Balanced Will Release an API to Push Money to Debit Cards | Hacker News Reader

Balanced Will Release an API to Push Money to Debit Cards

blog.balancedpayments.com

66 pointssteveklabnik50 comments

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.

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

I know it isn't bad if you know the person is at the same bank, for example most of my friends bank at Chase so we can transfer money via wire for free.

Right, I personally use Chase's "QuickPay" feature a lot. I would imagine that most people don't think of that as a 'wire transfer' though.

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."

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.

Nothing is completely secure. Giving out Credit/Debit card numbers on a website can lead to theft too. Giving out bank account numbers can to. In both cases consumer is indemnified as along as they flag the transaction within 60 days. The problem is the hassle of dealing with the banks etc.

Wire transfers cost money in the U.S. essentially it seems like a way for a bank to make extra money to me (since it really takes little effort to transfer money). That's part of the reason paypal and bitcoins have been fairly popular in the U.S.

Automated Clearing House (ACH) transfers are usually much cheaper than wire transfers (often free at credit unions).

http://www.mybanktracker.com/news/2013/03/20/ways-send-money...

Wire transfers are generally free within the UK/EU and very fast (bank-to-bank in the UK usually only takes a few hours at most).

I love how we've been trained to think that a few hours is fast. Only takes 30 days for me to clear an international cheque!

In the UK they're pretty much instant. In my experience if it doesn't hit the account by the time you login to your online banking, something's gone wrong.

Like everyone else on this thread said, wire transfers cost money here in the US. I think what the EU considers a wire transfer is different than what we do here in the US. Wire transfers here require a bunch of information and are painful.

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.

As someone who spent a lot of time in the UK/EU and is now back in the states, I'd love for someone with insight/experience in the EU/UK to explain how the economics make it possible for a system of banks to talk to each other without charging the users.

The US economics are pretty simple - banks know they can charge for it.

I am from the US as well, and am not a lawyer, but my understanding is basically

TL;DR: regulation

* http://en.wikipedia.org/wiki/International_Bank_Account_Numb...

* http://en.wikipedia.org/wiki/Single_Euro_Payments_Area

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.

If I use your reasoning then Americans should be as afraid to write paper checks since each check has the owner account number on it, hence anybody who gets a paper check can syphon money using ACH. Not really! (Paper checks - even today - move more money than Credit/Debit cards)

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.

I'm an american, and I've never paid to transfer money to another bank account, even at another bank. Im not sure why people would pay for that, other than not knowing they dont have to.

edit: If people are curious, its this: https://home.capitalone360.com/p2p

> Im not sure why people would pay for that, other than not knowing they dont have to.

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.

at rentsent, we've been using Dwolla as an abstraction layer for bank accounts - it's not fast, but it is pretty cheap, and a lot easier than having to remember someone else's bank account number

Wire transfers != ACH transfers

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

Transfers are not usually free for business accounts.

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...

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

Such an API already exists, you can get it directly from Visa: 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.

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.

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.

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.

People have their debit cards in their pockets. ACH account details are not as readily available to most people.

Agreed - I was trying to figure out whether or not this was actually the problem. That's the problem I'm setting out to solve with ACH, so I was trying to see if myself and Balanced are at least seeing the same customer problem.

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.

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

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?

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.

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

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.

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!

Thanks! :D

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

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.

Hey, Balanced employee here.

> 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.

I was thinking I could use this some how to create a process where two users can initiate and complete a trade between themselves.

Gotcha. Thanks, I thought you meant sending BTC to cards somehow.

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.

What do you think of partnering with Coinbase or Bitpay to allow bitcoin payments to be deposited into the "escrow" account as USD? The only question would be how refunds would work, but certainly there can be a solution to that.

As a side note, out of curiosity, what do you see in Dogecoin over Bitcoin or Litecoin?

> The only question would be how refunds would work, but certainly there can be a solution to that.

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...

> 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.

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.

> In the end, I think it makes sense that it should be the merchant's task to handle the refund requests.

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.

(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...

oops forgot this:

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

Oh this will definitely take a bite out of paypal.

Please be successful!

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.

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