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ACH Debit #2

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matin opened this issue Aug 17, 2012 · 145 comments
Closed

ACH Debit #2

matin opened this issue Aug 17, 2012 · 145 comments
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@matin
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@matin matin commented Aug 17, 2012

Balanced only allows for pulling money in from credit cards. ACH debits enable the following use cases:

  • merchant initiated refund to a buyer after the merchant has already received their money
  • debiting a merchant in the case of a chargeback by a buyer
  • large transactions that can't support the variable fee associated to credit card payments

UPDATE

ACH Debits are now supported, visit https://docs.balancedpayments.com/current/?language=bash#debiting-bank-accounts for more information

Email us at support@balancedpayments.com to get in the beta!

Pricing
image

@matin
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@matin matin commented Aug 17, 2012

See also #3

@chadwhitacre
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@chadwhitacre chadwhitacre commented Aug 17, 2012

+1

@chadwhitacre
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@chadwhitacre chadwhitacre commented Aug 21, 2012

Am I wrong in thinking that this would be something along the lines of 25¢ pay-in transactions? That would be huge. Credit card fees are painful.

@matin
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@matin matin commented Aug 21, 2012

@whit537 haven't finalized the pricing yet, but 25¢ to 50¢ sounds like the right ballpark

@matin
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@matin matin commented Aug 22, 2012

from @femgineer

What's the current pattern for refunds? As in, how quickly would a buyer request a refund? What is the volume of refunds being processed on e-commerce sites. I ask because everyone is talking about abuse and when is the appropriate time to issue a refund.

Can you clarify what you mean by "refund"? Are you talking about refunding a card transaction or a seller initiated refund, which would require debiting the seller's bank account.

When are you anticipating this going live?

In September. ACH debits is something we have to do, but we need to prioritize against other highly requested changes that are blocking some customers from going live altogether. The more people that comment here and comment on #3, the faster we can move.

@jjhurlock
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@jjhurlock jjhurlock commented Aug 22, 2012

+1 for Pessimistic. ACH debits are a requested priority and a September launch would be great. In my situation most buyers prefer to be debited via ACH because the large transactions can't fit on their card.

@jkwade
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@jkwade jkwade commented Aug 23, 2012

@whit537 Unlike @jjhurlock's use case, you'd want to debit a buyer's bank account for a relatively small amount (~$10):

  1. Is this purely to avoid the processing fees associated with credit cards?
  2. Are your buyer tolerant of a pessimistic ACH debit work flow?
@dsog
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@dsog dsog commented Aug 23, 2012

+1 I love where this is going :).

@femgineer
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@femgineer femgineer commented Aug 23, 2012

@matin So I get the concept of a large transaction not fitting on the card, but would a seller also have the option to use ACH in the event they do not want to pay the large fee associated with the large transaction? I'm guessing that is something that BizeeBee would to have to offer right?

@femgineer
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@femgineer femgineer commented Aug 23, 2012

@matin Also I meant a seller initiated refund, because those are the only types of refunds we would be dealing with on BizeeBee.

@chadwhitacre
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@chadwhitacre chadwhitacre commented Aug 23, 2012

@jkwade

Is this purely to avoid the processing fees associated with credit cards?

Yes.

Are your buyer tolerant of a pessimistic ACH debit work flow?

Dunno, need to think about that more. The pessimistic flow means ~four days before money is available to gift back out, right?

@matin
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@matin matin commented Aug 23, 2012

@femgineer you could use it at any time

@matin
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@matin matin commented Aug 23, 2012

Dunno, need to think about that more. The pessimistic flow means ~four days before money is available to gift back out, right?

@whit537 not certain. I contacted a few banks yesterday to see the level of service they could provide. Not all banks are equal. I'll post an update here when I have more info on getting the time down, which is a huge component of the experience.

@spenczar
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@spenczar spenczar commented Aug 23, 2012

Holy moly, this would be extremely valuable to us at ZeroCater - very excited to follow this.

