New Tech, New Models: ACH at the POS
Recently, Chief Business Officer of Trustly, Inc. - Craig McDonald was featured in a podcast called PaymentsOnFire® from Glenbrook Partners. Glenbrook Partners have been associated with payments education and payments consulting work in the US. In their podcasts, they frequently discuss payment rails - the networks and systems that actually move money either between banks and the open loop payments (e.g. Paypal) world or within a single operators network i.e. a closed loop network.
In this blog post, we summarize the key points discussed between the host of this “Payments on Fire” podcast, George Peabody, and our own Craig McDonald.
We all know how to initiate a credit card transaction either at the physical point of sale or online app but there's another systemically important system that most of us use all the time. If we're employed, our paychecks get deposited into our accounts using this medium mostly i.e. ACH - Automated Clearing House. ACH is an electronic payment method that is created by consumers when they authorize an originating financial institution, corporation, or other customer (originator) to debit directly from the consumer's checking or saving account for the purpose of bill payment or to pay for goods purchased. ACH has some really remarkable attributes that make it a powerful method of payment.
However, there are some reasons that have historically prevented mainstream adoption of ACH as a form of payment for goods and services:
Primarily, due to its big shortcoming - it runs in batches overnight. So it takes time to process this method of payment called ACH. For that reason, it can’t be labeled as “a real time payment”.
Another big problem with ACH payment is that there's no account authorization or validation. For example, when a debit transaction is initiated, a consumer gives a merchant permission to pull some money from their account, but a merchant has no way to know whether there's money in the consumer’s account.
Trustly combines broad connectivity into the ACH system with machine learning to effectively guarantee payments to merchants at a lower cost than cards. It’s a fascinating example of how new tech can broaden the utility of a system that is decades old. Trustly, a Nacha preferred partner, also provides peace of mind to consumers by providing a trusted multi factor authentication of the bank.
For implementation, level of effort is actually very small as compared to the benefits to merchants. We get merchants up and running in three weeks or less. We have native SDKs for iOS and Android which makes the deployment on these platforms very streamlined.
In summary, Trustly gives a payment guarantee to the merchants, at a very good price. What’s not to like? If you would like to see how Trustly could help your business accept Online Bank Payments, feel free to reach out to us at sales.us@trustly.com.
