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ACH Payments in Fidelity Private Shares

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Introduction

Fidelity Private SharesSM has released a new money movement feature on a limited basis, through a collaboration with Stripe. This feature allows option holders and grantees with RSAs under the Stock Incentive Plan to purchase their shares using an ACH payment.

Please note that this feature is only available to those within the United States.

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Enabling ACH payments

If a company wants to enable the ACH payment feature, they should contact their CSM or the Fidelity Private Shares support team at support.fps@fidelity.com. At that time, the company will need to select an account owner. The account owner is the only user who can manage and alter the company's Stripe account and bank account information in Fidelity Private Shares. 

Any change in account owner must be communicated with the Fidelity Private Shares support team directly at support.fps@fidelity.com. 

Setting up the ACH payment feature

Once the ACH Payments feature has been enabled, Fidelity Private Shares will contact the established account owner to let them know that they can kick off the setup process. The account owner should take the following steps:

  1. Sign into your Fidelity Private Shares account at privateshares.fidelity.com.
  2. Click the Company icon of the lefthand sidebar, then click Overview under the ACH PAYMENTS heading.
  3. Click Add Account to add the company's bank account information.
  4. The Add Account button will take you to the Stripe account onboarding workflow on Stripe's website. This process will guide you through setting up the company's Stripe account and linking it back to Fidelity Private Shares for use in ACH payments. 

Permissions and access

Users with Full Company Permission Access can grant ACH Payment access to others from the User Directory. Click on the three-bar menu to the right of the user and click Access. Scroll to the bottom of the page and check the box next to All Payments Access. 

Note that users with this access will not be able to manage or alter the company's Stripe account or bank account information; this power is reserved for the account owner.

ACH Payments Overview

Once the ACH payment feature is set up, the account owner and those with All Payments Access can view an overview of the company's ACH settings in two ways. The first is by clicking the Company icon of the lefthand sidebar, then clicking Overview under the ACH PAYMENTS heading.

Alternatively, navigate to the Administration Workspace > General Settings > ACH Payments. The Overview page provides a snapshot of the company's ACH setup. The account owner will see a screen like the one below. This is where the account owner can make updates to the company's account.

Users with All Payments access will see a screen resembling the one below with the option to Manage Account.

Bank account status

The overview page will show the status of the connected bank account. 

Enabled ACH payment is enabled. The connected account is verified and in good standing.
Disabled ACH payment is disabled for this connected account. For more information, go to Manage Account.
Pending The bank account is in the process of being verified by Stripe. Verification may take up to 1-3 business days. 

 

ACH Payment History report

Adjacent to the Overpage is the Payment History which lists all ACH transactions the company has conducted through Fidelity Private Shares. This report includes the grantee's name, a link to the associated document (the grant or option exercise), submission date, approval date, completion date, payment amount, and status. Use the Options button to update the report settings, and the Excel Report button to download a copy of the report. 

Transaction Status

There are eight total statuses that can be associated with a given ACH transaction. 

Status Description
Pending approval The transaction is waiting on approval from the company before it's submitted to the company's Stripe account. 
Approved The transaction has been approved by the company, but has not yet landed in the Stripe account.
Payout pending

Money has been moved to the company's Stripe account and is awaiting transfer to the company's bank account.
Payout in progress

Money is in the progress of transferring to the company bank account.
Completed

The transaction has been completed and the company has received the funds.
Rejected The transaction was rejected by the company in the Approval workflow.
Rejected (Timed Out) The transaction was not approved by the company within 30 days.
Payout failed Funds were moved to the company's Stripe account, but could not be moved to the company's bank account.
Failed The transaction failed (a reason specific to the transaction will be provided, e.g. insufficient funds).

 

ACH Proof of Payment documents

The account owner and those with All Payments Access can view all active, inactive, and pending ACH proof of payment documents in the Data Room. Navigate to All Documents > Stockholder Information > Stock Purchase Evidence. 

