Understanding statements

Statements are the groups of balances that result from credit card transactions. This page explains how Pismo manages the different routines necessary to maintain a simple and reliable credit card balance management function.

Prerequisites

  • Understand what network transactions are, since statement balances are calculated according to transaction balances.
  • Understand the identity hierarchy for Pismo objects. All configurations for statements are at the program or account level. The different statuses at all levels of the hierarchy can change the behavior of statements applications.

Credit card cycles

Credit card contracts always carry a risk of default or delay in payments. To weather this risk, the Pismo platform manages credit card balances and interest accruals in cycles (billing periods). Every statement corresponds to a single cycle. When a cycle ends, another cycle begins instantly. The relationship between transactions and statements can change, but the relationship between a statement and a cycle doesn’t change. This is because statements are ordered through their cycle number.

Every new account receives 30 cycles upon creation. Cycle numbers start at 1 for all new accounts and increment by 1 for each additional cycle. Every time a cycle is closed, a new one is created in the future, so there are always 30 cycles in the future for each account.

Calendars

To indicate the billing period that a cycle covers, every statement is paired with a group of dates. This is the calendar for the statement. A calendar includes the following:

  • best transaction date - Marks the first full day of a cycle and always comes right after the last cycle closing date.
  • cycle closing date - Marks the last day of a cycle. On this date, after the cycle is closed, no more transactions are allowed in the statement, so it becomes immutable. When a cycle closing date arrives, a grace period begins.
  • due date - Marks the date that the grace period ends. Note that all days of the grace period belong to the next cycle. Therefore, the due date marks the last day that the transaction balances in a statement can be paid off before charges start to accrue.

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Calendar management

You can manage statement calendars with the standard calendar management endpoints or with the primitive calendar management endpoints.

Balances

A statement summarizes transaction balances. The balance types of a statement are:

  • previous balance
  • debits
  • credits
  • current balance
  • minimum payment

On the cycle closing date, the Pismo platform opens the next statement and uses the current balance of the old statement as the previous balance for the next one. The debits and credits balances receive the sum of the amounts of the debit and credit transactions, respectively. A statement’s current balance should equal its previous balance, plus its debits, and less its credits. After the cycle closing date, the balances on a statement become immutable.

The Pismo platform updates the debits, credits, and current balance values live for each new transaction as it occurs.

The dynamics of cycles imply the possibility that a transaction occurs on one cycle, but netting out another transaction that happened on a different cycle. For example, a credit on Statement 2 that compensates for a debit made in Statement 1.

The Pismo platform calculates a minimum payment for the statement only at the cycle closing date. On this date, the platform assigns an open due date to the account, which equals the closed statement due date and marks the first day of debt, in cases where an account goes into default.

In this example, a credit of 20 was received in Statement 2, but discharged in the debits of 200, that were registered on Statement 1. Also, the credits of 20 weren't enough to compensate the debits of 200 or the minimum payment of 30.In this example, a credit of 20 was received in Statement 2, but discharged in the debits of 200, that were registered on Statement 1. Also, the credits of 20 weren't enough to compensate the debits of 200 or the minimum payment of 30.

In this example, a credit of 20 was received in Statement 2, but discharged in the debits of 200, that were registered on Statement 1. Also, the credits of 20 weren't enough to compensate the debits of 200 or the minimum payment of 30.

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Statement management

You can manage statement balances with the statement management endpoints.

Accruals

The minimum payment determines whether the Pismo platform marks the debits as refinanced or overdue. If the payments made within the grace period are greater than or equal to the minimum payment but less than the previous balance, the debits are marked refinanced. If the payments made in the grace period are less than the minimum payment, the debits are marked as both refinanced and overdue. If the payments in the grace period are more than the previous balance, the debits are marked paid.

In this case, debits from C1 and C2 are overdue. To stop accruals from being generated, the account needs to receive a credit of 312.91.In this case, debits from C1 and C2 are overdue. To stop accruals from being generated, the account needs to receive a credit of 312.91.

In this case, debits from C1 and C2 are overdue. To stop accruals from being generated, the account needs to receive a credit of 312.91.

One day after the due date, if the credits received are less than the previous balance, the account starts to accrue interest charges, penalties, and taxes. On every closing date, the Pismo platform posts these accruals as transactions and adds them to the total amount due, becoming part of the next statement's debits.

Since this account had open balances on CD2, the Pismo platform projected accruals from CD2 to DD2 and the values were posted along with the other accruals on CD2.Since this account had open balances on CD2, the Pismo platform projected accruals from CD2 to DD2 and the values were posted along with the other accruals on CD2.

Since this account had open balances on CD2, the Pismo platform projected accruals from CD2 to DD2 and the values were posted along with the other accruals on CD2.

Revolving financial contracts charge tax and interest rates, so they generate the refinancing accrual type. The Pismo platform considers default rates and penalties to be overdue debt charges, so these generate the overdue accrual type. The rates can be set at a Program or Account level.

Each transaction has one accrued value for each accrual instance per day, per accrual type. All accruals are proportional to the debit balance due. This means that, if the customer makes a partial payment, the next accrual instance is generated based only on the remaining balance. Accruals are posted on the next cycle closing date.

