For Regulators

Financial Management & Settlement Policy

1. Purpose

This policy sets out XOOBAY’s financial management and settlement standards applicable to secondary merchants and suppliers. It is designed to ensure the secure handling of buyer funds, timely and orderly settlement to merchants, and full compliance with applicable international financial, payment, and anti-money-laundering regulations.

2. Settlement Interval

XOOBAY operates a standardized settlement framework under which buyer payments are held in escrow and released to merchants within T+7 to T+15 days following delivery confirmation.

For merchants or product categories classified as higher risk, the settlement period may be extended up to T+30 days in order to fully accommodate dispute resolution and refund windows.

Merchants with verified identities, strong compliance histories, and low dispute ratios may be approved for accelerated settlement cycles, with settlement periods as short as T+3 days.

Supporting documentation includes settlement transaction logs and merchant dashboard settlement reports.

3. Deposits and Reserves

Newly onboarded merchants are required to provide a security deposit, generally equivalent to 5% to 10% of projected monthly sales volume. This deposit is retained to cover potential refunds, disputes, or chargeback liabilities.

In addition, XOOBAY applies a rolling reserve mechanism under which a portion of each transaction, typically around 10%, is withheld for a period of 90 days before release. This mechanism serves to mitigate fraud risk and protect against chargebacks.

Merchants with a proven record of sustained compliance and low risk may qualify for reduced deposit requirements or partial or full waiver of reserves, subject to internal risk assessment.

Evidence includes deposit agreements and reserve account statements.

4. Escrow Mechanism

All buyer payments are held in escrow accounts until delivery is confirmed through the logistics system or buyer acknowledgment.

Where a transaction becomes subject to a dispute, the associated funds are immediately frozen and remain inaccessible until the dispute is resolved or arbitration is concluded.

This escrow mechanism ensures balanced protection for both buyers and sellers in cross-border transactions.

Supporting evidence includes escrow account records and dispute resolution logs.

5. Refunds and Dispute Escrow

Approved refunds must be processed within 7 to 14 business days.

Funds related to potential refunds are retained during the applicable refund window to ensure sufficient liquidity and settlement integrity.

For disputed transactions, funds remain frozen in escrow until arbitration or final resolution has been completed.

Supporting documentation includes refund transaction records and service-level agreement compliance reports.

6. Compliance and Audit

XOOBAY conducts quarterly reviews of merchant accounts, refund ratios, settlement performance, and overall financial compliance.

Continuous AML and KYC monitoring is applied to transactions to prevent money laundering, terrorist financing, and fraudulent activity.

Automated transaction monitoring systems are used to identify abnormal payment volumes, unusual transaction patterns, or high-risk geographic indicators.

Supporting evidence includes audit reports, compliance certificates, and AML/KYC verification logs.

7. Transparency and Reporting

Merchants receive monthly settlement statements detailing transaction activity, reserve balances, deductions, and payouts.

Merchants are provided with dashboard access that allows real-time monitoring of settlement status and reserve balances.

All settlement terms and financial policies are disclosed in advance during the onboarding process to ensure transparency and informed consent.

Supporting evidence includes settlement statements and merchant dashboard screenshots.

8. Enforcement

Merchants that fail to comply with XOOBAY’s financial management policies may be subject to delayed settlements, increased reserve requirements, account suspension, or removal from the platform.

XOOBAY reserves the right to adjust settlement terms, reserve levels, and financial controls based on the ongoing risk profile of each merchant.