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Release Type: Enhancement · Breaking Change
Action RequiredStarting August 2026, Create Payout will reject requests made on behalf of (OBO) an entity whose details are still in draft (not submitted), or whose purpose_of_use does not include payout. Before this rolls out, check the approval_status and purpose_of_use of every entity you use as an OBO party, and update your integration to handle the new rejection responses gracefully.

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Summary

Tazapay’s On-Behalf-Of (OBO) payouts let a platform merchant move funds on behalf of an entity — a seller, agent, or partner it onboards. Until now, Create Payout did not check whether that entity’s details had actually been submitted, or whether the entity was even meant to be used for payouts, before releasing funds on its behalf. To close this gap, Create Payout now runs two checks on the entity before creating an OBO payout:
  1. The entity’s details must have been submitted — not still in draft.
  2. The entity’s purpose_of_use must explicitly include payout.
If either check fails, the payout is not created and the API returns an error explaining why.

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What Changed

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Entity Status Check

The entity’s approval_status must be one of:
  • approved
  • submitted
  • requires_action
These statuses all mean the entity’s details have, at minimum, been submitted. An entity that’s still in draft (details not yet submitted) can no longer be used as the OBO party for a payout.

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Purpose-of-Use Check

An entity’s purpose_of_use determines what it can be used for: payout is required to create a payout on its behalf, collect to create a collection, and so on. The entity’s purpose_of_use array must include payout to be used as the OBO party on a Create Payout call, even if its status otherwise qualifies.

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Affected Endpoints

  • POST /v3/payout — when the request specifies an on-behalf-of entity.

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Compatibility

This is a breaking change for OBO payout callers only. Create Payout calls that do not act on behalf of an entity are unaffected. If you use OBO payouts today, requests for entities still in draft, or without payout in purpose_of_use, will start failing.

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Behavior

  1. Create Payout API Documentation
  2. Entity API Documentation
  3. Checkout on Behalf Of Integration Guide