Ask HN: Who wants to accept Check online? | Hacker News Reader

Ask HN: Who wants to accept Check online?

11 pointsachguy11 comments

I am building a payments product which will help you accept checks online digitally without the customers having to mail you paper checks. Different from e-checks in that there are no NSFs and funds are guaranteed - also the user experience is totally different. More efficient and much cheaper than credit cards. Are you interested in your using it (US only for now)?

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I hate to burst your bubble or anything, but dwolla.com does this pretty well and cheaply. How will you differentiate?

I don't quite follow the "no NSFs and funds are guaranteed" - are you implying that if the transaction is authorized there will never be a chargeback (or equivalent)? I need more info - I can't think of any way you could handle it sustainably.

No worries. dwolla.com I believe uses and existing relationship with a credit union/bank and hence restricts real-time transfers to account holders of that/those bank(s) - which is a small percentage. Additionally it requires signups, SS# etc. so the experience is fundamentally different. The problem is not just being able to make a financial transaction but able to do it easily - when I'm transacting on the Internet the last thing I want todo is signup for yet another service

You're doing real-time payments?? My unanswered questions about no-NSF/guaranteed funds are even more pertinent then... It sounds like you've either got some ridiculously good creditworthiness detection, or you're glossing over a huge issue.

As a money transmitter, I don't know how you'd get around the legal requirements to collect SSN and contact info for US recipients...

Dwolla also has "Guest Sending" - so users don't need to sign up for dwolla to send me money: https://developers.dwolla.com/dev/docs/transactions/guestsen...

As I alluded in my other reply we guarantee real-time authorization, not real-time settlement. Settlement can happen in batch mode using networks likes Check21 or ACH.

No NSF != Guaranteed funds

Any payor has the right to dispute a charge. That is a Federal Regulation (Reg E ) so no payment system can guarantee funds (other than wire transfers which are fund transfers not transactions i.e. not funds paid for goods/services received )

We guarantee no NSFs. With ACH NSFs are a big issue since until the 2-3 settlement is done one does not know whether the funds are going to clear. What the Payor disputes with the Merchant is between Payor and the Merchant

In so far as SS# collection etc. it applies only to the receiver not to the sender. MTA laws apply only if funds are being held.

As far as guest checkout for Dwolla and other services - please try it and let me know how far you can get without signing up for the service... the way I see it is guest checkout is simply deferring sign-up not obviating it.

You arn't explaining much of the actual benefits of the product, but for what you do describe: Bitcoin can also solve all of these problems. Why bother using checks when it's obsolete in 5-10 years?

The issue here is ubiquity. What percentage of the world's population has heard of Bitcoin (< 1%) and what percentage of merchants offer Bitcoin as an option (also < 1%). Checks are something that anybody from college kid to seniors understand.

You are right in predicting Checks will be obsolete - and indeed that is what we are doing. By creating a "digital image" of a Check as oppose to Paper Checks. Paper Checks were not designed for e-commerce. They are a low cost option but mailing a Paper Check for an online transaction doesn't work in today's day and age.

Imagine have a Digital Image of the Check generated and transmittable anywhere over the Internet. Instantly. Or even almost instantly. That is what we are building i.e. getting rid of Paper Checkbooks so nobody has to use those pesky smart phone apps to take a picture of a Paper Check when there is an existing digital image (again think Check21)

Now coming back to Bitcoin: How are you going to acquire Bitcoins ? Mine them (again < 1% of the population)? Probably buy them. Would you rather pay 3% transaction changes to buy say $10K of Bitcoin i.e. $300.00 or would you rather use something like a "Digital Check" for say a fixed transaction cost of $1.00 ?

You realize that checks transfer more money than any other strategy in modern times?

Indeed.

"ballpark" numbers:

Total transactions volume VISA/MC CC in 2013: Appx $7-8Trillion Total transaction volume using paper Checks and ACH in 2013: Appx $70Trillion i.e. 10X

How does it defer from a wire transfer?

I think there are still countries where wire transfers are very unknown or not very common.

A typical payment/financial transaction has two parts, authorization and settlement. In a wire transfer authorization and settlement happen in real-time (they are known as RTGS = real-time gross settlement) i.e. the money is transferred in a single instruction in real-time and once this transaction is complete there is generally no recourse for roll-back. Hence wire-transfers involve high authentication barriers (typically faxing a request with signature or going to a branch) and cost a lot (typically $25 to $50 for outbound transfers) and hence are unsuitable for ecommerce

In our system the authorization portion of the financial transaction happens in real-time but settlement happens in batch (using settlement networks like Check21 or ACH). This makes it feasible for Internet based transactions i.e. ecommerce since authentication can be a simple click on a web page as well as retains the cost structure very low i.e. not just cheaper than wire transfers but also lower cost than Credit Cards.

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