
Balanced Will Release an API to Push Money to Debit Cards - steveklabnik
http://blog.balancedpayments.com/push-to-cards/
======
pavlov
From a European perspective, it seems utterly strange that Americans don't
simply use wire transfers for something like this.

If someone wants to send me money, I just give them my bank account number
(IBAN). Transfers are free within EU and the handful of outsider European
countries.

Why are Americans afraid of giving out their bank account numbers? The only
thing you can do with an IBAN is send money to it, and that's hardly
malicious.

~~~
steveklabnik
Wire transfers are expensive here, $15~$30.

You can also withdraw money if you have the bank account information. A famous
example is Don Knuth, who had to stop offering rewards checks: [http://www-cs-
faculty.stanford.edu/~knuth/news08.html](http://www-cs-
faculty.stanford.edu/~knuth/news08.html)

~~~
pavlov
Wow. At that cost, I assume American banks must be using a combination of
telegraphs and the Pony Express to settle their wire transfers.

"You see, sending money _across state lines_ is not easy. There needs to be
insurance in case wild natives attack and steal the leather bag containing
those money orders... It's only fair that we pass that cost on to the
customer."

~~~
wmf
You're joking, but when I did a wire transfer it failed the first time and I
had to call my bank and give them extra information over the phone, including
the street address of the branch where the destination account lives.
Considering how much labor went into it, I understand why they charged me $30.

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robbiet480
Sorry, but I have to ask as I did yesterday: Why was (YC S11) removed from the
title? They were in Y Combinator Summer 2011 batch...

~~~
ceejayoz
Especially given Stripe doesn't seem to get the same treatment. It's a little
odd.
[https://news.ycombinator.com/item?id=7106377](https://news.ycombinator.com/item?id=7106377)

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tpurves
Such an API already exists, you can get it directly from Visa:
[https://developer.visa.com/vpp/](https://developer.visa.com/vpp/)

Note that, pushing money to anybody as a service also involves a lot of
regulatory compliance issues in almost any country you would want to be able
to do this in. In the US for example, facilitating money laundering, terrorist
financing or transfers to a named person (even accidentally facilitating if
you don't have enough controls in place) is a felony and you can go to jail.
So make sure you are a licensed money transfer operator before attempting.

~~~
steveklabnik
As you noted, that would only work with Visa, ours works with all debit cards.

And we have really strict regulatory compliance, a laywer was something like
our 5th hire. We do a lot with KYC and such, so those details are all handled
for you, by us. All merchants on Balanced marketplaces get underwritten
individually.

~~~
tpurves
That's great to hear that you are on top of this. So many payment startups
fail to think through or manage their compliance risk until they discover too
late that it is a barrier to scaling or killer for their entire user
experience. Compliance is one of the biggest challenges for creating new
payment services.

You guys should also take a look at the Visa push-payment apis. In reality
they are designed more for other API providers like yourselves to fold-in to
their available push-payment options. Particularly handy for applications like
marketing rebates, bill payment or expense reimbursements for payments already
made on a card. Visa transfers do have a few advantages over straight ACH -
you can push funds to a debit account, a credit card account or a reloadable
prepaid account. Works across borders, in some countries works real time. Also
a card number can be easier and less error-prone for consumers to enter than
full bank routing info (as you probably know, handling rejects on ACH is a
real pain). Downsides: only works on Visa cards, but you can mitigate that
with traditional fallback options like ACH, instant-issuance prepaid, or
mailing a check.

source: I don't have a stake in that service anymore, but I used to work on
developing it.

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tomasien
Can you explain like I'm 5 why ACH debits won't work and Debit Cards will? It
must have nothing to do with fees, so you're saying you assume too much risk
because you'd only have 2 days to reverse the transaction? I don't know what
that would be true - because you guys aren't compliant with Regulation E or
something? You should have 60 days.

Edit - reading some of the comments perhaps it's about convenience - 4-5 day
wait, I don't know my account number, etc.

~~~
rmanisha
Note: I work at Balanced

I think you mean ACH credits (payouts) and not ACH debits. The push to debits
cards feature is less about the risk and all about the convenience.

The process of collecting bank account information from sellers/merchants has
proven to be cumbersome for our customers for three reason: 1\. People rarely
have their checkbook on hand 2\. People are less willing to provide that
information (Whereas people are more comfortable giving out debit card
information since they can always change the debit card number as an added
security. It is also much easier to file a chargeback on a debit card
transaction) 3\. Bank account information cannot be validated in real time
thus, increasing payout delays cause by typos.

I may have completely missed the mark on your question, if so please correct
me.

~~~
tomasien
Not at all, I get it. This, and I'm just trying to give feedback, wasn't a
very well written article for someone who doesn't already understand the
problem. After I understood the problem, the post was much, much easier to
understand.

If you'd like a method for processing ACH where those three things aren't a
problem, gimme a holler - tommy@paidez.com

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dylanbathurst
This will be really cool. We use Balanced for our payments system, and have
talked with a lot of our users about pay-outs. The top two problems with
getting customers to cash out are the security of giving away their bank
account info, and the time it takes to get your check book and input the
account and routing info.

I'm curious about how this works though. I think Square Cash is doing
something similar right? I've heard rumors about how it works where the
company basically posts a refund to the card even if it had never been
charged. Is that correct?

~~~
rmanisha
Balanced employee here.

>The top two problems with getting customers to cash out are the security of
giving away their bank account info, and the time it takes to get your check
book and input the account and routing info. Another benefit is that the debit
card information is validated in real time, rather than waiting 4 business
days for ACH credit to fail.

This is the main reason that customers have asked us to add this functionality
since a debit card number is much more accessible and safer to hand out.

>I've heard rumors about how it works where the company basically posts a
refund to the card even if it had never been charged. Is that correct?

That would be the hacky way to do it. We're planning to push money via the ATM
rails which would make the transfer instantaneous.

~~~
dylanbathurst
"ATM rails?" Can you explain that a little more?

~~~
rmanisha
Sure, the transactions would travel along the same rails used when you walk up
to an ATM and withdraw funds. When you input your debit card, the information
is validated immediately, your balance is then depleted by the amount
withdrawn. The push to debit card functionality will move funds along this
network instead of the cumbersome ACH network, which take days to process
requests and validate bank account information.

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milkmanjr
I love Balanced.

Pushing money to debit cards is cool, but my customers don't have a problem
providing banking details. Especially since payouts are fast as is.

But international payouts, that would be huge!

~~~
steveklabnik
Thanks! :D

We're still working on the international story. I care about it a lot,
regulations are hard. :/

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cinquemb
I think it will be pretty cool to see how this plays out and what kinds of
debit cards can be used (pre-paid, tied to checking/savings accounts, etc.).
I'm even interested if something like this will make it easier to exchange
cryptocurrencies remotely without going through a central exchange.

~~~
jareau
(co-founder of Balanced here)

Thanks! We're pretty interested in cryptocurrencies at Balanced [1]. Would
love to have your support on this
project:[https://balanced.crowdhoster.com/let-s-push-to-debit-
cards/c...](https://balanced.crowdhoster.com/let-s-push-to-debit-
cards/checkout/payment?amount=25&quantity=1&reward=3)

~~~
jareau
oops forgot this:

[1]
[https://twitter.com/steveklabnik/status/423271986073063424](https://twitter.com/steveklabnik/status/423271986073063424)

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ck2
Oh this will definitely take a bite out of paypal.

Please be successful!

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reachue
Even if there is no harm in giving out your bank account number, your bank
account number is longer then your debit card and harder to recount. I think
this is a great idea and hope it pans out.