The Exercise Options workflow

The Grantee Experience

If the company is utilizing the ACH Payments feature, their grantees can purchase their options via an ACH payment by taking these steps:

  1. Click the Start New Workflow button and select Exercise Options.
  2. Select the grant you wish to exercise. Click Continue. 
  3. Review the instructions on the Let's Get Started page, then click Continue.
  4. Indicate the number of options you wish to exercise.
  5. Choose ACH from the Payment Type dropdown menu. Click Continue.
  6. Review the Option Exercise document and sign it once you are satisfied with the content. Continue forward in the process.
  7. You may be asked to obtain spousal consent, if applicable.
  8. At the Checkpoint, review the documents a final time. If there are errors, you can go back to a previous step in the process to make updates. Once you are satisfied, click Continue. 
  9. You may be asked to accept the terms of a Disclosure - this is required in order to utilize the ACH Payment feature. To proceed, click Accept Terms.
  10. The Pay for Options step will display the Exercise Cost and ask you to select what bank account you wish to use to complete the payment. If you have paid for options via ACH before, your bank account information may already be present. If not, use the Link a bank account button to add your bank account. You will need your routing number and account number. Once you've selected your preferred account, click Submit to submit the payment.
  11. A company representative will receive an alert asking them to approve your exercise documents. After they approve the exercise documents, the transfer of funds will be initiated. Funds will land in the company account within 8-12 business days. 

The Company Experience

If the company is utilizing the ACH Payment feature, their grantees can purchase their options via an ACH payment. This process requires the company to approve the exercise before initiating the transfer of funds. These are the steps, as well as the corresponding Transaction Status that displays in the Payment History report while at that step.

Step in Process Transaction Status
1. The company representative receives an email requesting their approval for a pending option exercise.  Pending approval
2. The company representative has 30 days to approve the exercise before it will expire. If changes are required, click the Request Changes button to send the workflow back to the grantee. To approve the exercise, click Continue. Approved

3. Once the request is accepted, the transfer of funds will be initiated. The company representative will be prompted to sign the corresponding exercise documents. Click Submit to complete the signature process. 

 Approved

4. The president and secretary will be prompted to sign the corresponding stock certificate. This concludes the option exercise workflow.

 Approved

5. The funds will land in the company's Stripe account within 4-6 business days of when the company representative approves the exercise (step 2).

 Payout pending

6. The funds are received by the company's bank account within 8-10 business days of when the company representative approves the exercise (step 2).

 Complete

If the company fails to accept the transaction within the allotted 30 days, the exercise will be sent back to the grantee for their re-approval. The company representative will not have to approve the transaction a second time.

The Accept Grant workflow for RSAs under the SIP

The Grantee Experience

If the company is utilizing the ACH Payments feature, their grantees can purchase their restricted stock via an ACH payment by taking these steps:

  1. You will receive an email asking you to review the new grant the company has issued. Click the Accept Grant link in the email to navigate to the workflow.
  2. Review the terms of the grant and consider using the Review Agreement button to download the grant document.
  3. Choose Bank Transfer (ACH) from the Payment Type dropdown menu. When ready to move forward to the signing step, click Continue.
  4. Sign the corresponding grant document(s).
  5. You may be asked to obtain spousal consent, if applicable.
  6. At the Checkpoint, review the documents a final time. If there are errors, you can go back to a previous step in the process to make updates. Once you are satisfied, click Continue. 
  7. You may be asked to accept the terms of a Disclosure - this is required in order to utilize the ACH Payment feature. To proceed, click Accept Terms.
  8. The Pay for Shares step will display the Total Cost and ask you to select what bank account you wish to use to complete the payment. If you have paid for shares via ACH before, your bank account information may already be present. If not, use the Link a bank account button to add your bank account. You will need your routing number and account number. Once you've selected your preferred account, click Submit to submit the payment.
  9. A company representative will receive an alert asking them to approve your transaction. After they approve the transaction, the transfer of funds will be initiated. Funds will land in the company account within 8-12 business days.

