> ## Documentation Index
> Fetch the complete documentation index at: https://docs.reap.global/llms.txt
> Use this file to discover all available pages before exploring further.

# Funding Model

> How user funds are held, and how card spending is backed in your project.

Every Reap project is configured with a **funding model** at onboarding. The funding model determines where user funds sit, how card spending is backed, and how settlement works.

<Note>
  Your funding model is set by Reap during project setup and cannot be changed after launch. If you are unsure which model your project uses, contact your Reap account manager.
</Note>

***

## The two models

Your funding model answers two questions: where user funds are held, and how card spending is backed.

| Model              | Where user funds sit              | Master collateral account | Card spend backed by                       |
| ------------------ | --------------------------------- | ------------------------- | ------------------------------------------ |
| **User-Funded**    | Reap-provisioned per-user wallets | Not used                  | The user's own wallet balance              |
| **Program-Funded** | Your custody, off Reap            | Required                  | A single master account you keep topped up |

A separate, independent choice, [authorization mode](/program-configuration/authorization-mode), decides who approves each card transaction. It applies only to Program-Funded projects.

***

## User-Funded

User-Funded is the default funding model. Each user deposits stablecoins into a Reap-provisioned wallet dedicated to them. Their balance stays self-custodied and isolated to that user, and card spending draws from that wallet.

```mermaid theme={null}
flowchart LR
    U([User]) -->|Deposits stablecoins| W[User wallet on Reap]
    W -->|Backs card spend| C[Card program]
    C -->|Settlement| N[Card network]
```

### How funding works

1. You create an account for a verified user. Reap provisions deposit addresses for every supported chain.
2. The user sends supported stablecoins to those addresses. Once the deposit is approved, the balance becomes spendable.
3. The user taps their card. Reap authorizes against the account's available balance.
4. On a schedule, Reap settles cleared card spend by drawing stablecoins from the user's wallet.

### When User-Funded fits

* You want Reap to hold user funds end to end, so your users self-custody on the Reap platform.
* You are issuing retail cards where each user funds their own spending directly.
* You do not need to represent externally held assets or issue program credits.

***

## Program-Funded

Program-Funded is designed for programs where you already hold user funds: custodians, exchanges, crypto wallets, fund managers, brokerage platforms, and corporate treasuries.

Instead of users depositing into Reap, you keep a single **master collateral account** with us, topped up periodically to back card spending across your whole program. No per-user funds move to Reap; how each user's spending power is set and authorized depends on your [authorization mode](/program-configuration/authorization-mode).

<Note>
  This page describes the default authorization mode, **Managed**, where you allocate Virtual Assets and Reap authorizes spend against them. Program-Funded projects can instead use **External** authorization, where you approve each transaction in real time and do not allocate Virtual Assets. See [Authorization mode](/program-configuration/authorization-mode).
</Note>

```mermaid theme={null}
flowchart LR
    C([You]) -->|User funds stay with you| UH[Your custody / balance sheet]
    C -->|Periodic top-up| M[Master collateral account on Reap]
    C -.->|Set spending power per user| A[User accounts on Reap]
    M -->|Backs card spend| Card[Card program]
    Card -->|Settlement| N[Card network]
```

### How funding works

1. **You fund the master collateral account.** You send stablecoins to the master account's deposit addresses. It is the only account in your project that holds real crypto, and it collateralizes every card transaction across the program. See [Funding via Deposits](/accounts/deposits#master-collateral-funding).
2. **You set each user's spending power.** How depends on your [authorization mode](/program-configuration/authorization-mode). In the default **Managed** mode you mirror each user's balance into Reap as [Virtual Assets](/virtual-assets/overview) and Reap authorizes against it; in **External** mode you authorize each transaction in real time from your own systems. Either way, no per-user funds move to Reap.
3. **You keep the program collateralized.** Authorizations require the master account to still cover total outstanding spend across the program, so keep it topped up. Cleared spend is reconciled against it - in Managed mode via [`SETTLEMENT` postings](/virtual-assets/postings#settling-card-debt) on whatever cadence fits your operations.

### What Reap handles for you

Program-Funded preserves your custody model while handing off every part of running a card program. You get:

* Real-time authorization for every card swipe.
* Clearing, reversals, refunds, and fee accounting.
* Fraud monitoring, KYC, and transaction screening.
* Multi-chain stablecoin custody for the master account.
* Settlement with the card network.
* A unified ledger across fiat and crypto movement.

You decide who can spend what. You hold user funds. You settle on your own cadence. Reap does the rest.

### When Program-Funded fits

* You already custody user funds and want to keep them productive on your side rather than float them with Reap.
* Your users self-custody on your platform (wallet app, exchange account, custodian) and you want to issue cards against those balances without moving funds to Reap.
* You want to offer cards backed by assets you hold externally: stablecoins, non-stable crypto, fiat-backed units, or your own points.
* You want to issue program credits (cashback, sign-up bonuses, credit lines, salary allowances) without building card-processing infrastructure.
* You are a corporate treasury or trust structure pre-funding spending for a defined group of users.

***

## Funding model and program mode

Funding model is independent from [program mode](/program-configuration/modes). Both consumer and corporate programs can use either User-Funded or Program-Funded.

* **Program mode** determines who gets verified and who owns accounts.
* **Funding model** determines how those accounts are funded.

A typical consumer retail program uses **Consumer + User-Funded**. A custodian issuing cards against balances held on their platform uses **Consumer + Program-Funded**. A corporate expense program with company-held balances uses **Corporate + User-Funded** or **Corporate + Program-Funded** depending on whether the company custodies the funds or deposits them with Reap.