Payouts via check #69

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jkwade opened this Issue Sep 12, 2012 · 54 comments

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@jkwade

Not all of our merchants have bank accounts / want to share that information. Could Balanced provide bill pay-style check issuing? If so how much would it cost?

@matin
Balanced member

No plans to provide payouts via checks. Instead, Balanced will focus on ACH (#2) and possibly push money to credit cards (#32).

@matin matin closed this Sep 17, 2012
@mahmoudimus

+1, that's a very acceptable compromise.

@skolos

+1, would be very nice to have this feature

@dickbrouwer

+1 for sure, no one does this today in a developer-friendly way.

@whit537

Big +1 if this would solve international payouts (#23, #44)

@jkwade

Would checks sent to US addresses still be useful? Also, would payout to check be more or less useful than payout to credit card (#32)?

@dickbrouwer
@tonymfn

As a co-founder of an online food ordering business, we could DEFINITELY use checks. We have some old-school clients who are VERY interested in receiving a physical check. These same clients are also VERY resistant to direct deposit. Just saying. Everyone would win.

@Breefield

+1 Especially for our international merchants.

@twanlass

+1 - Checks offer a great alternative for merchants who don't feel comfortable offering personal / banking details.

@ecwilsonaz

+1. This would be an excellent way to drive adoption of Balanced, too. Imagine I have an app which has an option to send a check if the recipient doesn't have ACH set up. With that check, I could include a 1 page marketing piece to expose the recipient to my app. "Here's your check! Want it faster next time? Sign up for an account at myapp.com and receive next-day payments to your bank account. Powered by Balanced Payments"

@EricaGF

+1 We currently issue checks manually, and we're looking into a solution for ACH as well as checks, and it would be great to streamline it into one system.

@laserlemon

👍 to issuing paper checks as an alternative to ACH.

@VKalusani

++1 Would be huge as I would like customers/merchants have option of ACH and Check

@robbiet480

+1 checks would be most useful

@robbiet480

Have to add that it seems that this would solve all edge cases of payments and fills a real need online (Balanced already supports ACH in/out + credit/debit cards + soon bitcoins it seems)

@aacook

Also vote +1. We built out marketplace payments in house before balanced existed. Our supply side is small, local merchants. We started by sending out paper checks and then later added direct deposit with hopes of transitioning to direct deposits. We experienced really bad conversions when we asked our supply side for direct deposit info (both existing supply and new supply). We added 24-hour direct deposits and that didn't change conversions. For any marketplace dealing with small, local merchants, I'd guess they're seeing existing resistance to providing direct deposit info.
I'll admit this could be a design / flow issue, so we plan to run another experiment to see if it's our "ask" for dd info and timing of the ask that's causing such a poor conversion.

@david-l-young

+1 for completeness -- we offer merchants check payout now, but has to be done by hand and can not be automatically tracked in our DB the way ACH payments can be.

@matin
Balanced member

It's great to see so much interest in checks.

What are the best way to manage branding on the check?

Our ACH payments started with "Balanced Payouts" on the recipients statements, and we're correcting that by listing the name of the marketplace or the value specified through the API. A check would need to come from a bank account owned by Balanced, which could create some confusion for the recipient.

Would it be sufficient to list the marketplace name in the memo field?

@david-l-young

Branding is not a huge concern from my POV. Marketplace name in the memo field would be fine.

@matin
Balanced member

@david-l-young the branding is less for the marketplace itself and more to avoid confusion for the recipient. Marketplace name in the memo field could work, but I still have to admit that check payouts is low right now in the list of priorities.

I'll reopen, so we can revisit in the future.

@matin matin reopened this Apr 2, 2013
@aacook

There's certainly some complexity here so I understand why Balanced has stayed away from it. The biggest issues we have with paper checks are:
-The check was never received because the USPS lost it in the mail (this happens surprisingly often).
-The check was sent but isn't received before the desired time, so we have to cut an emergency credit card or direct deposit payment. Then, sometimes the check is cashed by mistake anyways.
-The transaction is cancelled, but the seller already cashed the check, at which point we have no way of getting the funding back. Solution here is to put a credit on file and deduct from the next transaction. Not fun.
-Something totally wonky happens and we need to issue a stop payment.