@timnguyen
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@timnguyen timnguyen commented Aug 25, 2012

@whit357 and for people looking to ACH strictly to avoid processing fees.

Anecdotally, we've seen lots of people be fairly hesitant about having to provide bank info. Many actually prefer check even with the longer delay and greater inconvenience required to actually cash the check. Additionally there have been studies and speculation positing that credit cards make consumers more likely to spend.
http://www.psychologytoday.com/blog/ulterior-motives/201001/spending-and-credit-cards
http://www.npr.org/templates/story/story.php?storyId=92178034
http://spectrum.mit.edu/articles/normal/the-psychology-of-spending/

I'm not saying ACH in is bad and I agree that card fees suck, but the above evidence makes me skeptical that ACH payment would be a very good solution for low value transactions, whimsy purchases, or marketplaces with short-term customer-marketplace relationships.

@jjhurlock
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@jjhurlock jjhurlock commented Aug 25, 2012

@timnguyen Regarding ACH payments for large transactions that can't fit on a single card. Could a user who is hesitant to provide their banking info have the ability to pay simultaneously with two cards? I know Apple.com allows this feature at checkout.

@spenczar
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@spenczar spenczar commented Aug 25, 2012

@jjhurlock I don't know about @timnguyen, but in my experience at least, payers don't always have two cards. The usual answer is to split the transaction into several charges over several days. ACH debit would be welcome to replace that awkward practice.

@timnguyen
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@timnguyen timnguyen commented Aug 25, 2012

@spenczar I absolutely agree that ACH debits is hands down the better solution for large transactions. That's where both card limits and card fees become very very significant issues. All I'm saying is that for low value general e-commerce transactions ACH for payment is lacking/needs lots of work. I forgot to mention earlier though, I think the major use case for splitting across cards is with prepaid/giftcards.

@jjhurlock Currently marketplaces can already create multiple debits with different payments instruments for the same user through balanced. The caveat is that I'm not sure what is the best way to arrange the UX for the form on the marketplace's end.

@KRecht
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@KRecht KRecht commented Aug 27, 2012

We vote for both ACH for customer transactions and for merchant refunds @venuebook.

@matin
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@matin matin commented Aug 29, 2012

@spenczar @khussein @KRecht @jjhurlock @whit537

What do you expect the average size of ACH debits for you to be?

You can send this number to me directly: support@balancedpayments.com

@franklangston
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@franklangston franklangston commented Aug 30, 2012

Big upvote here! Crucial for handling refunds and chargebacks because merchants want their money quickly, but that means they have to get it back in for those scenarios. Receiving buyer money via ACH is also a positive.

@rmanisha
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@rmanisha rmanisha commented Sep 13, 2012

What would be the limit on ACH Debits?

@matin
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@matin matin commented Sep 13, 2012

@rmanisha there won't be one in the API, but the customer's bank may impose one for that particular customer.

@matin
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@matin matin commented Sep 13, 2012

matin added a commit that referenced this issue Sep 14, 2012
@charliepinto
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@charliepinto charliepinto commented Sep 14, 2012

I'm pretty late to this conversion. I apologize if my below questions are already answered:

ACH Credits: Do you expect to impose a limit on the number of transactions per day? Is there a limit on any particular transaction size? Do you expect to impose reserves?

ACH Credit Batching: How often and when can we batch transactions to our merchants? Will you follow strict times when you initiate instructions?

ACH Return Error/Corrections: How will you handle errors and corrections? Will you provide a smart error and return responses (e.g., frozen account, account closed, insufficient funds, invalid account number, invalid routing number). In our experience, the error responses are very helpful for risk management. Also, if a credit fails, will you automatically retry during the next ACH cycle? Some users input incorrect bank information (invalid account/routing number) and we would like to know so we can tell the user why they credit failed.

@gbelote
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@gbelote gbelote commented Jun 28, 2013

@matin a cap would be a very welcome addition for us since we've had a few $25k debits and currently run larger payments outside of BP due to cost.

