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.



	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 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.

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.

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

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.

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 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.

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.



(In thousands)
Contract balance	Location on the unaudited condensed consolidated balance sheets	June 30, 2019		December 31, 2018
Receivables¹	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

¹The 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.

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.



(In thousands)	Remaining 2019		2020		2021		2022		2023		2024		Total
Minimum monthly fees¹	$	31,378	$	42,041	$	23,534	$	13,594	$	6,351	$	775	$	117,673
Professional services²	9,227		316		—		—		—		—		9,543
Total remaining performance obligations	$	40,605	$	42,357	$	23,534	$	13,594	$	6,351	$	775	$	127,216

¹The 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.