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Accrual management

You can manage accrued values for an account using the accrual management endpoints. The accrual rates can be managed with the rate management endpoints for programs and accounts.

Daily accrual routine

A scheduler triggers the daily accrual routine. The Pismo platform calculates accruals every day for all debit transactions that are overdue and that have a balance greater than zero. The routine runs through the following steps, by account, so multiple instances of the same application can run separately for different sets of accounts.

Step

Description

Account lock key acquiring

Obtain the key to perform operations on a credit account. Each credit account can only receive operations from one routine at a time.

Accrual rate selection

The accrual rates can be selected on a program, account or contract level. Program rates are overwritten by account rates, and account rates are overwritten by contract rates.

Interest accrual

Calculates interest amounts for balances both before and after their due date. You can set different rates on a program or on an account level for refinancing and overdue accruals.

Default interest accrual

Calculates additional interest amounts for balances after their due date in case of default. You can set the rate on a program or account level.

Fine accrual

Calculates the fine for balances after their due date in case of default. You can set the fine on a program or account level.

Taxes accrual

Calculates the fixed and daily taxes applied to arrears. You can configure the fixed and the daily rate on a program level.

Account lock key return

Return the key to perform operations on the credit account. The key becomes available for other routines to manipulate the credit account.

The daily accrual routine runs daily. The routine selects only accounts that have debit transactions that are overdue and have a balance greater than zero. This means that the routine could run every day for each account.

Cycle closing routine

A scheduler triggers the cycle closing routine. This routine runs through all the following steps by account, so multiple instances of the same application can run separately for different sets of accounts. Each step is part of the process that revolves cycles.

Step

Description

Account lock key acquiring

Obtain the key to perform operations on a credit account. Each credit account can only receive operations from one routine at a time.

Annual fee processing

The Pismo platform processes the annual fee into statements by cycle. Each installment of the annual fee will be registered as a scheduled transaction and won't affect the account limit until it is processed into the statement. You can configure the amount of the annual fee at the program level.

Foreign exchange adjustments

If you configure the program to settle foreign purchases on the cycle closing date (instead of on the transaction date), the Pismo platform processes the converted amount of the transaction into the statement. The platform converts the amount into the currency of the program, using the commercial rate of the cycle closing date.

Accrual transactions creation

The Pismo platform processes accrual registries into statements, grouped by their type (interest, default interest, or fine).

Tax transactions creation

The Pismo platform processes taxes accrual registries into statements. You can set this to happen on the cycle closing date or on the first day of each month.

Pending credit processing

The Pismo platform compensates any credit balance that wasn't discharged upon receipt with debit balances from the current statement. The platform manages balances on a transaction level, using a discharge routine that follows a payment hierarchy.

Minimum payment evaluation

The Pismo platform calculates the minimum payment value for each transaction category, sums the results, and posts the sum to the closing statement. You can set the categories on a program or account level.

Cycle closing

The Pismo platform closes the current cycle. When a cycle ends, the next one starts immediately after that, in the next second. This entails that all the transactions that happen in the cycle closing date, after the cycle closing routine, will be registered in the next cycle, that is now current, not the one that just got closed.

Cycle opening

The Pismo platform opens the next future statement, that becomes the current statement. The platform creates all new transactions in the current statement. For installment contracts, the platform creates the first installment on the current statement.

Debt opening date setting

The Pismo platform sets the open due date (which is the same as the due date) for the account of the closed cycle.

Statement events messaging

The Pismo platform sends cycle closing, cycle opening, transaction creation and discharge events.

New statement creation

The Pismo platform creates a new statement for the account.

New calendar creation

The Pismo platform creates a new calendar for the account.

Account lock key return

Return the key to perform operations on the credit account. The key becomes available for other routines to manipulate the credit account.

The cycle closing routine runs daily. The routine selects only accounts that have statements on their cycle closing date for processing. This means that, for each account, the routine runs once every cycle.

Reactive routines

The Pismo platform triggers reactive routines in response to events (usually a transaction creation or update). Each step is triggered separately and must acquire the key to an account before processing any data related to it, returning the key after processing is finished. The following table describes the routines triggered in the statement management scope.

Routine

Description

Payments and purchases processing

The Pismo platform recognizes credit or debit transactions created and, according to their transaction configuration, triggers internal routines.

Discharge

The Pismo platform receives credits and discharge them into previous debits. You can setup the charge order on the program level, through transaction categories. You can also setup an inner charge order for each transaction type registered within each transaction category.

Debt Status Normalization

The Pismo platform evaluates the debt status of an account and, if the credits are more than the minimum payment, sets the collection status of the account to Normal and its open due date to "Null".

Balance Update

The Pismo platform adjust debits, credits and current balance values in a statement according to the new transaction amounts.

Accrual reversal

The Pismo platform identifies a credit received for a retroactive date and reverses any accrual that isn't due. Credits that represent a partial payment cause accruals to be reversed proportionally. For the case that credits are more than the minimum payment, all overdue accruals will be reversed.


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