There are, of course, even more complexities Balanced would have to manage.

I outsourced this to our bookkeeper for the time being, and we're currently looking at check batching/printing services, such as:
https://www.batchex.com/default.aspx

If you don't care about branding, another solution is to use your bank's bill pay.

@matin
Balanced member

@aacook very good summary! You're dead on.

@ecwilsonaz
@EricaGF
@aacook

I wasn't aware batchex shut down.

I've outsourced the check printing to our bookkeeper and we spend about $3-4 per check (excluding the time wasted for the above exceptions). We created an internal dashboard to pull down daily transactions to be paid out via check. Bookkeeper then prints out checks, pulling marketplace fee and including a memo on each check referencing transaction #. Checks are then signed, and we include a quick, personalized note (e.g. sometimes it's a new sellers first booking) on a blank, branded card. Check numbers are entered into the dashboard (and then tied back to each transaction). Then they're mailed out.

$3-4 per check isn't so bad for the time being, especially when it's branded.

At the end of the day, direct deposit is where it's at.

For those of you who have had issues with getting direct deposit info from sellers, do you think it's an interface/flow issue? Anyone willing to share overall conversion with sellers on capturing direct deposit info? I will admit (1) our direct deposit setting is in a weird spot in our settings and (2) we've also been using humans to try and collect that info (team members who are already on the phone w/ the seller for other reasons). So maybe it's just a design issue. Our overall conversion on collecting direct deposit info from small merchants is less than 15%.

We plan to run another iteration soon basically asking for DD info at the ideal time via email. I'll report back w/ conversion in a couple weeks.

@matin
Balanced member

The Balanced team discussed this topic further. I think @aacook explained the issues very clearly. Our biggest concern is not having the ability to reverse checks.

There is currently no intention to offer check payouts in the future. I understand how frustrating that must be to certain customers, and I apologize that we can't find a better way to support this need.

We are still working on improving our ACH payout system, such as our introduction of same-day clearing for payouts to Wells Fargo bank accounts.

@matin matin closed this Apr 5, 2013
@robbiet480

Looks like a great possible Balanced<->Lob partnership!

@g33kidd

LOB + Balanced = Amazing Payment Service :P

@Frankjac

Paper checks is a big problem for paying online sellers through online sites. Would be great to have it handled.

@mahmoudimus

Quora question asking us to elaborate, @matin or @jkwade should answer by linking this Github issue.

@jordanmessina

+1 Balanced<->Lob partnership

@Breefield

There doesn't exactly need to be a partnership here. Two API's, two companies, both paying out funds from your bank account. They offer different pieces of the puzzle, but really I just dropped the link in because LOB provides a solution. A partnership isn't strictly necessary.

@jkwade

@Breefield a direct partnership would make it easier for marketplaces, so they don't have to fund two separate accounts or does Lob pull directly from you bank account?

@Breefield

I think it very well could be the same account, but I am not certain.

@aacook

Update: Lob's URL is: https://www.lob.com/services/checks

Lob is just like your bank's "bill pay" service except with a sweet API layer. So, there is no direct deposit or ACH stuff happening. They just print and send out checks. You don't need to be concerned about integrating accounts/etc. @Breefield is correct.

I don't see him on this thread, but I spoke to Leore from Lob in Jul and he's awesome. As far as I know, the product is still in development. I'll rope him into the conversation to confirm.

To me the concern marketplaces still need to think about is the fact that once the check is sent, you can't just reverse the transaction. You can, but you need to issue a stop payment with your bank, which can cost you $15-20 depending and isn't easily done with an API. If you have a payment flow where the supply side isn't paid out until after the transaction happens, then you should be good.

@Frankjac
@robbiet480

My preferred solution would be to pull money directly from the escrow account that Balanced has for everyone. I'm assuming it's some kind of bank account with a routing/account number, but could be wrong. It would be a pain to have to transfer it to an external account and then have Lob cut a check from that routing/account number.

