Fund Allocation Instructions
Fund Allocation Instructions define how funds are distributed among parties within a platform ecosystem. There are 2 instruction models available, allowing platforms to choose the approach that best aligns with their operational and settlement requirements.
There are two instruction models available:
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Transaction-Level Allocation Instructions require allocation details to be submitted as part of the payment request. Allocation instructions can be provided during an Authorization, Capture, or Sale transaction. For refunds, allocation details are optional. If no allocation instructions are provided, the system automatically reverses the allocation activities associated with the original transaction. Void transactions do not support fund allocation instructions, as no funds have been distributed at that stage.
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Summary-Level Allocation Instructions do not require allocation details to be submitted during transaction processing. Instead, the system accumulates transaction activity, allowing the platform to submit allocation instructions at a later time based on its preferred operational schedule. This model provides greater flexibility for platforms that manage fund distribution in batches or through centralized allocation processes.
Instruction Creation
Each fund allocation instruction must include three key pieces of information:
- Party – The party that will receive the allocated funds.
- Account Type – The destination ledger or account where the funds will be allocated.
- Amount – The amount to be allocated.
For example, a platform may allocate $100 to Party A and distribute the amount across multiple account types, such as:
- Earnings: $90
- Fee: $5
- Escrow: $5
Platforms are not required to allocate all available funds in a single instruction. Multiple allocation instructions can be submitted throughout the day, allowing funds to be distributed incrementally based on operational needs.
Destination and Participant Mapping
Each allocation instruction must reference one or more valid allocation destinations associated with onboarded parties within the platform ecosystem. Destinations typically represent specific ledger balances or fund ownership categories, such as participant earnings, fees, platform revenue, reserve balances, or other configured fund accounts. Proper participant mapping ensures funds are attributed to the correct party and can be accurately tracked throughout the payout and reporting lifecycle.
Relationship to Payout Instructions
Fund allocation determines how transaction proceeds are distributed across participating parties, while payout instructions determine how and when those allocated funds are disbursed. Allocated funds are recorded in the appropriate participant balances and become available for payout based on the platform's payout configuration, funding status, eligibility requirements, and payout schedule. Allocation activities and payout activities are maintained as separate but related financial events to support tracking and reconciliation.
Status and Exception Handling
Allocation processing typically progresses through statuses such as Pending, Processed, Completed, Rejected, or Failed. Exceptions may occur when allocation instructions are invalid, destinations are unavailable, allocation totals do not balance, participant configurations are incomplete, or other validation requirements are not met. The platform should review and resolve allocation exceptions promptly to prevent downstream impacts on balances, reporting, and payout processing.