An Operation is the smallest unit of financial activity in Midaz – essentially a single ledger entry, which is either a debit or a credit on a specific account.

Operations are the building blocks of transactions. Every transaction is composed of two or more operations (Figure 1). Each operation records a change in the balance of one account:

• A Debit operation decreases an account’s balance (for asset accounts that normally have positive balances) or represents value outflow from that account.
• A Credit operation increases an account’s balance or represents value inflow into that account.

If we break down a transaction, it’s a collection of operations that together must net to zero from the ledger’s perspective. For example, a P2P payment with a fee might include:

• a $100 debit from the sender’s account
• a $98 credit to the recipient’s account
• a $2 credit to the platform’s fee account

Midaz guarantees that transactions always balance before they are committed.

Operations also carry metadata such as timestamps and references to the transaction they belong to. In Midaz's API or DSL, when creating a transaction, you must specify a set of operations, each with an amount, asset, source/destination account, and so on, and the system validates that they balance out before committing.

Chart of Accounts

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The Chart of Accounts in Midaz defines the accounting routes and categorizations of Operations within transactions. It acts as a structured framework, ensuring financial activities are categorized, auditable, and aligned with regulatory requirements.

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Note

The Chart of Accounts links the Ledger to a traditional balance sheet. For instance, a Controller can define that all fees related to a specific type of transaction will be credited to a "X Fees Account," ensuring proper categorization within financial statements.

In Midaz, each operation can be tagged with a specific route or category as defined by the chart of accounts. This provides a clear and auditable structure for all financial flows, critical for compliance and reporting in banking environments.

Defined Routes

The chart of accounts allows defining routes such as "Fee Income", "Interest Expense", or "Customer Deposits". By tagging a fee operation with the "Fee Income" route, Midaz automatically credits the correct ledger account, streamlining financial reporting.

Consistency

Using a Chart of Accounts ensures uniform transaction categorization, simplifying audits and reporting. For example, auditors can filter all operations tagged as "Interest Income" to track bank interest payouts and their corresponding debits.

Settlement Flows

The chart-of-accounts helps define settlement flows for external transactions. For example, when funds leave Midaz via SWIFT or PIX transfers, they are recorded under a dedicated "external settlement" account, ensuring a balanced ledger representation.

Chart-of-Accounts Group

For institutions operating multiple ledgers or product lines, Midaz supports Chart-of-Accounts Groups. This allows banks to manage financial flows under distinct structures while maintaining a unified reporting approach.

Managing Operations

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The Operations are automatically created by Midaz, so you cannot create an Operation alone. However, you can perform the following actions to manage the Operations of a transaction.

View Operation Details

• by Account: To view all operations from a specific account, use the List Operations by Account.
  • To view the details of a specific operation from an account, use the Retrieve an Operation by Account endpoint.
• by Portfolio: To view all operations of a specific Portfolio, use the List Portfolio Operations.
  • To view the details of a specific operation from a Portfolio, use the Retrieve an Operation by Portfolio endpoint.

Edit an Operation

• To edit Operation details, use the Update an Operation endpoint.