The Company Experience

If the company is utilizing the Money Movement feature, their grantees can purchase their restricted stock via an ACH payment. This process requires the company to approve the transaction before initiating the transfer of funds. These are the steps, as well as the corresponding Transaction Status that displays in the Payment History report while at that step.

Step in Process Transaction Status
1. The company representative receives an email requesting their approval for a pending purchase of restricted stock.  Pending approval
2. The company representative has 30 days to approve the purchase before it will expire. If changes are required, click the Request Changes button to send the workflow back to the grantee. To approve the purchase, click the Continue button. Once the request is accepted, the transfer of funds will be initiated. Approved

3. The president and secretary will be prompted to sign the corresponding Stock Certificate. This concludes the Accept Grant workflow.

 Approved

4. The funds will land in the company's Stripe account within 4-6 business days of when the company representative approves the purchase (step 2).

 Payout pending

5. The funds are received by the company's bank account within 8-10 business days of when the company representative approves the purchase (step 2).

 Complete

If the company fails to accept the transaction within the allotted 30 days, the workflow will be sent back to the grantee for their re-approval. The company representative will not have to approve the transaction a second time.

FAQs

I'm trying to pay for options/shares and I'm getting an error message. What should I do?

The error messages you may receive are displayed below, with accompanying next steps. 

The payment type you chose is not working. Please confirm that the account number and routing number are correct and try again. If you are still having issues, reach out to support.fps@fmr.com.

The Disclosure pop-up was not accepted. Click the disclosure link in the error to view and accept the Disclosure before proceeding.

If you are a grantee and have received an error message other than the two above, please contact support.fps@fmr.com. 

I'm a company representative waiting for the funds to transfer to the company account and I got an error message. What should I do?

The error message you may receive is displayed below, with accompanying next steps.

Visit the ACH Payments Report to learn more about why the funds failed to transfer. Once the underlying issue is resolved, the transfer will initiate when the user returns to the workflow and clicks Continue.

If you are a company representative and have received an error message other than the one above, please contact support.fps@fmr.com. 

When should I expect ACH funds to hit my account (as the company)?

8-12 business days from when you approve the purchase, although this transaction processing time is an estimate. The funds are pulled from the grantee account, which can take 1-5 business days. This is where the process can vary. Once the funds are received in the Stripe account, they are held for 2 business days. After 2 business days, it will take 1-5 business days to hit the client account.

When should I expect ACH funds to be removed from my account (Grantee)?

Funds will be removed from the grantee's account within 4-6 business days after the company approves the transaction. The grantee should ensure they have the funds in their account for at least 30 days after they complete the exercise or purchase.

What happens if the payment fails?

Clients should work directly with the grantee to resolve the issue. Clients can view the status of the payment and failed reason. For failed option exercises, the grantee will need to submit a new exercise workflow. For failed RSA purchases, the grantee will have the option to change bank accounts or select an alternative payment option.

What happens if the company representative does not approve the grantee transaction within 30 days?

To encourage timely approval from the company representative for a transaction request, there is a limit of 30 days for ACH transactions to be approved. If the company approves the transactions after 30 days, the exercise is returned to the employee to be confirmed. Once returned and reapproved by the employee, the workflow will not require approval by the client again. The same is true for RSA purchases.

Is there a fee to use ACH Payments in Fidelity Private Shares?

Currently, there is no additional cost to clients to use this feature.

Can I refund an ACH?

Currently, there is no refund option. This feature is planned for future releases.

I know my transaction was processed, but it’s showing as failed in the Payment History report.

If a transaction is canceled, then reprocessed in the same day, it will display as two line items. This is normal and expected. The company should refer to the top transaction for the most up to date status.

Screenshots are for illustrative purposes only.

Fidelity and Stripe are not affiliated.

Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.

Fidelity Private Shares LLC

© 2024 FMR LLC. All rights reserved.

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