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Payout_System_Design_Overview

The document outlines a design for a secure, fully-managed payout system that allows users to withdraw funds to their bank accounts without interacting with Stripe or other payment gateways. It details the user experience flow, including onboarding, bank account linking, withdrawal requests, and payout status updates, while ensuring compliance with financial regulations. Key benefits include a white-labeled experience, enhanced security through data tokenization, and an automated workflow for managing payouts.

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mixdivine237
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12 views3 pages

Payout_System_Design_Overview

The document outlines a design for a secure, fully-managed payout system that allows users to withdraw funds to their bank accounts without interacting with Stripe or other payment gateways. It details the user experience flow, including onboarding, bank account linking, withdrawal requests, and payout status updates, while ensuring compliance with financial regulations. Key benefits include a white-labeled experience, enhanced security through data tokenization, and an automated workflow for managing payouts.

Uploaded by

mixdivine237
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Payout System Design Overview (for Internal Review)

Project Goal:

To implement a secure, fully-managed payout system allowing users to withdraw funds to their bank

accounts, without ever knowing or interacting with Stripe or any third-party payment gateway.

Business Objectives:

- Enable users to withdraw earnings or balances to their bank accounts.

- Maintain a compliant, secure infrastructure for handling sensitive financial operations.

- Keep the user experience fully white-labeled - no exposure to Stripe branding or interfaces.

- Meet financial compliance obligations (e.g., KYC, AML) without burdening the user.

Core Approach:

We will use Stripe Connect (Custom accounts) to manage payouts. This enables us to:

- Create and manage Stripe accounts for users in the background.

- Handle all required regulatory verification (KYC) programmatically.

- Link each user's bank account securely.

- Initiate fund transfers to users using our platform's balance.

- Track payout status via webhooks, and notify users within our app.

User Experience Flow:

Step 1: User Onboarding (Hidden Stripe Integration)

- User enters personal and bank information inside our application.

- The backend creates a Stripe Connect Custom Account on behalf of the user.

- Required KYC details (e.g., full name, date of birth, SSN last 4, address) are submitted silently via our

backend.

Step 2: Bank Account Linking

- The frontend securely tokenizes the user's bank details using Stripe.js (to avoid PCI compliance risks).

- A bank token is sent to the backend and attached to the user's hidden Stripe account.

- At no point is raw bank information stored on our servers.


Step 3: Withdrawal Request

- User initiates a withdrawal request (e.g., $100).

- Our backend verifies available balance and creates a transfer to the user's Stripe account.

- Stripe automatically performs a payout to the user's linked bank account.

Step 4: Payout Status Updates

- Stripe notifies us via secure webhooks about payout success or failure.

- Our backend updates the user's withdrawal status accordingly and notifies them in-app (e.g., "Payout

Completed" or "Payout Failed - please update bank info").

Backend Handling (High-Level):

- Account Management: Each user is assigned a hidden Stripe Connect account upon registration or first

withdrawal attempt.

- KYC Compliance: Required identity information is collected and passed to Stripe programmatically. If

additional documents are required, the user uploads them through our UI - never directly with Stripe.

- Bank Tokenization: We use Stripe.js on the frontend to generate a secure token from user input. This token

is sent to the backend and used to attach the bank account.

- Withdrawals: A Stripe transfer is created from our platform balance to the user's account. Stripe then

handles payout to the user's bank.

- Webhooks: We subscribe to payout events to keep records updated and provide accurate user feedback.

Key Benefits:

- White-labeled Experience: Users never see or interact with Stripe.

- Security First: Sensitive data is tokenized and not stored on our servers.

- Compliant-by-Design: We meet Stripe's and regulatory requirements for identity verification and anti-money

laundering.

- Automated Workflow: Everything from onboarding to payout tracking is programmatically managed.

Future Extensibility:

This system can be extended to support:

- Multi-currency payouts

- Instant payouts (with eligible Stripe accounts)

- Payment splits (if we handle vendors or freelancers)


- Transaction history and withdrawal receipts

Summary:

Our payout solution uses Stripe's infrastructure behind the scenes, but provides a seamless, branded

experience.

All compliance, security, and integration complexity is abstracted behind our backend services.

The end-user only sees:

- A secure bank entry form.

- A "Withdraw" button.

- Notifications like "Payout complete."

No logos. No redirects. No third-party confusion.

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