0.10

Upload Fee Disclosures

Use the Document Upload JS with the account_id param and "type": "fee_disclosure". The JS response will provide the document ID.

Next, send a POST /accounts/{id} request with the document ID in the documents array. The API response will contain the ID, type, and create time, and will look like this:

{
  "name": "Foo Bar Shop",
  "description": "The Foo Bar Shop on 5th ave.",
  "documents": [
    {
      "id": "{id}",
      "type": "fee_disclosure",
      "create_time": 987389472347,
      "resource": "documents",
      "path": "/documents/{id}"
    }
  ]
}

Once a document ID has been added to an account, it cannot be removed. Any subsequent requests with fee disclosure document IDs will append the array, and the most recently added fee disclosure document will be considered the current fee disclosure for that merchant.

Consume Billing Statements

First, WePay will create a Billing Statement on the 5th of the month following each billing cycle (defined as a calendar month), and will send a Notification when it is ready. A Billing Statement will describe the amount in fees owed by the merchant by providing aggregate information about the merchant’s fees over the billing cycle. The aggregate information will be present in the payload block of the billing_statements.created Notification.

A Billing Statement Notification will look like this:

{
	"id": "ccdbd4f6-a409-42b8-abdb-3451ff40501e",
	"resource": "notifications",
	"path": "/notifications/ccdbd4f6-a409-42b8-abdb-3451ff40501e",
	"owner": {
		"id": "121212",
		"resource": "applications",
		"path": null
	},
	"topic": "billing_statements.created",
	"event_time": 1568922341,
	"payload": {
		"resource": "billing_statements",
		"id": "c4a1abf1-34ac-40e8-bdba-5649f0665421",
		"path": "/billing_statements/c4a1abf1-34ac-40e8-bdba-5649f0665421",
		"owner": {
			"resource": "accounts",
			"id": "c4a1abf1-34ac-40e8-bdba-5649f0643043",
			"path": "/accounts/c4a1abf1-34ac-40e8-bdba-5649f0643043"
		},
		"create_time": 1510080177,
		"amount": 2300000,
		"currency": "USD",
		"month": 1,
		"year": 2019,
		"api_version": "3.0"
	}
}

Amount describes the amount owed by the merchant to WePay for processing fees, and will match the amount in the Adjustment.

Next, fetch the billing statement fee summary and transaction summary by sending GET /billing_statements/{id}/fees_summary & GET /billing_statements/{id}/transactions_summary requests respectively. Use the response data in combination with the billing statement data to compile the billing statement for the merchant.

A GET /billing_statements/{id}/fees_summary response might look something like this:

{
  "previous":"/billing_statements/{id}/fees_summary?page=aaabc123def456",
  "next":"/billing_statements/{id}/fees_summary?page=cccde123fgh456",
  "results":[
    {
      "fee_type":"VISA",
      "fee_category":" VISA BUSINESS TIER 3 - STANDARD",
      "currency":"USD",
      "total_amount":56594,
      "item_count":1,
      "variable_fee_bps":295,
      "fixed_fee_amount":20,
      "fixed_fee_markup_amount":0,
      "variable_fee_markup_bps":15,
      "total_interchange_fee":1690,
      "total_markup":8489,
      "total_fees":10179,
      "api_version":"3.0"
    },
    {
      "fee_type":"ECHECK",
      "fee_category":"eCheck fees",
      "currency":"USD",
      "total_amount":20290,
      "item_count":6,
      "variable_fee_bps":null,
      "fixed_fee_amount":null,
      "fixed_fee_markup_amount":0,
      "variable_fee_markup_bps":15,
      "total_markup":5417,
      "total_fees":5417,
      "total_interchange_fee":null,
      "api_version":"3.0"
    },
    {
      "fee_type":"CHARGEBACK",
      "fee_category":"Chargeback fees",
      "currency":"USD",
      "total_amount":20290,
      "item_count":4,
      "variable_fee_bps":0,
      "fixed_fee_amount":1500,
      "fixed_fee_markup_amount":null,
      "variable_fee_markup_bps":null,
      "total_markup":null,
      "total_fees":6000,
      "total_interchange_fee":null,
      "api_version":"3.0"
    },
    {
      "fee_type":"OTHER",
      "fee_category":"MC ACQUIRING FEE",
      "currency":"USD",
      "total_amount":8807781,
      "item_count":49,
      "variable_fee_bps":4,
      "fixed_fee_amount":0,
      "fixed_fee_markup_amount":null,
      "variable_fee_markup_bps":null,
      "total_markup":null,
      "total_fees":352,
      "total_interchange_fee":352,
      "api_version":"3.0"
    },
    {
      "fee_type":"RECURRING FEES",
      "fee_category":"Monthly",
      "currency":"USD",
      "total_amount":null,
      "item_count":null,
      "variable_fee_bps":null,
      "fixed_fee_amount":null,
      "fixed_fee_markup_amount":2500,
      "variable_fee_markup_bps":null,
      "total_markup":2500,
      "total_fees":2500,
      "total_interchange_fee":null,
      "api_version":"3.0"
    },
    {
      "fee_type":"VISA",
      "fee_category":"Auth Fees",
      "currency":"USD",
      "total_amount":null,
      "item_count":100,
      "variable_fee_bps":null,
      "fixed_fee_amount":null,
      "fixed_fee_markup_amount":30,
      "variable_fee_markup_bps":null,
      "total_markup":30,
      "total_fees":30,
      "total_interchange_fee":null,
      "api_version":"3.0"
    },
    {
      "fee_type":"MASTERCARD",
      "fee_category":"Auth Fees",
      "currency":"USD",
      "total_amount":null,
      "item_count":50,
      "variable_fee_bps":null,
      "fixed_fee_amount":null,
      "fixed_fee_markup_amount":30,
      "variable_fee_markup_bps":null,
      "total_markup":1500,
      "total_fees":1500,
      "total_interchange_fee":null,
      "api_version":"3.0"
    }
  ],
  "api_version":"3.0"
}

A GET /billing_statements/{id}/transactions_summary response for a merchant who only received payments on the 1st of the month might look something like this:

{
  "previous":"/billing_statements/{id}/transactions_summary?page=aaabc123def456",
  "next":"/billing_statements/{id}/transactions_summary?page=cccde123fgh456",
  "results":[
    {
      "year":2019,
      "month":9,
      "day":1,
      "total_amount":511246,
      "currency":"USD",
      "item_count":94,
      "summaries":[
        {
          "fee_type":"AMEX",
          "currency":"USD",
          "total_amount":23658,
          "item_count":5
        },
        {
          "fee_type":"DISCOVER",
          "currency":"USD",
          "total_amount":30934,
          "item_count":7
        },
        {
          "fee_type":"MASTERCARD",
          "currency":"USD",
          "total_amount":54187,
          "item_count":9
        },
        {
          "fee_type":"VISA",
          "currency":"USD",
          "total_amount":402467,
          "item_count":73
        }
      ],
      "api_version":"3.0"
    }
  ],
  "api_version":"3.0"
}

Once a Billing Statement is made available, your platform must compile a statement for merchants and deliver it before WePay begins processing the charge for fees.

Compile the merchant’s statement using data from the Billing Statement, fees summary, and transactions summary. The statement must be compiled and sent to merchants within 24 hours of WePay sending the billing_statements.created Notification. When your platform sends the statement, include a notice that their Payout Method will be debited for the billing statement amount. When planning this process, provide merchants with sufficient time to review the statement you send them and reach out with any questions or concerns before WePay debits their Payout Method.

WePay will debit the merchant’s Payout Method 24 hours after the Billing Statement is available.

In WePay systems, the debit will be an API Recovery. The merchant will be able to view the debit as a single line item on their bank statement. If the Recovery succeeds, then a billing_statements.charge_succeeded Notification will fire.

If the Recovery fails, then a billing_statements.charge_failed Notification will fire. Additionally, WePay will debit for fees from the merchant’s gross settlement the following day and apply a $25.00 debit failure fee.