@benblair
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@benblair benblair commented Jun 28, 2013

@matin FWIW, a $20 cap on ACH debit would definitely get us to switch our transactions to balanced. We're mostly in the $20-50k range per transaction.

@mahmoudimus
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@mahmoudimus mahmoudimus commented Jun 29, 2013

again, just to re-iterate what @matin said, email support@balancedpayments.com get in the beta for ACH debits.

@bbry
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@bbry bbry commented Jul 1, 2013

I have done a great deal of research into companies who only provide ACH transactions via their own API's. I have to reinstate that charging 1% is crazy high. On average I was quoted $00.25 that is twenty five cents total, not $00.30 + 1%, just $00.25. $00.25 is the top price and it was lowered with increased usage. Balanced might have a good API but it is not worth using it when comparing the costs involved to other companies offering the same services.

@erikcw
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@erikcw erikcw commented Aug 8, 2013

I agree. 1% is very high based on my research.

I understand that you guys have to eat, but it just doesn't seem competitive. I've been getting quotes for $0.25 per transaction. Of course, if the business doesn't do any significant volume, then the nice Balanced APIs/speed of integration might make it a worthwhile tradeoff. But your clients are just going to migrate to other solutions as their processing volume climbs. Balanced's competitors' APIs aren't that obtuse!

@whather
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@whather whather commented Aug 8, 2013

I'm fine with the 1% fee, as our margins are over 20%.

However, we can't use it because of the account verification piece (where
the buyer has to verify the 3 micro payments balanced sends the account
before any transfers are allowed). Most of our buyers don't have direct
access to the business bank account they use, and therefore can't verify. I
wish there was a way around this.

On Thu, Aug 8, 2013 at 10:43 AM, erikcw notifications@github.com wrote:

I agree. 1% is very high based on my research.

I understand that you guys have to eat, but it just doesn't seem
competitive. I've been getting quotes for $0.25 per transaction. Of course,
if the business doesn't do any significant volume, then the nice Balanced
APIs/speed of integration might make it a worthwhile tradeoff. But your
clients are just going to migrate to other solutions as their processing
volume climbs. Balanced's competitors' APIs aren't that obtuse!


Reply to this email directly or view it on GitHubhttps://github.com//issues/2#issuecomment-22340943
.

@bbry
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@bbry bbry commented Aug 9, 2013

There is never a reason to leave money on the table. A $500 ACH transaction equals a $5 transaction fee. So for example say you have 5,000 customers paying $500 or more(since there is a $5 cap), that would be a balanced payments fee of $25,000 fee VS a fee of $1,250 with other ACH processors who charge only .25 a quarter per transaction. That is a huge difference of over $23,750 you would loose.

@jkwade
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@jkwade jkwade commented Aug 10, 2013

@whather @erikcw

Please note we've updated our pricing. ACH Debits now cost 1% + 30¢ with a $5 cap.
image

@bbry
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@bbry bbry commented Aug 10, 2013

Yaha @jkwade I know it is still a rip off compared to other ACH providers as you will see in my example above.

@matin
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@matin matin commented Aug 10, 2013

@bbry The original goal was to provide something that is price competitive by starting at $1 per transaction. We realized that the business case didn't make sense in compared to other priorities like international, foreign currency support, etc. More info in my previous comment: #2 (comment)

We revisited offering ACH debits when several customers requested that we reconsider if they were willing to pay more. After enough customers encouraged us, we moved forward. We've had the goal to continually reduce the pricing. Adding a $5 cap was the first step. The plan is to reduce the cap in increments as it makes sense.

@lay2000lbs
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@lay2000lbs lay2000lbs commented Aug 10, 2013

I just want to jump in to state that I and my business are very happy with the ACH pricing schedule. There is an obvious selection bias to only get negative comments on a post like this so I want to say thanks for making this happen and this is a huge value add for us.

