# Funds Flow & Payout Timing

This guide explains exactly how and when funds move from a shopper's payment to a merchant's bank account when using Violet with Stripe and automatic transfers. Understanding this flow helps resolve common confusion about payment timing and "pending" balances.

{% hint style="info" %}
**Applies to:** Channels using Stripe as the payment provider with `AUTOMATIC` transfer method. For other configurations, see [Transfer Settings](/prism/payments/payment-settings/transfer-settings.md) and [Scheduled Transfers](/prism/payments/payment-settings/scheduled-transfers.md).
{% endhint %}

## The Three Phases of Funds Movement

When a shopper places an order, funds move through three distinct phases before reaching the merchant's bank account:

```
┌─────────────────────────────────────────────────────────────────────────────────┐
│  PHASE 1: TRANSFER          PHASE 2: SETTLEMENT         PHASE 3: PAYOUT        │
│  ─────────────────          ─────────────────────       ────────────────        │
│                                                                                  │
│  Shopper pays               Stripe clears the           Stripe sends to         │
│       ↓                     card payment                merchant's bank         │
│  Channel Stripe ──────→ Merchant Stripe ──────────→ Merchant Bank              │
│       │                     │                           │                        │
│  ~30 seconds               2-3 business days           1-2 business days        │
│  (programmatic)            (pending → available)       (per payout schedule)    │
│                                                                                  │
└─────────────────────────────────────────────────────────────────────────────────┘
```

### Phase 1: Transfer (Immediate)

When a shopper completes checkout:

1. Payment is captured by Stripe
2. Funds land in the channel's Stripe balance
3. Violet creates a Distribution defining the commission split
4. Violet creates a Stripe Transfer to the merchant's Stripe Connect account
5. The transfer posts immediately to the merchant's Stripe balance

**Timing:** Steps 1-5 complete programmatically in approximately **30 seconds**, including retries for transient failures.

{% hint style="success" %}
**Key point:** The transfer to the merchant's Stripe account happens immediately. There is no additional transfer processing delay.
{% endhint %}

### Phase 2: Settlement (2-3 Business Days)

After the transfer posts to the merchant's Stripe account:

* Funds appear in the merchant's Stripe Express dashboard
* Funds are visible as part of their Stripe balance
* However, funds may be marked as **"pending"** rather than **"available"**

**Why "pending"?**

This reflects Stripe's settlement and risk-clearing window for the original card payment. It typically takes 2-3 business days for card payments to fully clear.

{% hint style="warning" %}
**This is NOT a delay in moving money.** The funds are already in the merchant's Stripe account. "Pending" simply means they aren't yet eligible to be paid out to a bank account.
{% endhint %}

### Phase 3: Payout (Per Schedule)

Once funds become **"available"** in Stripe:

1. Stripe initiates a payout based on the configured payout cadence
2. The bank receives and processes the deposit

**Payout cadence options:**

* **New accounts:** 7-day rolling basis after first sale
* **Established accounts:** 2-day rolling basis
* **Custom schedules:** Available for high-volume merchants

**Bank processing:** After Stripe initiates the payout, banks typically settle funds in 1-2 business days, depending on local banking rails.

## Example Timeline

Here's a real-world example showing when a Monday afternoon order would hit the merchant's bank:

| Step                    | What Happens                             | When                      |
| ----------------------- | ---------------------------------------- | ------------------------- |
| Order placed            | Shopper completes checkout               | Monday 2:00 PM            |
| Transfer created        | Violet creates Stripe Transfer           | Monday 2:00 PM (\~30 sec) |
| Funds visible in Stripe | Transfer posts to merchant Stripe        | Monday 2:00 PM            |
| Settlement complete     | Funds move from "pending" to "available" | Wednesday-Thursday        |
| Payout initiated        | Stripe sends to bank (2-day rolling)     | Thursday evening          |
| Bank deposit            | Funds appear in merchant's bank          | Friday-Saturday           |

**End-to-end:** Approximately 5-7 business days from order to bank deposit (not counting weekends/holidays).

## Common Confusion Points

### "Why do my funds show as pending?"

The transfer was successful. "Pending" is Stripe's standard hold while the original card payment clears. No action is required—funds will automatically become available.

### "The transfer was instant but I haven't been paid yet"

Correct. The *transfer* to your Stripe account is instant. The *payout* to your bank happens on a schedule (2-day or 7-day rolling) after funds clear.

### "What determines my payout schedule?"

Payout cadence is configured by the channel (platform) as part of Stripe Connect settings. New accounts typically start with a 7-day rolling schedule, moving to 2-day after establishing history.

## Terminology Reference

| Term                  | Definition                                                                   |
| --------------------- | ---------------------------------------------------------------------------- |
| **Transfer**          | Movement of funds from channel's Stripe to merchant's Stripe Connect account |
| **Distribution**      | Violet's record of how funds are split (commission, fees, merchant payout)   |
| **Pending Balance**   | Funds in Stripe that haven't cleared settlement yet                          |
| **Available Balance** | Funds in Stripe that can be paid out to a bank                               |
| **Payout**            | Movement of funds from Stripe to a bank account                              |
| **Payout Cadence**    | The schedule on which Stripe initiates bank payouts                          |

## Related Documentation

* [Transfers](/prism/payments/payments-during-checkout/transfers.md) - Technical details on Transfer objects
* [Distributions](/prism/payments/payouts/distributions.md) - How fund splits are calculated and recorded
* [Stripe Connect](/prism/payments/payment-integrations/supported-providers/stripe/stripe-connect.md) - Stripe integration details
* [Scheduled Transfers](/prism/payments/payment-settings/scheduled-transfers.md) - Configuring delayed or batched transfers
* [Transfer Settings](/prism/payments/payment-settings/transfer-settings.md) - Configuring AUTOMATIC, CUSTOM, or EXTERNAL transfers


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