Introducing real-time payments

Until now it’s only been possible for third-party financial applications to provide a simple read-only view of a bank account, but we believe in order to provide the most value and utility for end-users, applications must be able to move money too. So that’s why today we’re excited to announce the next step in our journey towards that goal: real-time payment APIs.

These new APIs are built on top of the Zelle network, a real-time P2P network connecting over 1120 banks in the United States, and allow your application to push money directly from a user’s bank account to another US bank account, with the money arriving in the beneficiary’s account in seconds.

While we expect many new use cases to emerge from the availability of these new APIs, one of the most obvious immediate use cases that we are most excited about is replacing ACH. ACH is commonly used for high-value and recurring payments, and is preferred by many businesses because payment cost is fixed, rather than being a percentage of the payment’s value, as well as being cheaper than plastic card payments. Despite appearing cheaper, ACH has many hidden costs that can quickly add up:

• ACH payments take 3-6 business days to clear from the time you submit ACH debit instructions to your bank. So while you can check if the customer has sufficient funds available using our real-time account balance API, there is no guarantee sufficient funds will be available by the time your ACH instructions are processed by the bank. This is a problem if you are shipping goods to users or de facto extending credit to the user before the payment clears, e.g. a brokerage/trading app making funds immediately available to the user.

• Individuals have 90 days to dispute the transaction, with some banks allowing up to 120 days. Customers can dispute transactions for reasons such as incorrect or duplicate transaction amounts and fraud. The dispute itself may also be fraudulent, e.g. our brokerage app user crying fraud after losing all of their money during a bad day at the markets. Regardless, if the customer’s bank decides their dispute is legitimate, they will reverse the transfer. This is all the more frustrating for merchants because there is no dispute resolution system in the ACH network. A merchant’s only option is expensive litigation in court.

• NACHA rules require account details to be verified by using ACH micro-transactions or Teller’s Verify API before an account can be debited. This adds additional expense and time in the case of micro-transaction based authentication.

Because our payment APIs are real-time you will know instantly whether or not the payment succeeded or not. And because Zelle has no chargeback or reversal mechanisms, payments are one-way and irreversible, eliminating an entire category of fraud and counterparty risk. Finally, no expensive or time-consuming account detail verification is required.

Instead of pulling money from the user’s account by submitting an ACH batch file to your bank, you can directly push it from the user’s account to your by asking the user to connect the account to your application with Teller.

The flow looks like this:

• Register your bank account for receiving money from users with Zelle, e.g. payments@your-app.example.com
• User connects their account to your app with Teller
• Your applications makes an API call to select or add payments@your-app.example.com to the user’s Zelle beneficiaries and send money to that account
• You receive money instantly

Our payments APIs are available today and currently supported by our Chase, Bank of America, Citi, and Capital One integrations with support for the rest of our integrations arriving in the coming weeks.

We can’t wait to see what you build.