How IOU Wallet Works
IOU Wallet helps you record, track, and settle everyday peer-to-peer obligations. It is designed for real-world situations where something is borrowed, a service is provided, or money is owed — and both sides want clarity without formal contracts or legal overhead.
At its core, an IOU records:
- Who owes what to whom
- Under which conditions
- When the obligation is considered fulfilled
Both parties acknowledge the IOU through a virtual handshake. Once the obligation is fulfilled, a closing handshake confirms settlement and completes the IOU.
IOU Wallet supports Items, Services, and Cash IOUs, each of which can start simple and be extended with additional terms when needed.
Create a New IOU
When creating an IOU, you choose your role:
- Debtor – "I Owe You"
You acknowledge that you owe an item, service, or amount. - Creditor – "I Am Owed"
You record that someone owes you an item, service, or amount.
This defines who initiates the IOU and who must accept it. An IOU only becomes active once the counterparty accepts the recorded terms.
IOU Types
Item IOUs (Borrowed Things)
Basic example
A friend borrows your book.
You create an IOU describing the item. Your friend accepts it. When the book is returned, settlement is initiated and confirmed.
With a rate
You lend a camera for a week.
A daily or weekly rate is agreed. The rate can start accruing:
- From acceptance, or
- From the agreed return date
With redemption
You lend equipment that may not be returned.
Instead of returning the item, the borrower can settle by paying an agreed redemption value. If a rate applies, accrued charges are added on top.
Service IOUs (Work Provided)
Basic example
A service IOU typically represents a commitment, not immediate work.
For example: a one-time babysitting voucher at an open-ended date.
With a value
You can attach a value to the service (e.g. €50), so the obligation is clearly recorded and agreed upfront.
With rates or fees
Rates or late fees can be defined to reflect delayed settlement.
Cash IOUs (Money Owed)
Basic example
You lend a friend €50.
The IOU records the amount owed. Once repaid, settlement is initiated and confirmed.
With a rate
A rate can apply:
- From acceptance, or
- Only after a defined due date
Personal IOUs
Personal IOUs are informal by design and reflect favours or personal undertakings, such as babysitting, helping with a move, or an apology.
They exist to acknowledge intent — not to formalize or monetize relationships.
Due Date
An IOU can include an optional due date, which defines when settlement is expected.
- Due dates do not enforce settlement
- They act as a shared reference point
- They help align expectations between both parties
Rates
Rates allow IOUs to reflect time-based value or compensation.
A rate can be defined as:
- Daily or weekly
- Applied immediately on acceptance, or
- Applied after the due date
Rates are fully visible before acceptance and cannot be changed afterward.
Rate Freeze During Pending Settlement
Once settlement is initiated and the IOU enters Pending Settlement, rates stop accruing.
This ensures:
- No additional charges accumulate while settlement is being confirmed
- Both parties have certainty over the final amount
- The final settlement amount is locked until the closing handshake is completed.
Settlement
Settlement confirms that the obligation has been fulfilled. It can happen off-platform or on-platform.
Manual Settlement (Off-Platform)
Used when:
- An item is returned
- A service is completed
- Cash is exchanged directly
The owing party initiates settlement.
The receiving party confirms it.
The IOU is then closed and archived.
On-Platform Settlement (Payments)
For monetary IOUs, IOU Wallet can generate payment links using supported settlement rails.
Settlement options are controlled by the receiving party, who enables payment rails in Settings and shares public payment details.
Supported Providers
- PayPal
- Solana (crypto settlement)
Current limitations
PayPal
- Payments can be initiated via generated PayPal links
- PayPal payments cannot be auto-detected
- Settlement must be confirmed manually after payment
Solana
- Best used with two devices:
- Desktop to display the QR code
- Mobile wallet to scan and pay
- Automatic settlement detection requires the correct payment reference
- If the reference is missing or altered, the IOU remains open and requires manual confirmation
Conversion Rates
When settling across currencies:
- IOU Wallet uses the current conversion rate at the time of settlement
- Conversion rates are provided by Helios, our pricing and conversion data provider
- Displayed values are indicative and shown for transparency
- Final settlement outcomes depend on the payment network used
Network Fees
IOU Wallet does not charge platform fees.
However, payment networks may apply their own fees:
- PayPal: transaction and currency conversion fees
- Solana: network (gas) fees
These fees are defined and charged by the respective networks.
Messaging & Communication
Each IOU includes a built-in messaging system designed to:
- Send reminders
- Respond to IOU actions
- Record settlement-related communication
A complete message history is available under View IOU, providing a transparent and auditable communication trail for both parties.
Virtual Handshakes
An IOU is created and completed through two virtual handshakes.
1. Accepting Handshake
Creating an IOU notifies the counterparty
Until accepted, the IOU remains Pending Acceptance
Actions:
- Accept – confirms agreement and activates the IOU
- Decline – requires an explanation
Only the Initiator or the Creditor can cancel an IOU.
Accepting an IOU does not move money, items, or services. It only confirms agreement on the recorded terms.
2. Settlement Handshake
The owing party initiates settlement
The IOU enters Pending Settlement
The receiving party confirms receipt
Confirmation completes the IOU and moves it to the archive.
Settlement confirmation does not move assets — it records mutual agreement that the obligation has been fulfilled.
Archive
The Archive stores all:
- Settled IOUs
- Declined IOUs
Archived IOUs remain available for reference and record-keeping.
Important: Nature of IOUs & Dispute Resolution
IOU Wallet is a record-keeping and coordination tool only.
- IOUs are not legally enforceable
- They do not constitute contracts, securities, or transferable claims
- IOU Wallet does not arbitrate disputes
An IOU records what both parties agreed at the time of acceptance. In case of disagreement, users are encouraged to resolve matters through direct conversation and verbal clarification.
The product is designed to support trust — not replace it.