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Revenue | 6 Months Ended
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Jun. 30, 2019
Revenue from Contract with Customer [Abstract] |
Revenue |
3. | Revenue
In accordance with Topic 606, revenue is recognized when, or as, performance obligations are satisfied as defined by the terms of the contract, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services provided. The vast majority of the Company’s Topic 606 revenue is derived from stand-ready commitments to provide payment processing, transaction processing and SaaS services and support. Revenue is recognized based on the value of services transferred to date using a time elapsed output method. For payment processing and transaction processing, services are considered to be transferred when a transaction is captured and the Company has validated that the transaction has no errors. Point-in-time revenue recognized was immaterial during the three and six months ended June 30, 2019 and 2018. Topic 606 does not apply to rights or obligations associated with financial instruments, including the Company’s finance fee and interest income from banking relationships and cardholders, certain other fees associated with cardholder arrangements and commissions paid related to such agreements, which continue to be within the scope of Topic 310, Receivables. In addition, gains on sale of WEX Latin America receivables are included in other revenue and are within the scope of ASC 860, Transfers and Servicing. We disaggregate our revenue from contracts with customers by service-type for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following tables disaggregate our consolidated revenue:
| Three Months Ended June 30, 2019
(In thousands) | Fleet Solutions |  | Travel and Corporate Solutions |  | Health and Employee Benefit Solutions |  | Total
Topic 606 revenues |  |  |  |  |  |  |
Payment processing revenue | $ | 120,717 |  |  | $ | 77,273 |  |  | $ | 16,836 |  |  | $ | 214,826 |
Account servicing revenue | 6,636 |  |  | 10,717 |  |  | 54,669 |  |  | 72,022 |
Other revenue | 19,609 |  |  | 693 |  |  | 6,999 |  |  | 27,301 |
Total Topic 606 revenues | $ | 146,962 |  |  | $ | 88,683 |  |  | $ | 78,504 |  |  | $ | 314,149 |
Non-Topic 606 revenues |  |  |  |  |  |  |
Account servicing revenue | $ | 34,870 |  |  | $ | — |  |  | $ | — |  |  | $ | 34,870 |
Finance fee revenue | 62,385 |  |  | 496 |  |  | 31 |  |  | 62,912 |
Other revenue | 23,097 |  |  | 2,171 |  |  | 4,608 |  |  | 29,876 |
Total non-Topic 606 revenues | $ | 120,352 |  |  | $ | 2,667 |  |  | $ | 4,639 |  |  | $ | 127,658 |
Total revenues | $ | 267,314 |  |  | $ | 91,350 |  |  | $ | 83,143 |  |  | $ | 441,807 |
| Three Months Ended June 30, 2018
(In thousands) | Fleet Solutions |  | Travel and Corporate Solutions |  | Health and Employee Benefit Solutions |  | Total
Topic 606 revenues |  |  |  |  |  |  |
Payment processing revenue | $ | 112,895 |  |  | $ | 51,289 |  |  | $ | 14,554 |  |  | $ | 178,738 |
Account servicing revenue | 5,384 |  |  | 8,995 |  |  | 26,702 |  |  | 41,081 |
Other revenue | 10,525 |  |  | 1,206 |  |  | 5,274 |  |  | 17,005 |
Total Topic 606 revenues | $ | 128,804 |  |  | $ | 61,490 |  |  | $ | 46,530 |  |  | $ | 236,824 |
Non-Topic 606 revenues |  |  |  |  |  |  |
Account servicing revenue | $ | 37,635 |  |  | $ | — |  |  | $ | — |  |  | $ | 37,635 |
Finance fee revenue | 45,188 |  |  | 228 |  |  | 6,137 |  |  | 51,553 |
