Which option describes the liability-bearing types for a negative balance on a connected account?

Which option describes the liability-bearing types for a negative balance on a connected account?

• A. Custom and Express
• B. Standard
• C. Express
• D. Custom

Answer: (A)

The key idea is that liability for a negative balance in a connected account depends on the type of Connect account. A negative balance happens when the connected account owes money to Stripe (for example, due to refunds, chargebacks, or fees) after payouts have been issued. Custom and Express accounts are the ones where the platform bears that liability. With Custom accounts, the platform has full control and responsibility for the connected account’s payouts and obligations, so covering a negative balance falls on the platform. With Express accounts, the platform also manages the onboarding and payout flow, and therefore can be responsible for funding shortfalls in the connected account. Standard accounts, by contrast, are designed so Stripe handles more of the liability and the platform does not bear the same level of responsibility for negative balances. So the liability-bearing types for a negative balance on a connected account are Custom and Express.

The key idea is that liability for a negative balance in a connected account depends on the type of Connect account. A negative balance happens when the connected account owes money to Stripe (for example, due to refunds, chargebacks, or fees) after payouts have been issued.

Custom and Express accounts are the ones where the platform bears that liability. With Custom accounts, the platform has full control and responsibility for the connected account’s payouts and obligations, so covering a negative balance falls on the platform. With Express accounts, the platform also manages the onboarding and payout flow, and therefore can be responsible for funding shortfalls in the connected account.

Standard accounts, by contrast, are designed so Stripe handles more of the liability and the platform does not bear the same level of responsibility for negative balances.

So the liability-bearing types for a negative balance on a connected account are Custom and Express.