Why Your Australian Startup Should Bank with NAB | Hacker News Reader

Why Your Australian Startup Should Bank with NAB

blog.coinjar.io

48 pointszhoutong19 comments

It is the routine practice of banks that, if they close one account for security concerns, they will close all affiliated accounts. They will also likely flag you personally for enhanced scrutiny should you ever attempt to do business with the bank again in any capacity. Ask if you're confused why this would happen.

As to why a bank might be leery of having a Bitcoin exchange operating on it despite you having only ~1% disputed transactions at present, they don't merely have to cover your risk today, they also have to cover your risk in the future, against both the risks which you are presently exposed to and cognizant of and those which you are not. A lot of the failure modes in running a financial services operation leave you to wake up to a database which suggests that you owe millions and a bank account with $0 in it.

Your bank has a very acute understanding of that risk, and does not want to be holding the bag if CoinJar should happen to explode, hence they declined your business.

n.b. I am trying to avoid saying "Bitcoinica" because I believe in fresh starts, but the word does not have zero relevance here.

Thanks patio11 for the insight.

Of course we fully understand and respect the bank's decision if they choose to close our business account. We already had the intention to close the account anyway. What's unacceptable is the total lack of communication (especially when they refused to stop incoming transfers to prevent further fraudulent transactions). On top of that, we have already built in an advanced fraud prevention system (partly outsourced to a YC startup in this field) and in most instances fraudulent transactions were caught. However there was no opportunity or channel for us to discuss anything with the bank.

Personally I have no complaint regarding their decision. This blog post written by my co-founder is more of a contrast of totally different reactions of two big banks in Australia. One of the transactional banking specialists in our new bank attended our startup pitch, and quickly arranged a meeting with us to discuss the products and services they can offer. Not only they acknowledged the risk of our business model, they gave us a great deal of valuable advice and we discussed a new approach to transaction processing (which will launch in September). With regards to the risk, we were more than happy to put up a security to take more control over the banking arrangements and they're happy to give us relatively customized solutions.

EDIT: Regarding the personal accounts closure, I was severely affected in terms of my personal life and financial wellbeing, because majority of my financial transactions happen with Commonwealth Bank and my only credit card is with them (and it's blocked with full balance due Sep 2). Half of the cards in my wallet became useless overnight. Technically speaking, they have every right to do this and I don't think their Code of Banking Practice will ever protect me in this circumstance. I believe that it's a fine line to draw between "security risk" and "blatant discrimination". Unlike in the US, the "good behaviors" in one's credit history aren't freely transferable between financial institutions (only the "bad events" are recorded and shared). To me, the personal banking relationship is a lot more than just an account number and some dollars. It concerns the mutual trust between the bank and me that both parties have spent real effort and time building and maintaining. I'm a business guy and I know what the bank is doing can be considered "right", but in the end I feel socially worse-off and discriminated against just because of their issue with one of my startups.

Keep us posted on how it goes with NAB.

I'm with Westpac (cost, convenience, pretty decent service so far), but if NAB pans out as better for heavily transactional businesses then I will switch.

Adding to my last: I asked a banking friend of my acquaintance about your situation.

He says it looks like Commonwealth Bank are in breach of their own terms. Hie thee to the Financial Ombudsman and give them hell: http://www.fos.org.au/

Good reason to generally use a different bank for your personal banking and your business banking especially if your business model is potentially high risk in the eyes of banks.

Welcome to the murky world of the Third Party Payments Aggregator (TPPA).

You look enough like one that every bank in the universe hates you. Why? Because no goods or services are being exchanged in an easily-reversible way.

When a chargeback happens, it is the processing bank who must immediately make good. Not you the merchant. The bank.

As you can imagine, they really don't like that. And so different businesses are treated differently. If you buy and sell physical goods, you are less likely to have your account locked because there is the option for repair, return or replacement as part of the settlement. You are more likely to have physical assets that the bank could seize. A shopfront address where they can send process servers. Etc etc.

But a TPPA takes money in one hand and sends it with the other. The entire model is moving money to and fro. That means, when a chargeback hits the bank ... you might have stopped being to and become fro.

Unsurprisingly, TPPAs have an unusually rate of both chargeback (shady "subscription" schemes) and of there being insufficient deposited cash on hand when a chargeback arrives (ditto).