@aacook

@Frankjac my bad, here's the URL: https://www.lob.com/services/checks

@robbiet480 Thinking through the payment flow, this is what would happen:
You have a marketplace where Bob is the supplier selling cupcakes and Jill is the buyer. Jill buys $25 in cupcakes from Bob. She enters her credit card, which routes through Balanced (or maybe uses her banking info). Balanced holds on to it and uses the schedule you set. When it comes time to do the payout (Bob delivered the cupcakes and Jill loves them!), Bob demands that he be paid by check. This is the dilemma I was dealing with: some of my supply side refused to give me their bank info and would only accept payments by check. So, your app sends a simple API call to Lob, passing Bob's address, pay-to name, the amount to pay out and other custom info (such as check number, memo). Lob then prints and sends the check out and Bob receives it a few days later. Bob then takes the check to his bank and deposits it, at which point your bank withdraws that amount from your account and records the check number used.

So, I guess the complexity is that anytime you have someone on the supply side who demands a check payment, you need to initiate a "refund" to get the funding back into your account or never put it in escrow from the start, instead having the funding go straight into your account.

TL;DR: As long as the "escrow" account is your main bank account where you already write checks from or you're easily able to pull the escrow funding back into your main account, you should be fine.

I'm not an expert on all the mechanics of balanced, but hopefully this is helpful.

@gh-naylor

+1

payout using Western Union or money order would be great too.

@timnguyen

@gh-naylor Big issue with Western Union etc. is the irreversibility of the transactions and the corresponding attractiveness of theses types of transactions with fraudsters.

Since those types of credits would be irreversible you're looking at something very attractive for fraudsters. Additionally you have a separate but related issue that I think most of us aren't yet ready for: this would be linking reversible debit instrument (e.g. credit cards or ACH debits where a buyer can file a chargeback to dispute and reverse the payment) to an irreversible credit instrument creating a possibility of irreversible asynchronous failure where you have your funds collection failing after you've sent an irreversible payment out and you end up holding the bag for the missing funds.

Put it this way, if you're using instruments like checks or ACH credits where you can issue stops or reversals you can fix mistakes or address fraud or other crisises.

@saizai

FWIW: I need a good (preferably ruby) API for physical check writing & mailing (preferably w/ a page insert) — because my company will be paying other entities that don't register with our website, and we just have their official name & address. (Plus there are regulatory issues.)

Can't do ACH if you don't have the payee sign up — nor if the law says 'thou shalt pay by check'.

@leore

@saizai try out lob.com.

Send me an email at leore@lob.com and I can see if we can get you talk about your exact needs.

-Leore

@robbiet480

@mahmoudimus @matin Bringing it up again, since @bavidar jumped in: It would be awesome to see a Lob<->Balanced partnership. Just let me give Balanced my Lob credentials, and have you use the Lob API to send checks. Or at least give me an account/routing number that will let me have Lob cut checks from.

@saizai
@leore

@saizai Great looking forward to working with you.

To anyone else who is in need of checks via an API, dont hesitate to reach out to me at leore@Lob.com

@slugme2

@aacook Thanks for that explanation. So it looks like, if the majority of your sellers are going to be sent checks, then using balanced for a marketplace doesn't really make any sense at all, huh? Physical checks is an absolute pre-requisite to our business model.

@tonymfn, @EricaGF - you still on here? What did you end up doing. Like you, my marketplace absolutely requires checks written to suppliers. Did you go Stripe or Braintree?

@leore

@slugme2 most people here integrated with us at Lob.com. Im happy to help you as well. Send me an email at leore@lob.com

@leore

Hi All,

We just announced another price cut to our Check API (https://www.lob.com/blog/price-cut-on-simple-check-service)

For those that are still looking to send payments via checks. Our on demand pricing starts at $1.50 and our volume pricing gets even cheaper.

@peretzp

am a balanced customer that is looking in to lob for check writing, so lob <-> balanced integration would be amazing for us. specifically, i don't want to have to move money from balanced escrow to a checking account backing lob every time i trigger a lob manual check call...

@leore

@peretzp we actually don't take money out of any account. We just print a check and when your payee cashes the check at the bank, the money will be transferred from your account to theirs.

@peretzp

@leore, yes, I understand that. my meaning is -- if I receive money from a buyer into my balanced escrow account and I want to write a check to the seller with LOB, then I need to transfer that money to a checking account. so the problem is that I cannot (as far as I can tell) write a check that would draw on the balanced escrow account.

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