On-demand funding is a card product feature that allows financial accounts to maintain a $0 balance and receive real-time funding when the cardholder makes a purchase. This guide overviews on-demand funding and steps for enabling the feature. 

Overview

On-demand funding works by providing real-time funding to payment cards at the time of authorization. The following steps outline how on-demand funding works: 

1. The account holder's financial account has a $0 balance. 
2. A cardholder initiates an authorization by swiping their card to make a purchase. 
3. The source financial account for your card product transfers funds in real time to the account holder's financial account for the authorization amount. 
4. Once the transaction is authorized and the funds are removed, the account holder's financial account returns to a $0 balance. 

Pseudo balance

Pseudo balance is an optional setting for on-demand funding that allows you to set a spending balance on an account holder's financial account. This setting ensures the account holder cannot spend more than a specific amount. 

Pseudo balance works using an available cash ledger that tracks the spend balance. When the cardholder initiates a transaction, Highnote automatically checks the pseudo balance available in the cash ledger. If the transaction amount is over the spending limit, Highnote declines the transaction. 

The following steps outline how pseudo balance works: 

1. You allocate $100 of pseudo balance to an account holder's financial account. 
2. The account holder spends $100 on their payment card. 
3. The initial $100 transaction is approved, and $100 is transferred from the source financial account.
4. Any additional authorizations are denied because the account holder spent their full pseudo balance. 

If pseudo balance is not enabled, Highnote checks the balance of your source financial account during authorization to ensure there are enough funds to cover the cost of the transaction. 

Enable on-demand funding

Use the following steps to enable on-demand funding from the dashboard in the test environment: 

1. From the Highnote dashboard, click the name of your card product. If you only have one card product, skip to step 2. 
2. Click Product Settings and select the Settings tab.
3. In the features section of the settings tab, use the toggle to enable on-demand funding.
4. Optional - In the on-demand funding tab, use the toggle to enable pseudo balance. For more information on pseudo balance, see Pseudo balance.
5. Click Enable On-Demand Funding. 

Issue an account holder financial account

Once the feature is enabled, you can issue account holder financial accounts with on-demand funding enabled. For more information on issuing financial accounts, see Issue a financial account.

Update pseudo balance

You can use the Highnote API to update the pseudo balance of an account holder's financial account. For more information, see the Initiate Pseudo Balance Update developer guide.