No verification for ACH debits

taylorbrooks commented 11 years ago

Allow marketplaces to debit bank accounts without verifying micro-deposits.

I know fraud and liability are major issues.

From a user standpoint it's a pain to give, then get an email, come back two days later, enter in your micro deposits. Ideally, the donor would enter their bank account, routing number, name, email, and amount and the transaction is processed immediately.

This seems to be the standard with other donor platforms, including those that do ACH.

joshstrange commented 11 years ago

I too would like this, Also please update your docs to make it VERY clear that verification IS required. The line "NOTE To debit a bank account you must first verify it." in the same color and size is not ok, especially when you don't have anything resembling a TOC at the top of the page. I coded out an entire contribute form for using bank account and made sure my code could easily use either a card or bank account as a contribution source before I stumbled across that little gem. A ton of time wasted due to the fact that I there was no TOC, if there had been I would have scanned though that and noticed the verify stuff and looked into it.

Also your docs currently say "Currently, Balanced supports only card transactions (info on ACH debits) for debits. To debit an account, i.e. charge a card, you must create a new debit resource." which is not true. I really love balanced but the docs are terrible and there doesn't seem to be anyway for a non-balanced employee to fix them (ie. a repo for pull-requests). For example in the PHP docs you have an example that uses dot-syntax for accessing variables on a class, this is not possible in PHP, it's some sort of ruby/php mixup.

dahjelle commented 11 years ago

+1.

While I definitely get the verification process for a marketplace setting—like PayPal or something—it doesn't make a lot of sense for the OP's (and my) use-case: processing non-profit donations where the transactions are very likely to be one-off transactions. It is perhaps better than requiring a user to create an account to donate, but it still isn't optimal.

Looking forward to solutions you might have.

MDrollette commented 11 years ago

I've seen Yodlee used by other ycombinator startups (coinbase.com) to provide instant account verification (their IAV API is described here http://www.yodlee.com/developers-and-alliances/yodlee-apis/). I'm not sure if/how this could play with Balanced but I just wanted to add it to this discussion.

matin commented 11 years ago

@MDrollette I've looked into IAV in the past, but I'm not sure how Balanced would make it work through the API.

taylorbrooks commented 11 years ago

@matin Is there a way to shift risk to the marketplace? Maybe require marketplaces that want to use no verification put money in escrow?

Not sure how other payment processors do it, but almost all of my competitors don't require bank accounts to be verified.

matin commented 11 years ago

@taylorbrooks that's possible. It's still early for us with ACH debits, and we're still early.

Specifically, we're still trying to see the best way to handle an ACH dispute (similar to a credit card chargeback) when working with a marketplace and how to reduce disputes in general. The process and interaction is very different than card processing.

karmajunkie commented 11 years ago

+1. Unfortunately the issue of verification makes balanced a non-starter for my project, which is a shame because its perfect in all other respects.

pjchristie commented 11 years ago

Instant verification is also critical to the function of my MVP.

nthj commented 11 years ago

One of my guys landed an account with a non-profit PAC last month. We were hoping to run about $250,000 through your systems in one evening: high-dollar donors bringing their checkbooks, but instead donating through mobile at the fundraising dinner. Unfortunately, being required to follow up with them a couple weeks later to ensure they verified their account was a non-starter, and the client decided old-fashioned paper checks were the way to go.

We'd be very open to other ways of verifying payments besides micro-deposits.

tskweres commented 11 years ago

Does anyone know of any competitors to Yodlee, or any other way for instant verification of accounts?

avr commented 11 years ago

We are definitely interested in eliminating the extra verification.

PaySimple has written up quite an extensive PDF covering the way in which ACH transactions can be disputed by a customer. Their "work around" appears to be requiring buyers to explicitly agree to certain terms during checkout and requiring merchants to provide specific information on receipts/confirmation pages. The language of those terms is in accordance NACHA - the organization which oversees ACH.

Here's the PDF: http://www.paysimple.com/paysimple30_help/tutorials/How_to_Authorize_ACH.pdf.

There is a lot of valuable information in the PDF regarding ACH.

One consideration would be to lower the requirement for buyers and place more responsibility on merchants. In other words, still require verification for merchant ACH accounts - but allow buyers to agree to the proper terms/conditions during the checkout process.

We are building a platform with a goal in double digits millions - and this is definitely a current road block for us.

podsports commented 11 years ago

+1 for no verifications for buyers. Maybe make this something you have to apply for to help with fraud? Some marketplaces are inherently safer based on how they identify merchants (open signups vs invitation only/ background checks). If the nature of the marketplace is such that the risk of fraud is lower, there is less risk that someone will use a stolen bank account number to commit fraud.

chrisjcollins commented 11 years ago

Another +1 for no verifications from ACH buyers. Our marketplace has occasional $2,500 - $5,000+ orders, generally from larger institutions like non-profits, churches, universities, & large companies. In almost every case, Credit Card payment is contentious for one of several reasons: (1) The credit card is blocked due to credit limit (2) Large abnormal purchase is marked as fraudulent (3) The person ordering does not have corporate authorization to use a credit card (4) The institution ONLY uses checks.