For us, we're not trying to build the cheapest product, we're building the best product and often times that means you need to pay a higher monetary costs to build a system that has other major advantages. If we were looking for cheap we would have opened our own merchant account and been processing our own payments. Likewise with ACH, they are plenty of cheap providers.

A lot of this boils down to your business model and market. If you're using ACH for traditional use cases and going against existing providers your are already in a losing margins battle. But if you are using ACH in a novel manner than the $5 fee may actually be incredibly competitive.

@bbry
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@bbry bbry commented Aug 10, 2013

That is very encouraging to hear that you are working on lowering your pricing further. Keep up the good work.

@satiani
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@satiani satiani commented Aug 20, 2013

Can you please update the documentation on balancedpayments.com?

https://docs.balancedpayments.com/current/api.html#debits says:

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.

The "info on ACH debits" links to this github issue. Furthermore, this link https://docs.balancedpayments.com/current/api.html#bank-account-verifications says:

NOTE You'll only need to verify a bank account if you're planning to later debit that account, which is a functionality only available through our ACH Debits private beta. Email support@balancedpayments.com to request access.

As I understand things, ACH debits is out of beta.

@matin
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@matin matin commented Aug 21, 2013

@satiani thanks for the catch.

ping @cieplak @remear ^^^

@remear
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@remear remear commented Aug 22, 2013

Thanks, @satiani. This should now be fixed.

@jondkinney
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@jondkinney jondkinney commented Aug 31, 2013

Came here from https://www.balancedpayments.com/help#q127 seems like that q&a needs to be updated?

@chadwhitacre
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@chadwhitacre chadwhitacre commented Jan 8, 2014

Why is this ticket still open? Balanced has offered ACH debits for months now, right?

@steveklabnik
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@steveklabnik steveklabnik commented Jan 8, 2014

It'll get closed soon, don't worry.—
Sent from Mailbox for iPhone

On Tue, Jan 7, 2014 at 11:20 PM, Chad Whitacre notifications@github.com
wrote:

Why is this ticket still open? Balanced has offered ACH debits for months now, right?

Reply to this email directly or view it on GitHub:
#2 (comment)

@bbry
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@bbry bbry commented Jan 15, 2014

I am still waiting for ACH debits to cost as much as other ACH processors at apx $.20 a debit or credit.

@jtoth55
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@jtoth55 jtoth55 commented Jan 15, 2014

Same here, my site is for landlords accepting rent payments from tenants, however rent payments are always going to hit the $5 fee limit, which isn't competitive with other services the tenant could use for sending the rent.

I love the Balanced API so I'm OK with the fees being a bit higher than other services like Dwolla (which has a terrible UX), but $5 is way too much. We're talking ACH here, not credit cards, so we would expect cents rather than dollars for the fee. Then I can add a little more to the fee for myself and have a viable business model for my site!

@bbry
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@bbry bbry commented Jan 15, 2014

@jtoth55 curious what the url to your landlord site it

also I agree @jtoth55 if dwolla can charge $.25 per a transaction then there is no reason that balanced can not follow, because no landlord is going to pay $5 when they currently pay zero when cashing a check. Or any other business that deals in high dollar amounts.

@jtoth55
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@jtoth55 jtoth55 commented Jan 15, 2014

@robertdoneill
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@robertdoneill robertdoneill commented Feb 12, 2014

@bbry just curious who you've found that charges $0.20 per ACH transaction.

@bbry
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@bbry bbry commented Feb 12, 2014

@robertdoneill some ACH processors in no particular order are
forte.net
achworks.com
checkgateway.com
While some of them do have a monthly fee(apx $20), that is a lot creeper then paying $5 for every transaction if you are doing high ticket transactions like collecting rent.

@robertdoneill
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@robertdoneill robertdoneill commented Feb 12, 2014

@bbry thanks for the help! I totally agree. Especially since (in my case where there are just b2b transactions) the "risk" they are pricing for doesn't even apply.

Its really a shame, the service is really great otherwise.

@steveklabnik
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@steveklabnik steveklabnik commented Mar 11, 2014

We support ACH debits.

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