Other revenue | 29,785 |  |  | 14,046 |  |  | 955 |  |  | 44,786 |
Total non-Topic 606 revenues | $ | 112,608 |  |  | $ | 14,274 |  |  | $ | 7,092 |  |  | $ | 133,974 |
Total revenues | $ | 241,412 |  |  | $ | 75,764 |  |  | $ | 53,622 |  |  | $ | 370,798 |
| Six Months Ended June 30, 2019
(In thousands) | Fleet Solutions |  | Travel and Corporate Solutions |  | Health and Employee Benefit Solutions |  | Total
Topic 606 revenues |  |  |  |  |  |  |
Payment processing revenue | $ | 228,125 |  |  | $ | 137,271 |  |  | $ | 36,228 |  |  | $ | 401,624 |
Account servicing revenue | 13,436 |  |  | 21,302 |  |  | 91,931 |  |  | 126,669 |
Other revenue | 36,595 |  |  | 1,798 |  |  | 13,775 |  |  | 52,168 |
Total Topic 606 revenues | $ | 278,156 |  |  | $ | 160,371 |  |  | $ | 141,934 |  |  | $ | 580,461 |
Non-Topic 606 revenues |  |  |  |  |  |  |
Account servicing revenue | $ | 67,309 |  |  | $ | — |  |  | $ | — |  |  | $ | 67,309 |
Finance fee revenue | 108,249 |  |  | 853 |  |  | 183 |  |  | 109,285 |
Other revenue | 46,382 |  |  | 11,774 |  |  | 8,472 |  |  | 66,628 |
Total non-Topic 606 revenues | $ | 221,940 |  |  | $ | 12,627 |  |  | $ | 8,655 |  |  | $ | 243,222 |
Total revenues | $ | 500,096 |  |  | $ | 172,998 |  |  | $ | 150,589 |  |  | $ | 823,683 |
| Six Months Ended June 30, 2018
(In thousands) | Fleet Solutions |  | Travel and Corporate Solutions |  | Health and Employee Benefit Solutions |  | Total
Topic 606 revenues |  |  |  |  |  |  |
Payment processing revenue | $ | 219,873 |  |  | $ | 96,066 |  |  | $ | 31,253 |  |  | $ | 347,192 |
Account servicing revenue | 13,850 |  |  | 18,464 |  |  | 53,727 |  |  | 86,041 |
Other revenue | 27,567 |  |  | 2,323 |  |  | 13,416 |  |  | 43,306 |
Total Topic 606 revenues | $ | 261,290 |  |  | $ | 116,853 |  |  | $ | 98,396 |  |  | $ | 476,539 |
Non-Topic 606 revenues |  |  |  |  |  |  |
Account servicing revenue | $ | 71,379 |  |  | $ | — |  |  | $ | — |  |  | $ | 71,379 |
Finance fee revenue | 88,792 |  |  | 487 |  |  | 11,155 |  |  | 100,434 |
Other revenue | 50,316 |  |  | 25,203 |  |  | 955 |  |  | 76,474 |
Total non-Topic 606 revenues | $ | 210,487 |  |  | $ | 25,690 |  |  | $ | 12,110 |  |  | $ | 248,287 |
Total revenues | $ | 471,777 |  |  | $ | 142,543 |  |  | $ | 110,506 |  |  | $ | 724,826 |
Payment Processing Revenue Payment processing revenue consists primarily of interchange income. Interchange income is a fee paid by a merchant bank (“merchant”) to the card-issuing bank (generally the Company) in exchange for the Company facilitating and processing transactions with cardholders. Interchange fees are set by the card network. WEX processes transactions through both closed-loop and open-loop networks.
• | Our Fleet Solutions segment interchange income primarily relates to revenue earned on transactions processed through the Company’s proprietary closed-loop fuel networks. In closed-loop fuel network arrangements, written contracts are entered into between the Company and merchants, which determine the interchange fee charged on transactions. The Company extends short-term credit to the fleet cardholder and pays the merchant the purchase price for the cardholder’s transaction, less the interchange fees the Company retains. The Company collects the total purchase price from the fleet cardholder. In Europe, interchange income is specifically derived from the difference between the negotiated price of fuel from the supplier and the agreed upon price paid by fleet cardholders.
