12 ms·

Inside ACH Payments with Stripe and Plaid

75 points by soroushjp 10y ago

wmf 10y ago
Is Plaid the password antipattern as a service? If banks can enable Apple Pay in less than two years they should be able to solve this problem.
- Johnie 10y ago
  They should, but they aren't. The challenge is bigger than you think. Core banking technology is so fragmented and outdated.
TimMeade 10y ago
Even after reading this I'm still confused on what plaid is bringing to the table. Why not do it all through stripe? If someone has the tech skills to integrate to stripe, it seems a short step to add ACH.
- zrail 10y ago
  Stripe does ACH, Plaid does account verification in lieu of microdeposits.
  - BallinBige 10y ago
    it verifies the funds are there, at that moment, but what about when the batch closes... will the Funds still be there?
    - ChemicalWarfare 10y ago
      I don't know the details but I'd guess that there's no funds verification involved just the validity of the account itself (which is what the micropayments are for when validating a checking account for the ACH flow).
    - zachperret 10y ago
      Unfortuantely, creating a memo post (hold on funds) is impossible given today's ACH infrastructure. That said, you can use Plaid to monitor funds availability throughout the lifetime of the transaction, and to predict the likelihood of clearing.
- mcorrand 10y ago
  Plaid provides a better verification and authentication flow. Users authenticate with bank username and password rather than routing and account number so they don't have to hunt those down, and there are no worries about mistyping (failed ACH payments cost $4). The bank account is verified straight away, which bypasses the microdeposits flow that takes a couple business days. I'm working on adding ACH payments to my Stripe Connect app, and I'm planning on adding only the Plaid Link flow because the routing/account number + microdeposits flow just seems like too much of a headache.
  - jwr 10y ago
    Bank username and password? You mean I'm expected to enter my bank username and password anywhere else than my bank?
- TimMeade 10y ago
  ok that helps. Does this only happen if the account has been 'pre verified' with plaid? or do they still have to do the micro deposits if this is a first time they have used ach?
  - zachperret 10y ago
    Nope, no micro-deposits necessary at all
ChemicalWarfare 10y ago
>>Due to its robustness for both consumers and suppliers, ACH is a slow, multi-staged, layered process that focuses on protecting all parties involved... I like what plaid brings to the table, that statement however is a bit of a stretch. ACH is slow because of the old tech involved essentially being a series of batched cron jobs used to move the data around not due to some 'robustness'. Countries with newer banking systems have ACH-like setup that us way faster then US', Mexico's SPEI being a prime example of that. There's also Fedwire but it's not for mere mortals :)
joshmn 10y ago
Just an incredibly kind PSA to everyone while we're on the subject of processing payments: Plaid's account verification does not in any significant or meaningful way prevent fraudulent transactions. Neither does Stripe. In fact, Stripe loves the chargeback fees, and there's a whole lot of "stuff" that's waiting to be released (and I don't mean as a feature) that will kindly support this. "Hi joshmn I'd love to hear how we can improve [but we will actually take what you say with a grain of salt because you're not in our club.]" I might sound bitter, but I'm not; I'm simply appalled. Not because I was burned by Stripe personally. Instead, my clients have, and you probably know someone that has too. Please for the love of your company/business/project, review transactions carefully. For most things that are just getting started, all it takes is one transaction to really screw things up. For businesses, you have ~3 lives. Your now-friendly, former-fraudster
- callmeed 10y ago
  Well, at least if there's a problem, you can always pick up the phone and give Stripe a cal–OH WAIT YOU CAN'T. I'm sorry–I love Stripe as a product–but it blows my mind that a company with a $5B+ valuation that touches your business' money only has email support. Not even fast email support (in my experience, 12h+ response time is normal). Not even a ticket number.
  - areyoucrazy 10y ago
    That's why you go with Braintree. They offer $50k in processing fee-free, which saves you ~ $1500 immediately. Their fee for currency conversion is 1%, while Stripe's is 2%. They reply much faster to email inquires and you can call them. They support more countries than Stripe.
    - rdybarra 10y ago
      For those reasons I wanted to go with Brain Tree, but they don't support ACH.
      - 10y ago
mxuribe 10y ago
For what often can be pretty dry material, that was a pretty good article. Well written - in that it interested me more as i read it. Nice job!
jaequery 10y ago
Stripe + Plaid is super cool! But I wish they allowed you to payout users with via ACH, instead of just receiving ACH payments. Anyone know of any offerings, besides Paypal Mass Pay?
- ROFISH 10y ago
  Agreed. I pay royalties to a lot of different accounts and Paypal is simply the only option available. How come its super hard to go "here is my ACH account, put $XX into this ACH account"? I'm not even taking someone else's money, I'm trying to give money! I even have the tax paperwork to accompany that payment.
  - zengr 10y ago
    http://www.checkbook.io http://www.checkbook.io lets you do exactly that via an API or their UI.
  - pjg 10y ago
    There are 3 issues: The most important one is few business are setup to make a direct ACH Credit (for making an ACH Debit its an harder barrier and even fewer businesses have it ). Those that are have cumbersome UI/UX. The other issue is giving out your account number is not always a good idea unless you trust the source. And finally if you do give out the account number and make a typo then the money goes to the wrong account. Alternately the account number needs to be verified. Which is why even today paper Checks are still prevalent by the billions. You can try Digital Checks though.
- matthewarkin 10y ago
  You can do "payouts" with Stripe Connect. Stripe doesn't have a money transmission license so they can only do a payout when it's tied directly to a charge (like marketplace). You could also take a look at Payoneer.
  - jaequery 10y ago
    Yep, went that route (Stripe Marketplace) and then realized later that it had to be tied to some charge. We wanted to payout users at end of the month so it wouldn't work for our case. Now, Payoneer is interesting. I really like Plaid interface to tie into the banks, do you know if it can integrate with it or even possibly have it's own Plaid like widget?
mjfl 10y ago
While we're on the subject: can anyone recommend a good resource on how transaction processing systems work, at as low a level and high detail as possible?
- zengr 10y ago
  You mean an ACH transaction processing system? Zenpayroll has a nice series of blog posts: http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-1/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-2/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-3/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-4/ http://engineering.gusto.com/how-ach-works-a-developer-persp...

