Stripe now supports ACH payments

Re:Stripe now supports ACH payments by spenczar5 on Tuesday January 12, 2016 @03:43PM (#10890223)

When I last worked on a billing system about three years ago, we looked so hard to find an ACH provider. There was just nothing out there. This is an enormous advance.

The problem we had was that we issued moderately large invoices monthly - they could be from $1k to $50k. We wanted to be paid quickly, so we tried to convince our customers to pay by credit card (through Stripe) and enable automatic payments, but we had trouble when customers would bump up against credit card limits.

So, for our bigger clients, we were relegated to asking for checks to be sent by mail. This meant we couldn't automatically charge customers every month, and instead needed to badger them to send their check - all of a sudden, we needed an accounts receivable team. We couldn't just ignore the problem since these were our biggest accounts, too.

Stripe's pricing is almost comically friendly here - credit card transactions are usually in the ballpark of 2.7% + $0.30, so even when card limits weren't an issue, we'd be paying out the nose on the transaction - 2.7% of $10k is $270. The new ACH payments would cost just $5.

Anyways, this is a serious accomplishment. The underlying banking regulations and technologies around ACH are thorny. Good job, Stripe!

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Re:Stripe now supports ACH payments by DrJokepu on Tuesday January 12, 2016 @04:46PM (#10890653)

It's insane how expensive financial transactions are in the United States. In the UK, the equivalent of an ACH transaction would be a BACS payment, which costs roughly 30p ($0.45) for a small business per transaction, although some banks will do them for free. Many smaller businesses however would just use Faster Payments Service for payments under £10K, which is like wire transfers in America, except they rarely cost more than 25p ($0.35) and once again, many banks will process FPS payments for free for small businesses.

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Re:Stripe now supports ACH payments by bebrown2 on Wednesday January 13, 2016 @03:19AM (#10892980)

Bank transfers don't really cost $5. The typical price for an ACH transfer is more like $0.05, down to $0.01 at scale. Stripe is making a nice profit on these because it's really hard to get an FI to do this for you if you are a startup.

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Re:Stripe now supports ACH payments by superuser2 on Wednesday January 13, 2016 @02:58AM (#10892917)

The infrastructure is there. The government operates a realtime gross settlement system with ~$1/transaction cost to banks (FedWire). It even has the very nice security property of being push-based rather than pull. The problem is that banks all seem to have agreed to charge $25/transaction for it.

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Re:Stripe now supports ACH payments by pjc50 on Wednesday January 13, 2016 @06:02AM (#10893505)

The problem is that banks all seem to have agreed to charge $25/transaction for it.

I believe in America this is called a "free market".

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Re:Stripe now supports ACH payments by DrJokepu on Wednesday January 13, 2016 @10:59AM (#10895226)

I mean, there is also a free market in the UK, yet Faster Payments Service transaction cost a fraction of what wire transfers cost in America, so what's the difference?

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Re:Stripe now supports ACH payments by pjc50 on Wednesday January 13, 2016 @03:19PM (#10897157)

To explain the joke, the US system is cartelised, while the UK one is under a bit more political and regulatory pressure to treat customers fairly.

(Not that we haven't had a problem with BS fees or the payment protection insurance scandal!)

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Re:Stripe now supports ACH payments by tomschlick on Tuesday January 12, 2016 @04:52PM (#10890700)

It's because of all the fraud on the backend they have to fight. I'm sure banks would like nothing more than to have a simple system where they only charge half as much but net 2x the transactions. Lots of overhead with fraud.

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Re:Stripe now supports ACH payments by toomuchtodo on Tuesday January 12, 2016 @05:31PM (#10890912)

It's not. It's because the largest banks are all stakeholders in the Automated Clearing House system, they make far higher margins on faster out of band methods (wire transfers), therefore it doesn't behoove them to improve.

There is some progress being made though, slowly and painfully.

http://www.npr.org/sections/money/2013/10/04/229224964/episo...

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Re:Stripe now supports ACH payments by jslampe on Tuesday January 12, 2016 @05:44PM (#10890989)

I should also note that there is powerful Fed-chartered initiative, called the Faster Payments Task Force, going on right now. It combines +300 of the nation's payment stakeholders (including big banks, networks, retailers, etc). We've made a ton of meaningful progress on speed, standards, and more.

Big news coming in the next few weeks...

(learn more at https://fedpaymentsimprovement.org/)

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Re:Stripe now supports ACH payments by toomuchtodo on Tuesday January 12, 2016 @05:46PM (#10891003)

Thanks for the effort, and for posting this.