• | Interchange income in our Travel and Corporate Solutions and Health and Employee Benefit Solutions segments relates to revenue earned on transactions processed through open-loop networks. In open-loop network arrangements, there are several intermediaries involved between the merchant and the cardholder, and written contracts do not exist between all parties involved in the process. Rather, the transaction is governed by the rates determined by the payment network at the point-of-sale. This framework dictates the interchange rate, the risk of loss, dispute procedures and timing of payment. For these transactions, there is an implied contract between the Company and the merchant. In our Travel and Corporate Solutions segment, the Company remits payment to the card network for the purchase price of the cardholder transaction, less the interchange fees the Company earns. The Company collects the total purchase price from the cardholder. In our Health and Employee Benefit Solutions segment, funding of transactions and collections from cardholders is performed by third-party sponsor banks, who remit a portion of the interchange fee to us.
The Company has determined that the merchant is the customer as it relates to interchange income regardless of the type of network through which transactions are processed. The Company’s primary performance obligation to merchants is a stand-ready commitment to provide payment and transaction processing services as the merchant requires, which is satisfied over time in daily increments. Since the timing and quantity of transactions to be processed by us is not determinable, the total consideration is determined to be variable consideration. The variable consideration for our payment and transaction processing service is usage-based and therefore specifically relates to our efforts to satisfy our obligation. The variability is satisfied each day the service is provided to the customer. We directly ascribe variable fees to the distinct day of service to which it relates, and we consider the services performed each day in order to ascribe the appropriate amount of total fees to that day. Therefore, we measure interchange income on a daily basis based on the services that are performed on that day. The Company determined that WEX does not control the services performed by merchant acquirers, card networks, sponsor banks and online bill payment aggregators as each of these parties is the primary obligor for their portion of payment and transaction processing services performed. Therefore, interchange income is recognized net of any fees owed to these intermediaries. The Company determined that services performed by third-party payment processors are controlled by WEX as the Company is responsible for directing how the third-party payment processor authorizes and processes transactions on the Company’s behalf. Therefore, such fees paid to third-party payment processors are recorded as service fees within cost of services. Additionally, the Company enters into contracts with certain large customers or strategic cardholders that provide for fee rebates tied to performance milestones. If such fee rebates constitute consideration payable to a customer or to another party that purchases services from the customer, they are considered variable consideration and are recorded as a reduction in payment processing revenue in the same period that the related interchange income is recognized. For the three and six months ended June 30, 2019, such variable consideration totaled $231.3 million and $430.0 million, respectively and $222.7 million and $421.2 million for the three and six months ended June 30, 2018, respectively. Certain other fee rebates that constitute costs to obtain a contract are recorded as sales and marketing expenses. Account Servicing Revenue In our Fleet Solutions segment, account servicing revenue is primarily comprised of monthly fees charged to cardholders based on the number of vehicles serviced. These fees are primarily in return for providing monthly vehicle data reports and are recognized on a monthly basis as the service is provided. Additionally, account servicing revenue includes other fees recognized as revenue when assessed to the cardholder as part of the lending relationship, which is outside the scope of Topic 606. The Company also recognizes account servicing revenue related to reporting services on telematics hardware placements and permit sales to our over-the-road fleet customer base, both of which are within the scope of Topic 606. In our Travel and Corporate Solutions segment, account servicing primarily consists of licensing fees for the use of our accounts receivable and accounts payable SaaS platforms. In our Health and Employee Benefit Solutions segment, we recognize account servicing fees for the per-participant per-month fee charged on our SaaS healthcare technology platform. Customers including health plans, third-party administrators, financial institutions and payroll companies typically enter into three to five year contracts, which contain significant termination penalties. Our Travel and Corporate Solutions and Health and Employee Benefit Solutions segments provide SaaS services and support, which are stand-ready commitments and are satisfied over time in a series of daily increments. Revenue