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.
In the US you only need a name and bank account number (and to know which bank it belongs to to find the routing number) to make ACH withdrawals. That's why.
I'm not aware of any reforms in the banking system to change this awful system, so these online services are the next best thing. I am still waiting to find a good opportunity to use Square Cash.
ACH is far more complex then being able to withdraw money from someone's bank account with just their account number. To be able to initiate an ACH transaction bank level authentication is needed and it can only be done from an authorized bank. Can you give me a use case where someone can withdraw money from my bank account using just my bank account number ?
Any ideas ?
There is no logical reason for someone not to give out their bank account number anymore than their Credit/Debit card number. In both cases consumers are indemnified by federal regulations.
However perception is bigger than reality - just like in the early days of the Internet/e-commerce people were afraid of using their credit card numbers online so are they wary of using their bank account numbers online.
We do have something closer to what you're talking about though. Most large US banks offer the ability to transfer money to other members of the same bank with simply an account number. Such as Bank of America to Bank of America, or Wells Fargo to Wells Fargo. There are fees associated with going Wells Fargo to Bank of America though which is a turn-off.
The other problem with these kinds of transfers is that there is no API for integrating that technology into a 3rd party service. I would have to go onto Wells Fargo's site to transfer money to another Wells Fargo customer. If those banks had any sense at all they would innovate and release APIs to enable that kind of transaction.
The US economics are pretty simple - banks know they can charge for it.
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
"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."
edit: If people are curious, its this: https://home.capitalone360.com/p2p
Wire transfers are (almost) real-time and use Fedwire (domestic) and SWIFT (international) for communication in real-time. Usually banks charge hefty fees for this.
ACH is a batch network that takes minimum of 2 business days and generally costs mush less - often free too if you go through the bank's site.
The 2 are separate networks and regulated completely differently and hence different charges. Bottom line: if you want money transferred ASAP i.e. real-time/same-day it's likely to cost you. If you can wait for 2-3 days its likely to be free
That's an odd thing to say. For those of us that aren't Capital One customers, we do have to pay, because the Capital One service you use is not available to us. It's not some web service like PayPal we can sign up for on a whim either; opening a 360 account with Capital One requires an application, a credit check, an existing checking account with another bank, etc.
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.
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.
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.
Edit - reading some of the comments perhaps it's about convenience - 4-5 day wait, I don't know my account number, etc.
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.
If you'd like a method for processing ACH where those three things aren't a problem, gimme a holler - email@example.com
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?
>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.
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!
We're still working on the international story. I care about it a lot, regulations are hard. :/
Thanks! We're pretty interested in cryptocurrencies at Balanced . Would love to have your support on this project:https://balanced.crowdhoster.com/let-s-push-to-debit-cards/c...
> what kinds of debit cards can be used
This will work with any US-based debit card. Regulation is hard, still working on the international story in general.
> I'm even interested if something like this will make it easier to exchange cryptocurrencies remotely without going through a central exchange.
Can you expand on this a bit? I'm not immediately seeing the connection.
Cryptocurrency exchange is currently against our terms, "Prohibited Transactions" -> "(18) currency exchanges or dealers" and "(49) virtual currency or credits that can be monetized, re-sold or converted to physical or digital goods or services or otherwise exit the virtual world," in https://www.balancedpayments.com/terms/selleragreement . This is due to our upstream providers.
We're interested in working with them to work around such things, but haven't been able to yet: https://github.com/balanced/balanced-api/issues/204
I've been heavily involved in Dogecoin, and I'd love to see BTC/LTC/DOGE payments, but there's a lot of unresolved questions.
As a side note, out of curiosity, what do you see in Dogecoin over Bitcoin or Litecoin?
Yup, this is one of a bunch of problems. For example, "no chargebacks" is great for merchants, but bad for consumers. And while coinbase does support a simple charge, they don't have any way of doing things like holds.
As for Doge: http://words.steveklabnik.com/how-dogecoin-changed-my-perspe...
In the end, I think it makes sense that it should be the merchant's task to handle the refund requests. If the possibility is not built-in to bitcoin, why do you feel that you should make it? And of course, there would be no need for holds.
I actually did read that article in the past, didn't realize that was you. It may be interesting as a phenomenon, but I certainly wouldn't hold Doge in higher regard than Bitcoin, which has a much larger network.
Right, but the merchant is our customer, it's our job to make their lives easier.
And regardless of the details, my point is that you have to think about this case and others, and then make a call: it's not simply drop-in.
> If the possibility is not built-in to bitcoin, why do you feel that you should make it?
Consumers feel safe using their credit cards because of things like chargeback protection. If Bitcoin is really going to become a thing, it will need to have consumer protections built in. Doesn't have to be at the protocol layer, but it does need to exist in some form.
> which has a much larger network.
Depends. Yes, it's much larger now, but Doge is exploding in popularity. It has a higher trading volume than BTC, and has a bigger network (measured in hash rate) than Litecoin.
Don't underestimate the power of Reddit to turn memes into something big. I agree it's not there yet, but it could be.
Please be successful!