Process Diagram

Bill Merchants

To bill merchants, WePay will initiate a Recovery from the merchant’s active Payout Method for fees owed (the amount value in the Billing Statement). This will occur 24 hours after the Billing Statement was created (so the 6th of the month). If the recovery for fees fails, WePay will make an Adjustment to the merchant’s Account balance to collect the fees owed. Take note that these Recoveries and Adjustments fall outside of the merchant’s normal transactions which are included in Billing Statements and reconciliation.

It is recommended to disclose this process to merchants before they begin processing, and again once each Billing Statement is made available.

First, listen for a recoveries.created API Notification, and notify the merchant that a debit from their active Payout Method is currently being processed. Please note that currently, there is no specific reason code to distinguish between a recovery debit vs. processing fees (i.e. Merchant IC+ monthly fees) debit. To identify Merchant IC+ debits from the merchant’s Payout Method, match the amount value from the recoveries.created Notification to the amount value from the billing_statements.created Notification.

Next, listen for either the billing_statements.succeeded or the billing_statements.failed API Notification. Recoveries take 2-3 days to complete, which will typically be on the 8th of the month following the Billing Statement in question. If billing succeeded, a receipt or confirmation of successfully paid processing fees should be provided to the merchant.

If billing failed, then WePay will make an Adjustment to the Account for the amount owed. Notify the merchant that billing failed, and include informsation from the failure_reason structure explaining why. Let the merchant know that the amount owed will be debited from their current Account balance. If their balance is $0, then future payments will cover the amount owed.

After a recovery failure, listen for the adjustments.created Notification. Specifically note the reason JSON block containing the details identifying the Adjustment as a payment for Merchant IC+ fees.

Once an Adjustment is completed, a receipt or confirmation of successfully paid processing fees should be provided to the merchant.

Process Diagram

Reconcile Data

Many merchants will want a line-by-line breakdown of their fees which can be fetched by sending GET /billing_statements/{id}/transactions_summary and GET /billing_statements/{id}/fees_summaryrequests.

The API response to GET /billing_statements/{id}/transactions_summary contains an array of Transaction Summaries and will look something like this:

{
	"previous": "/billing_statements/{id}/transactions_summary?page=aaabc123def456",
	"next": "/billing_statements/{id}/transactions_summary?page=cccde123fgh456",
	"results": [{
				"day": 1,
				"month": 1,
				"year": 2019,
				"total_amount": 672424,
				"currency": "USD",
				"item_count": 100,
				"summaries": [{
					"fee_type": "VISA",
					"currency": "USD",
					"total_amount": 652134,
					"item_count": 9
					}, 
					{
					"fee_type": "ECHECK",
					"currency": "USD",
					"total_amount": 20290,
					"item_count": 6
					}, 
					{...}, 
					{...}
				],
				"api_version": "3.0"
				},
				{"day": 2, ...},
				{"day": 3, ...}
}

Each summary provides details organized by day of the month, fee type, and fee category. Fee types include the different card networks (i.e. Visa, Mastercard, etc.), and the different API Resources (i.e. Disputes (notated as chargebacks), Adjustments, etc). Fee categories drill down further to differentiate fees, and this is where you’ll be able to identify recurring fees (set by your platform in the pricing API), and authorization fees (also set by your platform in the pricing API).

The GET /billing_statements/{id}/fees_summary response contains an array of Fees Summaries and will look something like this:

{
	"previous": "/billing_statements/{id}/fees_summary?page=aaabc123def456",
	"next": "/billing_statements/{id}/fees_summary?page=cccde123fgh456",
	"results": [{
		"fee_type": "VISA",
		"fee_category": " VISA BUSINESS TIER 3 - STANDARD",
		"currency": "USD",
		"total_amount": 56594,
		"item_count": 1,
		"variable_fee_bps": 295,
		"fixed_fee_amount": 20,
		"variable_fee_markup_bps": 15,
		"fixed_fee_markup_amount": 0,
		"total_interchange_fee": 1690,
		"total_markup": 8489,
		"total_fees": 10179,
		"api_version": "3.0"
	}, {
		"fee_type": "VISA",
		"fee_category": "VISA BUSINESS TIER 4 - STANDARD",
		"currency": "USD",
		"total_amount": 652134,
		"item_count": 9,
		"variable_fee_bps": 295,
		"fixed_fee_amount": 25,
		"variable_fee_markup_bps": 15,
		"fixed_fee_markup_amount": 0,
		"total_interchange_fee": 19463,
		"total_markup": 97820,
		"total_fees": 117823,
		"api_version": "3.0"
	}, {
		"fee_type": "VISA",
		"fee_category": "Auth Fees",
		"currency": "USD",
		"total_amount": 202903,
		"item_count": 4,
		"variable_fee_bps": 265,
		"fixed_fee_amount": 10,
		"variable_fee_markup_bps": 15,
		"fixed_fee_markup_amount": 0,
		"total_interchange_fee": 5417,
		"total_markup": 30435,
		"total_fees": 35852,
		"api_version": "3.0"
	}, {
		"fee_type": "ECHECK",
		"fee_category": "ECHECK FEES",
		"currency": "USD",
		"total_amount": 20290,
		"item_count": 6,
		"variable_fee_bps": null,
		"fixed_fee_amount": null,
		"variable_fee_markup_bps": 15,
		"fixed_fee_markup_amount": 0,
		"total_interchange_fee": null,
		"total_markup": 5417,
		"total_fees": 5417,
		"api_version": "3.0"
	}, {
		"fee_type": "CHARGEBACK",
		"fee_category": "CHARGEBACK FEES",
		"currency": "USD",
		"total_amount": null,
		"item_count": 4,
		"variable_fee_bps": 0,
		"fixed_fee_amount": 1500,
		"variable_fee_markup_bps": null,
		"fixed_fee_markup_amount": null,
		"total_interchange_fee": null,
		"total_markup": null,
		"total_fees": 6000,
		"api_version": "3.0"
	}, {
		"fee_type": "OTHER",
		"fee_category": "MC ACQUIRING FEE",
		"currency": "USD",
		"total_amount": 8807781,
		"item_count": 49,
		"variable_fee_bps": 0.4,
		"fixed_fee_amount": 0,
		"variable_fee_markup_bps": null,
		"fixed_fee_markup_amount": null,
		"total_interchange_fee": 352,
		"total_markup": null,
		"total_fees": 352,
		"api_version": "3.0"
	}, {
	  "fee_type": "RECURRING FEES",
      "fee_category": "Monthly",
      "currency":"USD",   	
      "total_amount": null,
      "item_count": null,
      "variable_fee_bps": null,
      "fixed_fee_amount": null,
      "fixed_fee_markup_amount":2500,
      "variable_fee_markup_bps":null,
      "total_markup": 2500,
      "total_fees": 2500,
      "total_interchange_fee": null,
      "api_version": "3.0"
	},
	{...}
	],
	"api_version": "3.0"
}

The Transaction Summaries and Fees Summaries can be used in conjunction with reporting to provide holistic reconciliation for merchants.

Additionally, you can get a list of specific transactions (Payments, Adjustments, Recoveries, Disputes, etc.) included in the merchant’s processing for a given billing cycle. To do so, send a GET request for each resource with the start_time parameter matching the beginning of the billing cycle:

curl -X GET -G \
  --url 'https://stage-api.wepay.com/adjustments?create_time_start=1546329600'
  -H 'Accept: application/json'\
  -H 'App-Id: {your_app_id}'\
  -H 'App-Token: {your_app_token}'\
  -H 'Api-Version: 3.0' \

The create_time_start will be the unix timestamp for the 1st of a given month at 0:00:00 UTC.

Process Diagram

Test Merchant IC+

For testing Merchant IC+, we’ve created the following magic header values for the WePay-Magic-Behavior header key:

Find more information in the testing article.

Migrate Merchants To Blended Pricing

If a merchant is currently on Merchant IC+ pricing but is moving back to standard blended rate pricing, the following parameters must be set to null:

1. pricing.currencies.USD.credit_card
2. pricing.currencies.USD.payment_bank
3. pricing.currencies.USD.recurring_fee

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