XML 30 R11.htm IDEA: XBRL DOCUMENT v3.20.4
Revenue
 12 Months Ended
Dec. 31, 2020
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 following tables disaggregate our consolidated revenue:
Year Ended December 31, 2020
(In thousands)Fleet SolutionsTravel and Corporate SolutionsHealth and Employee Benefit SolutionsTotal
Topic 606 revenues
Payment processing revenue$404,843 $229,144 $64,904 $698,891 
Account servicing revenue17,512 41,927 253,706 313,145 
Other revenue78,620 2,559 35,734 116,913 
Topic 606 revenues$500,975 $273,630 $354,344 $1,128,949 
Non-Topic 606 revenues$417,335 $4,210 $9,375 $430,920 
Total revenues$918,310 $277,840 $363,719 $1,559,869 
Year Ended December 31, 2019
(In thousands)Fleet SolutionsTravel and Corporate SolutionsHealth and Employee Benefit SolutionsTotal
Topic 606 revenues
Payment processing revenue$457,244 $303,385 $64,963 $825,592 
Account servicing revenue17,709 43,293 205,524 266,526 
Other revenue83,765 3,340 28,225 115,330 
Topic 606 revenues$558,718 $350,018 $298,712 $1,207,448 
Non-Topic 606 revenues$479,677 $17,808 $18,758 $516,243 
Total revenues$1,038,395 $367,826 $317,470 $1,723,691 
Year Ended December 31, 2018
(In thousands)Fleet SolutionsTravel and Corporate SolutionsHealth and Employee Benefit SolutionsTotal
Topic 606 revenues
Payment processing revenue$464,980 $203,289 $55,722 $723,991 
Account servicing revenue30,385 37,262 108,172 175,819 
Other revenue66,379 4,906 25,668 96,953 
Topic 606 revenues$561,744 $245,457 $189,562 $996,763 
Non-Topic 606 revenues$413,396 $57,887 $24,593 $495,876 
Total revenues$975,140 $303,344 $214,155 $1,492,639 
    The vast majority of the above revenue relates to services transferred to the customer over time. Point-in-time revenue recognized was immaterial during the years ended December 31, 2020, 2019, and 2018.
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.
•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 between all parties involved in the process do not exist. Rather, the transaction is governed by the rates determined by the card 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.
    In determining the amount of consideration received related to these services, the Company applied the principal-agent guidance in Topic 606 and assessed whether it controls services performed by other intermediaries. Based on this assessment, the Company determined that WEX does not control the services performed by merchant acquirers, card networks and sponsor banks 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. Conversely, the Company determined that services performed by third-party payment processors are controlled by the Company as it is responsible for directing how the third-party payment processor authorizes and processes transactions. 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. When such fee rebates constitute consideration payable to a customer or other 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 related interchange income is recognized. For the years ended December 31, 2020, 2019, and 2018, such variable consideration totaled $537.7 million, $891.0 million, and $858.9 million respectively. Fee rebates made to certain other partners were determined to be costs to obtain a contract and 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. The Company also recognizes account servicing revenue related to reporting services on telematics hardware placements and permit sales to our over-the-road customers, both of which are within the scope of Topic 606. Additionally, account servicing revenue includes other fees recognized as revenue when assessed to the cardholder as part of the lending relationship, which are outside the scope of Topic 606.
    In our Travel and Corporate Solutions segment, account servicing reflects licensing fees earned for use of our accounts receivable and accounts payable SaaS platforms, all of which is within the scope of Topic 606.
    In our Health and Employee Benefit Solutions segment, we recognize account servicing fees for the per-participant per-month fee charged per consumer 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. This revenue is within the scope of Topic 606.
    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 when 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. Finance fee revenue also includes amounts earned by the Company’s factoring business, which purchases accounts receivable from third-parties at a discount. This revenue is outside the scope of Topic 606.
Other Revenue
    In our Fleet Solutions segment, other revenue primarily consists of transaction processing revenue, other fees charged to the merchants, 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. We also recognize fees charged to cardholders in other revenue, which are outside the scope of Topic 606.
    In our Travel and Corporate Solutions segment, the majority of other revenue reflects international settlement fees, which is outside the scope of Topic 606 and recognized as the service is performed. In our Health and Employee Benefit Solutions segment, other revenue primarily consists of professional services, which is within the Topic 606, and is recognized as the services are performed, in the amount we expect to receive from these services. Prior to the sale of the WEX Latin America business, other revenue in our Health and Employee Benefit Solutions segment also included the gain on sale of WEX Latin America receivables, which was outside the scope of Topic 606 and is recognized on the sale date of the receivables.
Contract Balances
The majority of the Company’s receivables, which are excluded from the table below, 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. 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 balanceLocation on the consolidated balance sheetsDecember 31, 2020December 31, 2019
Receivables
Accounts receivable, net$43,541 $43,092 
Contract assets
Prepaid expenses and other current assets$5,495 $4,593 
Contract assets
Other assets$19,927 $20,496 
Contract liabilities
Other current liabilities$8,530 $5,171 
Contract liabilities
Other liabilities$24,614 $— 
Refund liabilitiesAccrued expenses$5,265 $— 
    Impairment losses recognized on our contract assets were immaterial for the years ended December 31, 2020, 2019 and 2018. In the years ended December 31, 2020 and 2019, we recognized revenue of $5.2 million and $7.2 million included in the opening contract liabilities balances, respectively.
Remaining Performance Obligations
The Company’s unsatisfied, or partially unsatisfied performance obligations as of December 31, 2020 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. The remaining performance obligations also includes payments to the Company for providing payment processing services and facilitating transactions under certain long-term noncancellable contracts for which the Company has not satisfied its performance obligations. The total remaining performance obligations below 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)20212022202320242025ThereafterTotal
Minimum monthly fees1
$46,657 $31,879 $17,766 $7,340 $2,404 $36 $106,082 
Professional services2
3,679 60 — — — — 3,739 
Other3
2,771 3,302 3,349 3,770 4,321 9,301 26,814 
Total remaining performance obligations$53,107 $35,241 $21,115 $11,110 $6,725 $9,337 $136,635 
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.
3 Represents deferred revenue associated with remaining payment processing service obligations.