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Re:Stripe now supports ACH payments by johne20 on Tuesday January 12, 2016 @08:23PM (#10891689)

I had no idea about this. Thanks for posting this and make sure to post an update on your "big news".

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Re:Stripe now supports ACH payments by nowarninglabel on Tuesday January 12, 2016 @10:56PM (#10892231)

This is interesting, would like to see how it might help Kiva some day more efficiently transfer money in the U.S.

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Re:Stripe now supports ACH payments by bebrown2 on Wednesday January 13, 2016 @03:22AM (#10892995)

Thanks for your contributions to the FPTF, Jordan!

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Re:Stripe now supports ACH payments by tzier on Tuesday January 12, 2016 @07:16PM (#10891426)

Same Day ACH has been in the works for a while; however, a payments expert I spoke with said all the big banks are opposing it since (a) they make more on wires, as mentioned, and (b) most of them have in-house same day transfers, so it's an argument for opening multiple accounts with them vs at different institutions.

https://www.nacha.org/content/same-day-ach

The electronic financial system in the US is an embarrassment, to be honest. Instant transfers have existed in other countries for years. The only platforms that allow instant payments require (a) holding money in their bank account (e.g. your Venmo balance) and (b) the companies to comply with incredibly stringent money transmitter laws.

From what I've heard, Stripe doesn't make much from CC transactions (hence why almost all providers are at the same pricing). ACH costs fractions of a penny, so even if they only make $5 it's nearly 100% profit.

[Note: I'm not a payments expert so would love if someone who is could (in)validate all the above.]

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Re:Stripe now supports ACH payments by bebrown2 on Wednesday January 13, 2016 @03:22AM (#10892993)

Large banks aren't opposing faster payments anymore. It's my understanding that the NACHA membership voted to approve Same Day ACH and it will be phased in over the course of 2016-2018. In addition, the largest FIs are creating an actual real-time ACH system through The Clearing House, which has licensed technology from VocaLink (the developer/operator of the UK's Faster Payments system) and FIS to do so.

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Re:Stripe now supports ACH payments by charleyma on Wednesday January 13, 2016 @01:01AM (#10892558)

there's also the problem that it's a bit vague as to who can actually enforce faster payments. The effort is currently led by the FED, but they technically don't have enforcement power, the CFPB could do something but that'd be a bit of a stretch.

Additionally, the large banks are trying to influence the rules and requirements; for example, clearXchange + early warning system merging under a (large) bank consortium

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Re:Stripe now supports ACH payments by toomuchtodo on Tuesday January 12, 2016 @07:28PM (#10891470)

All of the above is correct.

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Re:Stripe now supports ACH payments by ericd on Wednesday January 13, 2016 @02:45AM (#10892886)

I believe they also like the float on the slower methods.

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Re:Stripe now supports ACH payments by Someone1234 on Tuesday January 12, 2016 @05:00PM (#10890747)

That doesn't explain anything. The UK has a similar level of fraud, and banks are just as required to pick up the bill as in the US.

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Re:Stripe now supports ACH payments by tyingq on Tuesday January 12, 2016 @05:17PM (#10890839)

Banks DO NOT pick up the bill for fraud in the US. The end merchant/seller does.

Edit: Downvote all you like. It's the truth. When the chargeback comes, you pay Stripe/Paypal/Etc a fee, and they yank the funds out of your account. Whatever item you shipped is gone.

Edit 2: The liability shift referred to below doesn't apply to online transactions. Card not present fraud is almost 100% on the seller/merchant. And given that the context is Stripe, well..

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Re:Stripe now supports ACH payments by w4 on Tuesday January 12, 2016 @05:49PM (#10891019)

I don't understand why this is being downvoted - it's correct.

It is the case that banks pick up the tab for transactions where the card is present, hence the move to EMV chips. However, merchants have liability for transactions where the card is not present, i.e. every Stripe transaction.

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Re:Stripe now supports ACH payments by usaphp on Tuesday January 12, 2016 @05:37PM (#10890957)

I upvoted, we had ecommerse store and we used authorize.net (it was like 10 years ago), every time we got a chargeback because of fraud - authorize.net deducted money from our bank account.

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Re:Stripe now supports ACH payments by cjg_ on Tuesday January 12, 2016 @05:49PM (#10891023)

Online transactions using Visa's 3DSecure/Verified by Visa or MasterCard SecureCode will shift liability to consumer though.

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Re:Stripe now supports ACH payments by tyingq on Wednesday January 13, 2016 @10:53AM (#10895169)

I think 3DS may work better in Europe, but here in the U.S., it just doesn't.

It requires the use of a password, and adds additional steps to the checkout process. You can't really make it mandatory on your store, as conversions/sales would crumble. So, you make it optional.