A huge segment (revenue-wise) of our market operates this way and there are no signs this will stop anytime soon. We end up accepting checks via snail mail and depositing them manually.

The real problem here is the lag time between purchase intent and usable cash money in our account. Someone has to assume that risk and it would be great if it were Balanced, for the proper fee of course ;)

Message me if you want any more details.

Chris

todgru commented 11 years ago

+1

bride91501 commented 11 years ago

+1

ntommarello commented 11 years ago

+1. With micro-debits removed, we'll stick with Balanced for a long, long time. Otherwise, we'll eventually be forced to switch to working directly with someone like Wells Fargo.

It introduces way too much friction to the payment process, and we're all about the user experience and making things as easy as possible for our users. i.e., not requiring them to do "bitch work" of remembering to log in to their bank account few days later, search through their transactions, re-log in to Wefunder, then confirm. Since it's a pain in the ass for the users, we generally don't see the funds until 1-2 weeks later.

We don't mind holding some funds in reserve account. Also, in our case, fraud will be less prevalent then your typical viagra discount drugstore - there are no physical goods, and since we're selling securities, there's a signed contract that's void if there's no consideration.

jkwade commented 11 years ago

Could Balanced remove verifications for all Debits associated with a Customer (via the on_behalf_of parameter) that has a non-null ein parameter AND is_identity_verified = true. This would ensure the customer is a verified business.

jbafford commented 11 years ago

It was requested I leave my comments here, so:

For my particular use-case for Balanced, I would require users to verify for both credits and debits.

For credits, because it'd cause a huge hassle (from a technical and customer service standpoint) if someone mistyped their account number and their money went to someone else; also because if they provided an invalid account, I wouldn't want to have to pay the $3.50 failure fee.

For debits, because there'd be the technical/customer service/financial costs to incorrect debits, but more importantly, as a bank account user, I'd want other people to have to verify their account before they deduct from it. If someone managed to mistype their account number so severely that it happened to be mine (or, worse, somehow managed to obtain my account number, which wouldn't really be that hard if it were someone I gave a check to), I would much rather see two micro deposits (which would give me a heads-up that something bogus is going on) than an actual debit that I'd have to challenge.

Remember that a bogus charge on a credit card is ok, in the sense that if dispute a bogus charge, I'm not actually out the money (though it's still a big hassle when I have to change my card number). A bogus charge to my bank account means I'm actually out the money until I go through a recovery process, and I might not ever get it all back. Meanwhile, I may have legitimate debits from my bank account failing as a result of an incorrect debit, and changing my bank account number is a bit more involved than changing my credit card number.

So yeah, while it sucks from a user interface, customer support, and timeliness standpoint to require verification on debits, I think the benefits of verification far outweigh the costs.

One possibility to get users over the inconvenience of verification might be to provide some incentive. The cost for a successful bank account debit is 1.9% lower than the cost of credit card charge, so the merchant might provide a 1% lower cost, or bonus credit, or whatever (basically, split the difference with the user) to encourage verification. Or Balanced might provide that incentive itself, offering a lower bank account charge rate against verified bank charges.

owensav commented 11 years ago

+1 for no verification for ACH debits. This is the one thing that's preventing us from switching to Balanced. It just adds way too much friction for our customers. We would be happy to take on the risk ourselves (e.g., have a security deposit with Balanced).

owensav commented 11 years ago

How about instant verification with online banking credentials, a-la Amazon and others: https://payments.amazon.com/sdui/sdui/helpTab/Amazon-Simple-Pay/Creating-Managing-Your-Account/Adding-Verifying-Bank-Accounts

chrisgo commented 10 years ago

+1 for no verification on ACH debits (for one-time payments)

Currently using this: http://www.vericheck.com/ach-payments/ This is nothing new, other providers include: http://www.firstdata.com/telecheck/telecheck-works.htm

The rates are way cheaper than CC processing but obviously, you guys need to know how to manage the risk per some of the notes above.

MDrollette commented 10 years ago

It seems dwolla does this for their guest checkout feature. They debit the bank account without doing the full 2-deposit verification step http://blog.dwolla.com/guest-checkout/

pmgarman commented 10 years ago

While integrating ACH payments into WooCommerce I've run into this not yet realizing this was required. From an e-commerce standpoint this looks like it could potentially cause lost sales. As a customer you would have to checkout and come back 2 days later to verify your account before your order is ever processed. The account is of course verified for future use... but who's to say how many customers won't come back in two days time due to whatever reason (no longer want the product, "forgot" and never "received" the email reminder, etc).

Maybe a middle-ground would be not to require the verification unless the debits to the account total a certain amount?