Inside ACH Payments with Stripe and Plaid | Hacker News Reader

Inside ACH Payments with Stripe and Plaid

fin.plaid.com

75 pointssoroushjp38 comments

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

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.

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.

For those reasons I wanted to go with Brain Tree, but they don't support ACH.

Then use Braintree for cards and Stripe for ACH.

ACH is cheaper than cards, but it's also slower and has a limit of $10,000 per transaction [1]. Cards have a limit of $1 million per transaction [2], which is 100x bigger than ACH. Also, people are used to paying with cards.

  [1] https://support.stripe.com/questions/accepting-ach-payments-with-stripe
  [2] https://support.stripe.com/questions/what-is-the-maximum-amount-i-can-charge-with-stripe

Wait, what? 1 million? I thought Visa had a hard limit of $2k USD per day.

And $10k limit for ACH? You can transfer more money than that via SWIFT.

Limits vary based on your bank, card type (debit vs credit), account type (personal vs. business) and what you're doing with the money (withdrawing cash vs. spending online). You can also ask to increase the limit. People can also get multiple cards and use them for online payments.

  ... limit of $2k USD per day.

AWS and AdWords both accept cards and people spend a lot of money there. Online accommodation booking can cost more than $2k and people have no problems doing it.

If you have items with high prices, just send users a quick notification to check whether their cards have a limit and to ask their bank to lift it.

> And $10k limit for ACH? You can transfer more money than that via SWIFT.

Not surprising. It seems ACH is still run with punch card technology

> I thought Visa had a hard limit of $2k USD per day.

Of course not. Maybe your bank has such a limit on your card, but there's definitely no hard limit that low imposed by any of the Visa/Mastercard/Amex. How else would you buy things over $2k?

Except Braintree are owned by PayPal and, just like PP, they love to just randomly kill your merchant account. I know plenty of people this has happened to for no good reason other than 'sorry you no longer fit our risk profile'.

I love Stripe for its of ease use, clean UI, etc., but yes their fraud/chargeback handling sucks.

My wife's box club business gets dinged all the time by fraudulent transactions. She uses CrateJoy, and they tell us it's our and Stripe's job to filter fraud. Well, I don't have a 24/7 SOC dedicated to filtering out fraud, so I have to rely on Stripe. Stripe, even with all the verification features enabled, still does very little to prevent fraudulent charges. My wife loses a not insignificant portion of her money on heavy renewal months (like 3 months after Christmas and most recently 6 months after Christmas) with people charging back for fraud or just because they want a refund. And of course Stripe is happy to slurp up the insane fees for it.

We'd move, but CrateJoy makes things really, really, really easy for her in terms of managing members and shipping. It's just a bummer to deal with this all the time.

What type of box business? Just ever curious about businesses people operate. :)

My first job out of University was working for a credit card processor and debt collection centre. It was just after Check-21 passed. I learned a lot about ACH, IRDs and credit card ISOs.

After leaving the US, I realized how terribly behind our banking system is compared to every other country in the world. Most of the EU, Australia, NZ all have direct person-to-person transfer via account number. Any bank to any bank, via web or phone app. Germany and other EU nations go further and offer TAN numbers (1-time use numbers, sorta-2-factor, but not really).

The US ACH system is absolutely terrible. The Federal Reserve need a supplemental system with 1-directional person-to-person transfer numbers. Our tax numbers also need to stop being used as a secret. No other country does that.

>direct person-to-person transfer via account number. Any bank to any bank,

The US doesn't have that? I can't transfer money to you, even if I have your bank account number? How are people expected to transfer money to each other then?

Cheques! Or Paypal kind of stuff

Yes, it's ridiculous

I don't understand this. You can't transfer money to another person from your bank account?

In India we have IMPS (sort of an instant transfer) which takes less than a second and costs Rs. 5 at a private bank (free at a public sector one).

I've been to Australia and transferring money to another account with the same bank requires just a mobile number.

>>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 :)

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!

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.

Stripe does ACH, Plaid does account verification in lieu of microdeposits.

it verifies the funds are there, at that moment, but what about when the batch closes... will the Funds still be there?

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).

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.

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.

Bank username and password?

You mean I'm expected to enter my bank username and password anywhere else than my bank?

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?

Nope, no micro-deposits necessary at all

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.

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

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?

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.

http://www.checkbook.io lets you do exactly that via an API or their UI.

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.

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.

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?

I believe Dwolla does this.

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?

You mean an ACH transaction processing system? Zenpayroll has a nice series of blog posts: http://engineering.gusto.com/how-ach-works-a-developer-persp...

http://engineering.gusto.com/how-ach-works-a-developer-persp...

Reply on news.ycombinator.com