If it's optional, only the most security conscious customers end up using it. Those are the customers with the lowest risk of having their card info stolen, and the most likely to report it quickly if the info is stolen.

So it adds more protection around a tiny fraction of your sales...the sales that were already very unlikely to be fraudulent.

It doesn't make any notable change to "the cost of online fraud in the US is 100% on the merchant/seller".

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Re:Stripe now supports ACH payments by ersii on Tuesday January 19, 2016 @06:01AM (#10929907)

Why would 3D-Secure work better in Europe than in the United States? I fail to understand that from reading your comment.

Yes, it requires extra authentication (My issuing bank has chosen password as the auth - some others use the bank code boxes for One Time Tokens). All online stores that I routinely buy from in Sweden and in Europe have 3D-Secure turned on. The only exception I've encountered is an airline.

The customers don't get to choose - it's not optional for customers. It's optional for merchants/shops. If they however disable 3D-Secure: They're liable though.

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Re:Stripe now supports ACH payments by tjohns on Tuesday January 12, 2016 @06:08PM (#10891126)

Are you sure about that? The Verified by Visa site says that the liability shift is to the card issuer, not to the consumer:

https://usa.visa.com/run-your-business/small-business-tools/...

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Re:Stripe now supports ACH payments by cjg_ on Tuesday January 12, 2016 @06:21PM (#10891193)

Ah yeah, but many issuers push it down to the consumer, basically the same case as when you've given the card PIN away.

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Re:Stripe now supports ACH payments by joshmn on Tuesday January 12, 2016 @10:34PM (#10892178)

I don't think this is true. So many shops these days sell fulls (inc SSN, DOB) at reasonable prices, some including even VBV/MSC passwords; you can filter by non-VBV/MSC as well, making VCV/MSC useless.

And if you really know where to look, the ability to look up someone's SSN will only cost you a buck or two.

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Re:Stripe now supports ACH payments by ceejayoz on Tuesday January 12, 2016 @05:31PM (#10890909)

That's not true for card-present transactions.

Before October 2015, issuers ate the fraud, not merchants.

After October 2015, the "liability shift" means issuers won't eat the fraud if it's a chip card and the merchant didn't use the chip reader. Otherwise, they still eat the fraud.

http://www.emv-connection.com/downloads/2015/05/EMF-Liabilit...

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Re:Stripe now supports ACH payments by zrail on Tuesday January 12, 2016 @05:33PM (#10890922)

That's only for in-person transactions. Fraud from card-not-present transactions that are Stripe's bread and butter still falls on the merchant.

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Re:Stripe now supports ACH payments by ceejayoz on Tuesday January 12, 2016 @05:34PM (#10890929)

Updated accordingly.

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Re:Stripe now supports ACH payments by DrJokepu on Tuesday January 12, 2016 @05:00PM (#10890751)

I wonder if fraudulent transaction levels are similar in the US to those in the UK and if no, what the reason is for the difference (and if yes, why the transaction costs are so much higher in the US).

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Re:Stripe now supports ACH payments by cavisne on Tuesday January 12, 2016 @10:30PM (#10892161)

One reason why it might be much higher in the US is the prevalence of swipe and sign. In Australia signatures are no longer allowed and essentially all transactions are chip and pin (or tap if its under $100). This basically eliminates in store fraud as a chip cant be skimmed. No idea why ACH is so expensive / terrible in the US compared to other countries, I guess its the number of banks?

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Re:Stripe now supports ACH payments by puranjay on Tuesday January 12, 2016 @10:52PM (#10892224)

In India, there's a protocol called 'IMPS' that allows instant transfers. The cost per transaction is a measly Rs. 5 (around $0.08).

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Re:Stripe now supports ACH payments by captn3m0 on Wednesday January 13, 2016 @03:14AM (#10892961)

Other issues in India prevent IMPS from reaching scale:

- No bank account verification APIs - Recurring payment support

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Re:Stripe now supports ACH payments by cowsandmilk on Tuesday January 12, 2016 @05:03PM (#10890769)

who are you billing in the >$25k range that doesn't have the ability to send payments via ACH and will do so free of charge.

I bill pharma and biotech companies and regularly receive payment via ACH and did not require a service provider and have never paid a fee.

I do need someone to reconcile the incoming payments to a particular account, but that really isn't a huge deal (and could be awkwardly automated already as they send an e-mail Remittance Advice the same day).

Maybe there is some intermediate set of customers, but for me, any customer paying large invoices regularly already is set up to pay by ACH.