75 points by soroushjp 10y ago

wmf 10y ago

Is Plaid the password antipattern as a service? If banks can enable Apple Pay in less than two years they should be able to solve this problem.

Johnie 10y ago
They should, but they aren't. The challenge is bigger than you think. Core banking technology is so fragmented and outdated.

TimMeade 10y ago

Even after reading this I'm still confused on what plaid is bringing to the table. Why not do it all through stripe? If someone has the tech skills to integrate to stripe, it seems a short step to add ACH.

zrail 10y ago
Stripe does ACH, Plaid does account verification in lieu of microdeposits.
- BallinBige 10y ago
  it verifies the funds are there, at that moment, but what about when the batch closes... will the Funds still be there?
  - ChemicalWarfare 10y ago
    I don't know the details but I'd guess that there's no funds verification involved just the validity of the account itself (which is what the micropayments are for when validating a checking account for the ACH flow).
  - zachperret 10y ago
    Unfortuantely, creating a memo post (hold on funds) is impossible given today's ACH infrastructure. That said, you can use Plaid to monitor funds availability throughout the lifetime of the transaction, and to predict the likelihood of clearing.
mcorrand 10y ago
Plaid provides a better verification and authentication flow. Users authenticate with bank username and password rather than routing and account number so they don't have to hunt those down, and there are no worries about mistyping (failed ACH payments cost $4). The bank account is verified straight away, which bypasses the microdeposits flow that takes a couple business days. I'm working on adding ACH payments to my Stripe Connect app, and I'm planning on adding only the Plaid Link flow because the routing/account number + microdeposits flow just seems like too much of a headache.
- jwr 10y ago
  Bank username and password? You mean I'm expected to enter my bank username and password anywhere else than my bank?
TimMeade 10y ago
ok that helps. Does this only happen if the account has been 'pre verified' with plaid? or do they still have to do the micro deposits if this is a first time they have used ach?
- zachperret 10y ago
  Nope, no micro-deposits necessary at all