is recognized based on an output method using days elapsed to measure progress as the Company transfers control evenly over each monthly subscription period. Finance Fee Revenue The Company earns revenue on overdue accounts, which is recognized as revenue at the time the fees are assessed. The finance fee is calculated using the greater of a minimum charge or a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge. On occasion, these fees are waived to maintain customer goodwill. The established reserve for such waived amounts is estimated and offset against the late fee revenue recognized. These waived fees amounted to $7.5 million and $12.0 million during the three and six months ended June 30, 2019, respectively and $5.1 million and $9.6 million during the three and six months ended June 30, 2018, respectively. Finance fee revenue includes amounts earned by the Company’s factoring business, which purchases accounts receivable from third parties at a discount. Through June 2018, the Company also recognized finance fee revenue earned on the Company’s foreign salary advance product. Subsequently, the Company revised its WEX Latin America securitized debt agreement and recognizes gains on the sale of these receivables within “Other revenue” below. See Note 10, Off-Balance Sheet Arrangements, for further information on our WEX Latin America securitization. Other Revenue Other revenue includes transaction processing revenue, professional services including software development projects and other services sold subsequent to the core offerings, and the sales of telematics hardware, all of which are within the scope of Topic 606. Revenue is recognized when control of the services or hardware is transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those services. In addition, international settlement fees and certain other cardholder fees (e.g. replacement card fees) and gains on sale of WEX Latin America receivables are included in other revenue. This revenue is outside the scope of Topic 606 and is recognized upon completion of the related service or the sale date of the receivables. Contract Balances The Company’s contract assets consist of upfront payments made to customers under long-term contracts and are recorded upon payment or when due. The resulting asset is amortized against revenue as the Company performs its obligations under these arrangements. The Company’s contract liabilities consist of customer payments received before the Company has satisfied the associated performance obligations and upfront payments due to the customer. The following table provides information about these contract balances.
(In thousands) |  |  |  |  |  |
Contract balance |  | Location on the unaudited condensed consolidated balance sheets |  | June 30, 2019 |  | December 31, 2018
Receivables 1 |  | Accounts receivable, net |  | $ | 38,198 |  |  | $ | 32,949 |
Contract assets |  | Prepaid expenses and other current assets |  | $ | 3,852 |  |  | $ | 3,819 |
Contract assets |  | Other assets |  | $ | 19,545 |  |  | $ | 19,232 |
Contract liabilities |  | Other current liabilities |  | $ | 3,870 |  |  | $ | 7,612 |
1 The majority of the Company’s receivables, which are excluded from the table above, are either due from cardholders, who have not been deemed our customer as it relates to interchange income, or from revenues earned outside of the scope of Topic 606. In the three and six months ended June 30, 2019, we recognized revenue of $3.6 million and $6.4 million related to contract liabilities. In the three and six months ended June 30, 2018, we recognized revenue of $2.2 million and $5.3 million related to contract liabilities. Remaining Performance Obligations The Company’s unsatisfied, or partially unsatisfied performance obligations as of June 30, 2019 represent the remaining minimum monthly fees on a portion of contracts across the lines of business and contractually obligated professional services yet to be provided by the Company. It is not indicative of the Company’s future revenue, as it relates to an insignificant portion of the Company’s operations. The following table includes revenue expected to be recognized related to remaining performance obligations at the end of the reporting period.
(In thousands) | Remaining 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | Total
Minimum monthly fees 1 | $ | 31,378 |  |  | $ | 42,041 |  |  | $ | 23,534 |  |  | $ | 13,594 |  |  | $ | 6,351 |  |  | $ | 775 |  |  | $ | 117,673 |
Professional services 2 | 9,227 |  |  | 316 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,543 |
Total remaining performance obligations | $ | 40,605 |  |  | $ | 42,357 |  |  | $ | 23,534 |  |  | $ | 13,594 |  |  | $ | 6,351 |  |  | $ | 775 |  |  | $ | 127,216 |
1 The transaction price allocated to the remaining performance obligations represents the minimum monthly fees on certain service contracts, which contain substantive termination penalties that require the counterparty to pay the Company for the aggregate remaining minimum monthly fees upon an early termination for convenience. 2 Includes software development projects and other services sold subsequent to the core offerings, to which the customer is contractually obligated.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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