As you have discovered, this is one of the most complicated calculation issues in Regulation Z. The regulation does not provide clear and adequate guidance, so you have to be prepared to "make the case" that your APR calculations are legally accurate. According you your website, your company provides software to payday lenders. At the rates of charge imposed by these lenders, absolute accuracy is a survival issue. Any calculation error blows way past the Reg. Z tolerance, and high cost lenders are always under the microscopes of the FTC, states' attorneys general, and other "watchdogs."
Your best bet is to contact Cliff Cook ( http://complyserv.com
) and follow his advice. Before retiring, I worked with Cliff on a number of payday lender projects. He is the leading national authority on payday loan calculation matters.