That you put in an anti-fraud system doesn't really matter to a bank. Anybody can say they did. What you get is a polite nod; they will still feed your business model and transactions data into their own anti-fraud system. If you score badly, expect to be frozen. Especially if you start moving transactions of a size that attract the interest of AUSTRAC.

Finally, the Commonwealth Bank is a retail or consumer bank. That's its history, it's baked right into their operational DNA. Both NAB and Westpac are generally considered to be better at business banking. I've no idea what ANZ's reputation is meant to be.

I suspect NAB got Pin because they're the only bank allowing you to deposit multiple currencies in a single account. Everyone else requires you to open separate accounts for separate currencies.

How do I know all this? The business model I'm working on is a TPPA. When I discuss it with banks, what they want is a locked reserve that they can get chargebacks from. The most generous I've been quoted is 30% of my cash locked for rolling 90 day increments.

> I suspect NAB got Pin because they're the only bank allowing you to deposit multiple currencies in a single account. Everyone else requires you to open separate accounts for separate currencies.

NAB also has Braintree, likely for similar reasons.

From what I know, NAB's Foreign Currency account is still single currency. You need 10 accounts if you need 10 currencies, with $40/month fee if balance is lower than $20k. The benefit is with their Merchant Account, which can offer settlement to foreign currency accounts with a single interface.

I've never seen any other major bank in Australia publishing any foreign currency offering for credit card processing.

Braintree is not a small player, so it's highly likely that they are able to get customized proposals from different banks and the choice of NAB should be a lot more than just the existence of a published product.

Sounds like I misunderstood the structure. Thanks.

For those interested, there's a discussion on Reddit (posted by my co-founder) as well: http://www.reddit.com/r/Bitcoin/comments/1ke0ro/commonwealth...

FYI I heard something a couple of weeks ago about ASB (NZ's CommBank subsidary) refusing to transact a fx transfer to a foreign based btc exchange.

Hi All,

If you wanted the contact at NAB, my email: Ben.harberts@nab.com.au and phone number is 0400 953 898. Cheers PS. Pan69 - years of pdf statements are available on both personal accounts (3) and business accounts (7) from electronic channels. Pps. There are bozos everywhere, grumpy!

btw - not calling you a bozo.

Thanks for the information on Commonwealth. As soon as I stop being a student (another 3 months) I am ready to bail from them, just because I had a dollarmite account with them 22 years ago doesn't mean I should be a customer for life.

I have never seen an industry that so dispises it's own clients/puppets. I mean, they don't even inform you when they close your business-account. And when you try to call (like any sane person would when her company can't process payments) there is no clear message.

Also; the Obama adminsitration has already used the banks to reach their own goals (WikiLeaks and Credit Card companies anyone?). Apart from that, they have used the threat to remove countries from the SWIFT system, denying all of a nation's companies and citizens access to any payment-system...

There's a moral to this story that runs deeper than not banking with shitty banks, and that's to always have a backup. Backups aren't only for data, but for key infrastructure (hosting providers, merchant providers, banks, phones, etc) too, in which a failure of one would means a serious hiccup. Having a backup can make for a faster recovery.

Even when it comes to things like a personal bank account, always have another live account with some other bank that's not within the same banking group! Debit get lost, accounts get phished, egregious meltdowns happen[0], or some retailer swipes your card so many times to get an auth on a laptop you're buying that you end up with no available funds!

[0] http://www.theguardian.com/money/2012/jun/29/natwest-fiasco-...

I quit Commonwealth for other reasons years back. Australian banks are in general pretty terrible, with high fees. They also refuse to adopt the IBAN as they don't want the ultra sophisticated service of cross-border financial transfers to become commodified (thus, impossible to leverage unrealistic fees and delays against). They also refuse to answer queries along this line (source: high value payments clearing committee, 1+ years of email queries with some responses, but no answer)

Just wait until you find yourself having no longer access to your statements. NAB can't even run a simple query that looks further back in time than 3 months. Oh, you can get a printed statement for which you will have to pay.

NAB is a freaking disaster and I strongly recommend anyone to stay from these bozos.

Wonder at whose behest they did this.

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