Faster payments has been a hot topic now for a couple of years, and we have kept our readers current with developments through several reports on the topic across consumer and business use cases. The article referenced here was posted in PaymentsSource and focuses on Checkbook.io, a San Mateo-based 2015 startup that specializes in converting checks to faster payments in B2C and B2B scenarios. Digital checks have been around now for awhile now and simply represent an electronic form of a check, for which the information is used to complete the transaction via ACH. In this particular summary, the piece discusses Instant Pay, which effectively allows the payment recipient (consumer of business) to select whether they wish to receive an instant payment or wait the typical 2 days for an ACH settlement.
‘Checkbook.io, a company that aims to eliminate paper checks for B2C and B2B payments, has thrust itself into an increasingly competitive faster payments market by allowing the recipient to choose whether the payment should be made immediately over debit rails or more slowly over ACH.’
The instant payment utilizes Mastercard Send or Visa Direct (push to card), which allow for immediate funds delivery via their global debit networks. Although we have not conversed with Checkbook io, the article states that their digital checks have ‘no bank routing numbers’ included, therefore less risky from stolen data. Certainly, we get that the return ‘ok’ to use the debit network for a near real-time payment would only require a social directory, it is not as clear what the forwarded digital check looks like. We assume tokenized and the recipient simply has a choice to receive an amount, and does not see a check image. Unsure how the remittance information is received, but we’ll save that for a follow on discussion.
“Basically, we have solved a two-sided problem where sender and recipient have to enroll in a service, by making it one-sided,” Gupta said. “In many cases, a payment sender does not have the recipient’s bank information to send money, so they don’t have an option like ACH, wire transfer or using credit cards.”
In any event, more innovative ways to get money from here to there faster, while eliminating paper.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group