ChemicalWarfare 10y ago

>>Due to its robustness for both consumers and suppliers, ACH is a slow, multi-staged, layered process that focuses on protecting all parties involved... I like what plaid brings to the table, that statement however is a bit of a stretch. ACH is slow because of the old tech involved essentially being a series of batched cron jobs used to move the data around not due to some 'robustness'. Countries with newer banking systems have ACH-like setup that us way faster then US', Mexico's SPEI being a prime example of that. There's also Fedwire but it's not for mere mortals :)

joshmn 10y ago

Just an incredibly kind PSA to everyone while we're on the subject of processing payments: Plaid's account verification does not in any significant or meaningful way prevent fraudulent transactions. Neither does Stripe. In fact, Stripe loves the chargeback fees, and there's a whole lot of "stuff" that's waiting to be released (and I don't mean as a feature) that will kindly support this. "Hi joshmn I'd love to hear how we can improve [but we will actually take what you say with a grain of salt because you're not in our club.]" I might sound bitter, but I'm not; I'm simply appalled. Not because I was burned by Stripe personally. Instead, my clients have, and you probably know someone that has too. Please for the love of your company/business/project, review transactions carefully. For most things that are just getting started, all it takes is one transaction to really screw things up. For businesses, you have ~3 lives. Your now-friendly, former-fraudster

callmeed 10y ago
Well, at least if there's a problem, you can always pick up the phone and give Stripe a cal–OH WAIT YOU CAN'T. I'm sorry–I love Stripe as a product–but it blows my mind that a company with a $5B+ valuation that touches your business' money only has email support. Not even fast email support (in my experience, 12h+ response time is normal). Not even a ticket number.
- areyoucrazy 10y ago
  That's why you go with Braintree. They offer $50k in processing fee-free, which saves you ~ $1500 immediately. Their fee for currency conversion is 1%, while Stripe's is 2%. They reply much faster to email inquires and you can call them. They support more countries than Stripe.
  - rdybarra 10y ago
    For those reasons I wanted to go with Brain Tree, but they don't support ACH.
    - 10y ago

mxuribe 10y ago

For what often can be pretty dry material, that was a pretty good article. Well written - in that it interested me more as i read it. Nice job!

jaequery 10y ago

Stripe + Plaid is super cool! But I wish they allowed you to payout users with via ACH, instead of just receiving ACH payments. Anyone know of any offerings, besides Paypal Mass Pay?

ROFISH 10y ago
Agreed. I pay royalties to a lot of different accounts and Paypal is simply the only option available. How come its super hard to go "here is my ACH account, put $XX into this ACH account"? I'm not even taking someone else's money, I'm trying to give money! I even have the tax paperwork to accompany that payment.
- zengr 10y ago
  http://www.checkbook.io http://www.checkbook.io lets you do exactly that via an API or their UI.
- pjg 10y ago
  There are 3 issues: The most important one is few business are setup to make a direct ACH Credit (for making an ACH Debit its an harder barrier and even fewer businesses have it ). Those that are have cumbersome UI/UX. The other issue is giving out your account number is not always a good idea unless you trust the source. And finally if you do give out the account number and make a typo then the money goes to the wrong account. Alternately the account number needs to be verified. Which is why even today paper Checks are still prevalent by the billions. You can try Digital Checks though.
matthewarkin 10y ago
You can do "payouts" with Stripe Connect. Stripe doesn't have a money transmission license so they can only do a payout when it's tied directly to a charge (like marketplace). You could also take a look at Payoneer.
- jaequery 10y ago
  Yep, went that route (Stripe Marketplace) and then realized later that it had to be tied to some charge. We wanted to payout users at end of the month so it wouldn't work for our case. Now, Payoneer is interesting. I really like Plaid interface to tie into the banks, do you know if it can integrate with it or even possibly have it's own Plaid like widget?

mjfl 10y ago

While we're on the subject: can anyone recommend a good resource on how transaction processing systems work, at as low a level and high detail as possible?

zengr 10y ago
You mean an ACH transaction processing system? Zenpayroll has a nice series of blog posts: http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-1/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-2/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-3/ http://engineering.gusto.com/how-ach-works-a-developer-persp... http://engineering.gusto.com/how-ach-works-a-developer-perspective-part-4/ http://engineering.gusto.com/how-ach-works-a-developer-persp...