How Square moves Cash(jonbwhite.tumblr.com) |
How Square moves Cash(jonbwhite.tumblr.com) |
It worked, but it was strictly against Visa/MC policy, and they had to stop. By that time they had some critical mass and got ACH going quickly.
I don't know if it's the same thing with debit cards, but I suspect it is -- the transaction goes through Visa/MC, but settles via ACH once it's known that it's a debit card.
But Square might be big enough to change the policy. Especially since Visa is an investor?
Either Square is flying under the radar or has gotten special permission to do this.
Excerpt from summary: "On today's show: Why the invisible pipes that move money around America are so slow. (And why the ones in England are so much faster.)"
http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
Having lived in the US, Ireland and Australia, I find the US banking system to be archaic compared to Ireland or Australia's. I can pay anyone up to around 1000 EUR/AUD in a few clicks. No fees or waiting days for money to show. It's brilliant!
So I listened to it. It wasn't that interesting. If you had never heard of ACH before, it would perhaps be illuminating, but if you already have a decent grasp of the existence of this system and it's shortcomings, there's not a lot more meat in that program...
YMMV.
Planet Money's original charter was to explain what was happening, literally day-by-day, as the 2007-2008 financial meltdown was happening. And those were pretty informative and well-written shows.
I mean, yeah, it's a podcast targeted at the average person, sure, I'm not expecting them to really go deep. But I don't know very much about that sort of thing, so sometimes they really are giving me information I don't have.
But the tone? Well, it really does feel like I'm being talked down to. I do not know why. I find my own reaction odd, and I've listened to the podcast several times in an effort to try to figure out what, exactly, I found condescending.
It's especially odd because I'll listen to other podcasts targeted at the average person, and I'll be entertained or informed, and I won't feel like they are talking down to me. There's something about the planet money folks that sets me off.
Square has a totally different cachet than GiftRocket does, so they may actually be in a position to bend the rules. Seemingly, other smaller payments providers have been able to implement APIs around this.
About 4 years ago I was building a payment processing solution for an ad network (something along the lines of an adsense clone) and for new users we needed to support micro-deposit verification. Usually this involves ACH deposits but to cut down the time it took, I implemented this using the Cybersource API against debit and credit cards. Obviously sending somebody money only reliably works with debit cards, because many people don't use a credit card often, but I just want to downplay the rhetoric in this post about squares unique brilliance in this regard.
After some googling I found this: http://www.fuzenetwork.com/contact-us/ linked to from here https://github.com/balanced/balanced-api/issues/32
I tried to use their contact form but was redirected to what looks like a version of their site that isn't supposed (or expected) to be public yet. From there I find a link to this page: http://info.fuzenetwork.com/developer-center-fuze-network and I was able to submit the form.
Edit: I received an email after signing up but it seemed a little half-baked. I would guess that they are still working on their product and aren't ready to launch just yet.
And of course, has anybody verified w/ Square that it MUST be a debit card. It could also just be a marketing distinction. For me, I NEVER use a debit card -- i abhor them -- and put everything on a credit card. So I wonder if it would let me provide a credit card number. For a friend sending me $20, it's no difference to me whether it goes directly to my Amex or makes a brief stop in in my bank account first.
As someone mentioned, we did this at PayPal a long time ago but it was frowned upon. We even looked at refunding prior credit card charges that were unrelated to the new payout. We'd even make money on those txns!
Venmo uses it. Square probably does it as well. Mastercard has an equivalent.
The fact that the US insists on operating on such a terrible system where it takes five business days reflects really badly on the infrastructure in place.
So on the one hand, I really like Square Cash as a concept. On the other, I wish banks would actually stop sitting on their hands and make a transfer system that works. Of course, there's no incentive for banks to do that, because they can keep charging money for 'instant' wire transfers right now.
Replacing ACH is a much better solution. Like what Dwolla has done.
On the money-sender side, debit cards have far fewer consumer protections so will result in fewer successful chargebacks. Whether that had anything to do with it, I have no idea.
If you're required to do, say, next-business-day payments but your infrastructure gets them done in 5 minutes, you could still want to delay all those payments to the next day since there it makes a significant addition to your revenue (float of the money held, interest on overdue customers, payment fees for 'more-urgent' payments) - unless competition forces you to do so.
Banks aren't sitting on their hands - you should expect a "transfer system that works" from banks as soon as someone actually threatens to outcompete them. Square Cash doesn't seem to be that thing - it relies on banks allowing the debit-card-refunds (AFAIK they are allowed to kill this ability as soon as they wish to), and I'm sure the banks make sure they earn 'their due' in fees on every such payment anyway.
But I agree having instantaneous transfers instituted at the bank level would be real progress. Unfortunately congress can't even agree on the incremental changes it makes to the existing system, so I have little hope for sweeping reform.
I mean, yeah, it's NPR. You're not going to get amazing voice talent reading the stories. I don't feel talked-down-to as much as I feel like I'm hearing a work done by second-year broadcasting students trying to finish a project. Listen to Chana Joffe-Walt or Zoe Chase sometime.
But if you think this podcast is annoying, best you skip the rest of them...
It's odd, too, as the non-financial stories on, say, this American life usually doesn't trigger the same response. (I mean, I'm not a huge fan of this American life, but not because I feel talked down to.)
I was commenting mostly because I find my own reaction... unexpected. And I think the question "what is arrogance?" is an interesting one. Different people will perceive vastly different levels of arrogance in the same document or reading.