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Re:Stripe now supports ACH payments by morgante on Wednesday January 13, 2016 @03:39AM (#10893049)

I think it's more that you want it to be part of an automated system. Ideally, it should be set up to autobill every month and reconcile those transactions automatically (like what you can do with credit cards).

The vast majority of customers do have access to some sort of ACH payment system, but it's not automated. You still have to pester them to pay each month.

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Re:Stripe now supports ACH payments by hrspandya on Tuesday January 12, 2016 @08:33PM (#10891733)

Have you tried Digital Checks ? https://www.checkbook.io https://youtu.be/N4X79qkEmog ? All the convenience of ACH plus work with non-ACH enabled bank accounts. Not all bank accounts are ACH enabled. Also ACH requires financial/bank info and verification from recipient and while Plaid solves it for some banks the recipient/sender may not be comfortable sharing it. Digital Checks have no such requirements. $1/Check regardless of transaction amount.

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Re:Stripe now supports ACH payments by NiekvdMaas on Wednesday January 13, 2016 @01:16AM (#10892613)

Digital Checks/e-Checks are very fraud sensitive. They usually clear just 5-7 days later and I have seen cases where the merchant lost tens of thousands of dollars.

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Re:Stripe now supports ACH payments by pjg on Wednesday January 13, 2016 @11:30AM (#10895464)

Digital Checks can clear overnight (just like Check21). Much faster than ACH. As for fraud the rules are no different than ACH.

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Re:Stripe now supports ACH payments by yalogin on Tuesday January 12, 2016 @10:30PM (#10892165)

Doesn't ACH processing cost a lot less than that? If I remember right, Dwolla used to charge $0.25 and I think they made it free.

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Re:Stripe now supports ACH payments by amluto on Tuesday January 12, 2016 @03:49PM (#10890278)

Wells Fargo CEO can do it. IIRC it wasn't cheap unless you have high volume, though.

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Re:Stripe now supports ACH payments by jslampe on Tuesday January 12, 2016 @05:53PM (#10891040)

I haven't seen it first hand, but lots of our current customers ditched them (and others) after working with their APIs or lack thereof (#xml).

In general, ACH just wasn't built to accommodate "platforms" as an entity in the transaction cycle. Banks, while although cheap, have a problem reconciling their infrastructure and processes with today's expectations. Not to mention their services don't package or include other compliance required to leverage ACH legally (KYC, OFAC, reporting, reject handling, etc.).

Bottom-line: ACH and traditional providers are not suitable options for today's platforms. Among others, banks are hemorrhaging ACH-related business to companies like Stripe and Dwolla.

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Re:Stripe now supports ACH payments by nemothekid on Tuesday January 12, 2016 @06:35PM (#10891247)

>Bottom-line: ACH and traditional providers are not suitable options for today's platforms. Among others, banks are hemorrhaging ACH-related business to companies like Stripe and Dwolla.

AFAIK, to plug in to the ACH network, you have to work with a Bank that has access to FedACH/ Electronic Payments Network. I know Dwolla has its own Payments Network, FiSync, but the number of banks on this system is very small. So in many cases its not so much that banks are hemorrhaging business, but Stripe/Dwolla are selling KYC, OFAC, reporting, reject handling, etc related services.

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Re:Stripe now supports ACH payments by yalogin on Tuesday January 12, 2016 @10:34PM (#10892180)

Can you tell me where I can find information about the compliance requirements for ACH transactions?

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Re:Stripe now supports ACH payments by jslampe on Wednesday January 13, 2016 @10:35AM (#10895007)

How much time do you have? The rule book is like 600-700 pages. The best route I recommend is to engage your bank or processor, like Dwolla or Stripe, with your use case. They should be able to quickly identify what the requirements are for your platform.

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Re:Stripe now supports ACH payments by manigandham on Tuesday January 12, 2016 @09:54PM (#10892055)

With those size payments, why didnt you just send your bank account details and have them ACH/wire payments to you?

Usually the hassle is in sending payments, not receiving them.

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Re:Stripe now supports ACH payments by baudehlo on Tuesday January 12, 2016 @07:54PM (#10891568)

Yep it's good news. Chargify has been doing it since early 2014, but for a lot of Stripe users it's nice to be able to continue using their API for it.

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Re:Stripe now supports ACH payments by dpiers on Tuesday January 12, 2016 @08:13PM (#10891658)

Hmm, that sounds a lot like what I was doing a few years ago...

Oh. Hey Spencer. ¯\_(ツ)_/¯

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Re:Stripe now supports ACH payments by beachstartup on Tuesday January 12, 2016 @04:49PM (#10890681)

we have a commercial banking platform (from a brand name bank) with ACH origination. did that not work/was that not available to you?

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